“Overall, the economic recovery continued its course but at a more moderate pace than what was observed for the months of May to July,” Statistics Canada stated.
“Slowing and uneven growth are indications that the Canadian economy is transitioning from the rebound phase to a more challenging stage of the recovery,” TD Bank economist Sri Thanabalasingam wrote in a client note.
“From here on in, the journey to ‘normal’ could see temporary stalls and bouts of turbulence.”
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Thanabalasingam noted that Ontario and Quebec have rolled back some reopening measures amid an “alarming” spike in new COVID-19 cases.
“Even without restrictions, consumers and businesses may rein in spending activity in response to rising caseloads. The second wave is now upon us, and the course of the recovery will depend on our success in containing it.”
Canada’s economy remains about 5 per cent smaller than it was before the pandemic, but CIBC economist Royce Mendes says the key now is to ensure things don’t get worse amid the second wave.
“Immediate attention has shifted away from recouping that ground in the near term and towards simply maintaining these gains now that the battle against a second wave of the virus has begun,” he wrote.