Experimental indexes of economic activity in the provinces and territories, February 2021
Following a slowing of activity growth in January, the three-month moving average of economic activity increased in a majority of provinces and territories in February. The increases represent an acceleration in growth compared with the three-month moving average for January.
The experimental indexes based on principal component analysis (PCA) and the least absolute shrinkage and selection operator (LASSO) were developed to address the need for a comprehensive measure of economic activity at the sub-national level in advance of the annual estimates of gross domestic product for the provinces and territories. PCA and LASSO are statistical methods that can be used to combine a range of economic indicators from a number of areas (e.g., the labour market, merchandise trade, manufacturing production, and wholesale and retail trade) into composite indicators.
The average growth over the December-to-February period for the PCA-based indexes was higher than that for the three months ending in January for 7 of the 10 indexes reported. The largest increases for the three months ending in February are found in the Northwest Territories, Alberta, Saskatchewan and Nova Scotia.
The average growth for the three months ending in February for the LASSO-based indexes increased in 6 of the 11 indexes reported when compared with the three months ending in January. The largest changes occurred in Alberta and Nunavut. As with the PCA-based indexes, the LASSO-based indexes suggest there tended to be continued economic growth across the country over the winter, even as COVID-19 restrictions were tightened.
Growth since October 2020 reflects a more normal pace of growth in most provinces and territories
After COVID-19 restrictions were initially implemented in the spring of 2020, economic activity declined sharply in most provinces and territories. As restrictions were eased over the summer of 2020, and as businesses and households adapted to living with COVID-19 and its resulting limitations on activity, the economies of the provinces and territories recovered rapidly. In general, the largest increases in activity tended to occur between May and October 2020.
In the fall of 2020, the incidence of COVID-19 began to increase, and restrictions on activity were strengthened. The result was a change in the trajectory of economic activity growth. The period of rapid growth over the summer was replaced by a continued expansion, but at a slower pace.
In particular provinces, such as Quebec or Ontario, the slower growth turned negative over the winter. However, in the majority of cases, the expansion of economic activity between October 2020 and February 2021 is not unusual when compared with the same period after 2009.
Note to readers
Additional information is available in the paper titled "Experimental Economic Activity Indexes for Canadian Provinces and Territories: Experimental Measures Based on Combinations of Monthly Time Series," which is part of the series Analytical Studies: Methods and References (). 11-633-X
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