Canada: Gross domestic product by industry, August 2018

Real gross domestic product rose for a seventh consecutive month, edging up 0.1% in August. Growth was concentrated in oil and gas extraction and finance and insurance, which more than offset declines in 12 of 20 industrial sectors.

The output of services-producing industries edged up 0.1%, while output was essentially unchanged for goods-producing industries.

Higher oil and gas extraction pushes up the mining, quarrying, and oil and gas extraction sector

The mining, quarrying and oil and gas extraction sector posted the largest increase in activity in August, rising 0.9% to nearly offset the declines in the two previous months.

The oil and gas extraction subsector was up 1.9%, led by a 3.2% rise in non-conventional oil extraction as crude bitumen and total crude production in Alberta reached record levels. Conventional oil and gas extraction (+0.8%) was up for the third month in a row, largely as a result of growth in natural gas extraction.

Mining and quarrying excluding oil and gas extraction was down 1.8% in August following three months of growth. Metal ore mining fell 5.9% as the majority of industries contracted. Contributing the most to the decline was a 13.7% drop in copper, nickel, lead and zinc mining, with the industry’s output contracting for the 11th time in 12 months as some producers continued to adjust their production levels. Mine output for copper and nickel for August was at its lowest level since the beginning of 2010. Non-metallic mineral mining rose 2.9% as all industries expanded in August, led by an export-driven 3.4% expansion in potash mining. Coal mining edged up 0.1%.

Support activities for mining and oil and gas extraction were down for a fourth consecutive month, contracting 3.8% on lower activity by drilling and rigging services.

The finance and insurance sector rises as bond and equity markets grow on higher market activity

Following a 0.4% decline in July, the finance and insurance sector rose 1.0% in August, the largest monthly gain since May 2017. Increased activity in bond and equity markets was a factor in the growth of depository and credit intermediation services (+1.4%) and financial investment services, funds and other financial vehicles (+2.8%). Insurance carriers and related activities were down 0.6%, continuing the decline that began in March 2018.

Real estate continues to grow as home resale activity increases

The real estate and rental and leasing sector rose 0.3% in August. The output of offices of real estate agents and brokers (+2.0%) was up for the third month in a row. Home resale activity increased across the country, led by Ontario, Quebec, British Columbia and Alberta. However, the output of the offices of real estate agents and brokers remained 16.7% lower than the December 2017 level, just before new mortgage lending rules came into effect in January 2018.

Manufacturing declines as majority of subsectors contract

Following two months of growth, the manufacturing sector contracted 0.6% in August as both durable and non-durable manufacturing declined.

Durable manufacturing was down 0.9% as 7 of 10 subsectors decreased. Transportation equipment was down 1.5% as motor vehicle assembly contracted 1.9%, largely due to atypical shutdowns at some assembly plants in August. This decrease in assembly activity was also a factor in the 5.0% decline in motor vehicle parts manufacturing. Fabricated metal products (-2.0%) and primary metal manufacturing (-1.9%) were down as international demand slowed down in August.

Non-durable manufacturing was down 0.2%. Declines in chemical (-2.7%), petroleum and coal products (-3.3%), food manufacturing (-1.3%) and print and related support activities (-4.1%) were almost fully offset by growth in plastic and rubber products (+8.4%), beverage and tobacco (+4.3%) and textile, clothing and leather manufacturing (+4.4%).

The construction sector declines as new housing slows down

The construction sector was down 0.4% in August, contracting for the fourth time in five months.

Following declines of 0.4% in June and 2.6% in July, residential construction decreased a further 1.6% in August as single, semi-detached and row houses construction declined. August’s level of activity reflects the largest decline in residential construction over a three-month period since the beginning of 2009. Non-residential construction was essentially unchanged as growth in industrial and commercial construction was offset by a decline in public construction. Repair construction declined 0.3% while engineering and other construction activities rose 0.5%.

Transportation and warehousing declines

Transportation and warehousing was down 0.5% in August, following six months of growth, as the majority of subsectors declined. Rail transportation decreased 3.8% due to lower rail movement of petroleum, chemicals, metals and minerals, automotive products and intermodal freight. Trucking (-0.5%), water transportation (-1.0%) and support activities for transportation (-0.7%) declined, while pipeline transportation grew 0.6%, reflecting a 1.5% increase in pipeline transportation of natural gas. Warehousing and storage (+2.9%) was up for the fifth month in a row.

Other industries

Utilities rose 0.8% in August following a 1.2% increase in July, Electric power generation, transmission and distribution was up 1.0%, as continued warm weather across many parts of the country followed a record-breaking heatwave in July, increasing electricity demand for cooling purposes. Natural gas distribution edged up 0.1%.

Professional services (+0.3%) were up for the seventh month in a row with increases in most industry groups.

The public sector was up 0.2% with all three components (education, health care and public administration) increasing.

Wholesale trade edged down 0.1% in August as five of nine subsectors decreased. With the decline in August, the wholesale trade sector continued its sequence of increases alternating with smaller declines since the beginning of 2018. The wholesaling of motor vehicles and parts (-2.2%) was down for the fourth time in five months as both exports and imports of motor vehicles and parts declined.

Retail trade declined 0.2% in August, the fourth decrease in five months, as 7 of 12 subsectors contracted. Among store types associated with back-to-school sales, there were decreases in clothing and clothing accessories stores and electronics and appliance stores, while sales at general merchandisers and sporting goods, hobby, book and music stores increased.

Accommodation and food services were essentially unchanged for the second consecutive month in August. Accommodation services were up 0.5%, reflecting an increase in overseas travel to Canada. Food services and drinking places were down 0.2%.

StatsCanada

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell