Canada economy sees biggest GDP drop ever in 2020, November GDP beats

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Construction workers work on building new homes in Calgary, Alberta

OTTAWA (Reuters) -The Canadian economy likely posted its largest contraction ever in 2020, with GDP seen down 5.1% on the year, according to a preliminary estimate from Statistics Canada on Friday, which also showed fourth quarter annualized GDP likely up 7.8%.

Canada's economy continued to outpace expectations in November, rising 0.7%, ahead of analyst estimates of a 0.4% gain. December GDP is likely to be up 0.3%, Statscan said, though economic activity remains 3% below pre-pandemic levels.

The Canadian dollar was trading 0.5% higher at 1.2762 to the greenback, or 78.36 U.S. cents, with the currency getting an added boost from higher oil prices.

The growth in November and December was stronger than expected, but post-holiday lockdowns are expected to weigh on economic activity in the new year.

Ontario, Canada's most populous province, entered a lockdown on Dec. 26 that has now been extended into February in many parts of the region. Quebec is also amid a strict lockdown and curfew, while other provinces also have restrictions.

The goods-producing sector posted a 1.2% increase in November, while the service-producing sector grew by 0.5%.

(Reporting by Julie Gordon and David Ljunggren in Ottawa, additional reporting by Fergal Smith in Toronto; Editing by Steve Orlofsky)