COVID-19 restrictions and economic activity
Tighter public health restrictions on business and personal activity due to the COVID-19 pandemic were associated with a slowing of economic activity, but the strength of that relationship depended on the severity of the restrictions and the wave of the pandemic. These are the main findings of the study "Measuring the Correlation Between COVID-19 Restrictions and Economic Activity" that is released today by Statistics Canada.
The public health restrictions that were introduced to combat the spread of the COVID-19 virus changed the daily lives of Canadians, including the way they worked and consumed. This study focuses on the link between the restrictions and economic activity, specifically retail sales, employment and the number of active firms. It illustrates the potential short-term consequences that these restrictions have on the economy, contextualizing the movements in these economic data and informing future decision making.
The study finds that growth of 10 percentage points in the severity of restrictions was associated with a slowing of retail sales growth by 0.4 percentage points, a slowing of employment growth by 0.2 percentage points, and a slowing of the growth in the number of businesses by 0.1 percentage points.
However, the link between restrictions and economic activity was not linear. Past a certain level of restrictions, the impact restrictions had on economic activity were more pronounced. At this threshold level, restrictions tended to go from being an inconvenience (e.g., wear a mask and gather only in smaller groups) to being a burden (e.g., in-person schooling is cancelled, non-essential retail and personal services are closed, and stay-at-home orders are issued).
Past this threshold, growth of 10 percentage points in the severity of restrictions was associated with a slowing of retail sales growth by 1.0 percentage points (vs. 0.4 percentage points before the threshold) and a slowing of employment growth by 0.6 percentage points (vs. 0.2 percentage points before the threshold). The response of active firm growth to tighter restrictions remained little changed.
Contact information
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).