BUSINESS NEWS: Canadian Economic Accounts - StatsCan

Statistics Canada has posted data for Canadian economic accounts for the fourth quarter and December 2009.

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Canadian economic accounts

Fourth quarter 2009 and December 2009

Real gross domestic product (GDP) increased 1.2% in the fourth quarter, the largest quarterly increase since the third quarter of 2000. Final domestic demand advanced 1.1% as consumer spending continued to grow. Real GDP increased 0.6% in December, a fourth consecutive monthly advance. Additional data tables are available in the Canadian Economic Accounts Quarterly Review.

For a third consecutive quarter, growth in final domestic demand was led by increases in personal expenditures, government expenditures, and investment in residential structures. Export and import volumes both rose for a second consecutive quarter, with growth in exports outpacing that of imports in the fourth quarter.
Final domestic demand advances again

Goods-producing industries rose 2.1% in the fourth quarter, the first quarterly gain since the second quarter of 2007. Production in mining and oil and gas extraction rebounded in the fourth quarter, while manufacturing and construction strengthened. Service-producing industries advanced 0.8%, as wholesale trade and the activities of real estate agents and brokers continued to grow at a strong pace. The public sector (health, education and public administration combined) as well as the finance and insurance sector also increased.
Note to readers

Percentage changes for expenditure-based and industry-based statistics (such as personal expenditures, investment, exports, imports and output) are calculated using volume measures that are adjusted for price variations. Percentage changes for income-based statistics (such as labour income, corporate profits and farm income) are calculated using nominal values, that is, not adjusted for price variations.

There are five ways of expressing growth rates for gross domestic product (GDP) and other time series found in this release.

1. Unless otherwise stated, the growth rates of all quarterly data in this release represent the percentage change in the series from one quarter to the next, such as from the third quarter to the fourth quarter of 2009.

2. The quarterly growth can be expressed at an annual rate by using a compound growth formula, similar to the way that a monthly interest rate can be expressed at an annual rate. Expressing growth at an annual rate facilitates comparisons with official GDP statistics from the Unites States. Both the quarterly growth rate and annualized quarterly growth rate should be interpreted as an indication of the latest trend in GDP.

3. The quarterly growth expressed at an annual rate should not be confused with the annual growth rate, which is also published with fourth quarter data. The annual growth rate is the percentage change in GDP from one year to the next, such as from 2008 to 2009.

4. The year-over-year growth rate is the percentage change in GDP from a given quarter in one year to the same quarter one year later, such as from the third quarter of 2008 to the third quarter of 2009.

5. The growth rates of all monthly data in this release represent the percentage change in the series from one month to the next, such as from November to December 2009.

Expressed at an annualized rate, real GDP grew 5.0% in the fourth quarter, up from 0.9% in the third quarter. This compared with a 5.9% fourth-quarter rate of increase in the US economy.
Contributions to percent change in gross domestic product (GDP), fourth quarter 2009
Table 1
Real gross domestic product
Table 1
Real gross domestic product1 Change Annualized change Year-over-year change
%
First quarter 2009 -1.8 -7.0 -2.5
Second quarter 2009 -0.9 -3.5 -3.5
Third quarter 2009 0.2 0.9 -3.3
Fourth quarter 2009 1.2 5.0 -1.2
2009 -2.6 ... -2.6
...
not applicable
1.
The change is the growth rate from one period to the next. The annualized change is the growth rate compounded annually. The year-over-year change is the growth rate of a given quarter compared with the same quarter in a previous year.
Consumer spending continues to rise

Consumer spending on goods and services advanced 0.9% in the fourth quarter, the same as the increase recorded in the third quarter. Households increased their spending on durable goods (+2.6%), particularly for motor vehicles and household furniture and equipment. Spending on services grew 1.0%, after advancing 0.8% in the third quarter.
Household demand expands
Housing demand strengthens

Investment in residential structures increased 6.5% in the fourth quarter, its third consecutive quarterly gain. Fourth-quarter investment was led by new housing construction (+7.1%), the first quarterly gain since 2007. Resale activity and renovations continued the upward trend that began in the second quarter.
Business investment in plant and equipment falls

Businesses reduced investment in plant and equipment (-2.3%), after an increase in the third quarter (+1.6%).

Investment in non-residential structures fell 2.2%, the same rate of decline as in the third quarter. It was the fifth consecutive quarterly contraction. Both building and engineering investment were on a downward trend throughout 2009.

Investment in machinery and equipment fell 2.4% after a 5.3% gain the previous quarter. All major categories of business machinery and equipment declined, except for telecommunications equipment, where investment rose 0.5%.
Exports and imports are up

Exports of goods and services grew 3.7%, after a 2.9% increase in the third quarter. Most major export categories were up in the fourth quarter, notably automotive products (+13%), industrial goods and materials (+6.9%) and energy products (+5.7%).

The growth in imports of goods and services slowed to 2.2%, after advancing 8.0% in the third quarter. Imports of automotive products, "other consumer goods," industrial goods and materials, and services were all up, while imports of energy products and machinery and equipment declined.
Inventories down again

Business inventories were drawn down for a fourth consecutive quarter, with manufacturers and motor vehicle dealerships leading the way. The economy-wide ratio of stock to sales edged down for a second consecutive quarter. Businesses held inventories equivalent to 68 days of sales, down from 70 days in the third quarter, but still higher than the decade's average of 63 days.
Prices are up

The price of goods and services produced in Canada advanced 1.1%, with significant price increases for residential structures, motor fuels, and energy exports. Prices fell in several categories, notably personal travel and industrial machinery. Final domestic demand prices were up 0.4%.
Purchasing power increases

Real gross domestic income, a measure of the purchasing power Canada acquires from its production of goods and services, grew 2.1% in the fourth quarter. Canada's terms of trade, a measure of export prices relative to import prices, strengthened for a third consecutive quarter as export prices moved up 1.9% while import prices fell 0.8%.
Table 2
Real gross domestic income
Table 2
Real gross domestic income1 Change Annualized change Year-over-year change
%
First quarter 2009 -3.5 -13.3 -6.6
Second quarter 2009 -0.5 -1.9 -8.3
Third quarter 2009 1.1 4.5 -7.0
Fourth quarter 2009 2.1 8.5 -0.9
2009 -2.6 ... -2.6
...
not applicable
1.
The change is the growth rate from one period to the next. The annualized change is the growth rate compounded annually. The year-over-year change is the growth rate of a given quarter compared with the same quarter in a previous year.
Economy-wide incomes are up

Nominal GDP expanded 2.4% in the fourth quarter, more than double the pace of the previous quarter. Corporate profits increased 9.0%, the second consecutive quarterly increase. Labour income advanced 1.4%, the largest increase since the first quarter of 2008.

The personal saving rate was 4.6%, down from 4.9% in the previous quarter, as growth in outlays outpaced that of income.
Gross domestic product by industry, December 2009

Real GDP increased 0.6% in December, a fourth consecutive monthly advance. Growth was recorded in most major industrial sectors. Goods-producing industries rose 1.0%, largely on the strength of mining and manufacturing. The services-producing industries rose 0.4%, with significant gains in wholesale trade and, to a lesser extent, retail trade. The public sector (health, education and public administration combined), the finance and insurance sector as well as several tourism-related industries also increased in December.
Real gross domestic product increases again in December

The output of the mining sector (+1.6%) grew for a fourth month in a row. Higher prices for natural gas may have helped to bolster support activities for mining and oil and gas extraction (+18%). Oil and gas extraction was up 0.3%. Mining excluding oil and gas extraction rose 1.0%, as a result of a significant increase in miscellaneous non-metallic mineral mines (which include diamond mines).

The output of the manufacturing sector grew 1.0% in December, largely as a result of an 11% increase in motor vehicles and parts manufacturing. Conversely, manufacturers of food products reported declines, while temporary closures led to a decrease in non-metallic mineral products manufacturing.

The volume of wholesaling activities continued to rise in December (+1.5%), reflecting increases in exports, imports and retail trade. The gains were widespread among the trade groups. Value added in retail trade was up 0.7%, with notable increases in general merchandise stores (which include department stores), clothing and accessories stores as well as furniture, home furnishings and electronics stores.

Construction activity grew 0.5% on the strength of residential building construction. Increased activity in the home resale market translated into a 4.1% advance in the output of real estate agents and brokers.
Main industrial sectors' contribution to the percent change in gross domestic product, December 2009
Year-end review, 2009

Real GDP fell 2.6% in 2009, as exports dropped 14% and business investment in plant and equipment fell 17%. Since 1961, the earliest date for which data consistent with the current definition of GDP exist, the only other annual declines were recorded in 1982 (-2.9%) and 1991 (-2.1%).

The year 2009 was characterized by lower production in the first half of the year, essentially no change in the summer months and notable growth in the last four months. The production of goods (-9.2%) dropped for a second consecutive year, while the production of services edged down (-0.1%). All the goods-producing sectors registered lower production, but manufacturing, mining and oil and gas extraction and construction were the largest contributors.

All major categories of goods exports and most major categories of services exports declined. The largest drops were recorded for automotive products (-33%), and industrial goods and materials (-21%).

The volume of imports fell 13% in 2009. Decreases were widespread with notable declines in automotive products (-25%), machinery and equipment (-19%), and industrial goods and materials (-15%).

Final domestic demand recorded a 1.7% decline, largely due to a 17% drop in business investment in plant and equipment. Consumer spending edged up, as a result of a 1.1% increase in expenditures on services. Consumer spending on durable and semi-durable goods declined 2.8% and 2.9% respectively. Government current expenditure on goods and services grew 3.0%, and government capital expenditure increased 13%.

Non-farm inventories were reduced in 2009, by about the same amount as their build-up in 2008.

Labour income edged up 0.1% in 2009. A 42% increase in the receipt of employment insurance benefits contributed to personal income growth of 0.5%.

The personal saving rate increased to 5.0% in 2009, up from 3.7% in 2008. The national saving rate, however, moved down markedly from 12.3% in 2008 to 4.8% in 2009, as saving in the corporate and government sectors declined.

The price of goods and services produced in Canada dropped 1.9% in 2009. There were significant price decreases for gasoline, crude petroleum and natural gas. Final domestic demand prices rose 1.3%, with notable increases in the price of food and industrial machinery.

SOURCE: Statistics Canada