CA: Monthly GDP

Tue Sep 01 07:30:00 CDT 2015

Consensus Actual Previous
Month over Month 0.2% 0.5% -0.2%
Year over Year 0.6% 0.5%

The economy in June expanded for the first time since the end of 2014. In fact, a 0.5 percent monthly rise in total output was comfortably stronger than expected and enough to see annual growth creep up from 0.5 percent to 0.6 percent.

The surprising buoyancy was achieved in large part via a healthy 0.9 percent monthly jump in output from goods producing industries. Within this, manufacturing saw a 0.4 percent gain, mining, quarrying, and oil and gas extraction grew fully 3.1 percent and agriculture was up 0.5 percent. However, construction declined 0.6 percent and utilities were just 0.1 percent firmer.

Services expanded 0.3 percent, underpinned by a 1.0 percent rise in wholesale trade and a 6.4 percent surge arts, entertainment and recreation. Finance and insurance (0.7 percent) and management of companies and enterprises (1.5 percent) also fared well. Other rises were relatively small but only administrative and support, waste management and remediation services (0.1 percent) and public administration ( 0.2 percent) posted outright declines.

June's pick-up in activity was not enough to prevent the economy from tipping into technical recession (see today Q2 GDP calendar entry) but at least it provides a usefully positive handoff for the third quarter. This is probably just as well for with a soft July employment report already in the bag and oil prices still soft and very volatile, growth could yet struggle to get going on a sustainable basis near-term.

Gross domestic product by industry is the value added by labor and capital in transforming inputs purchased from other producers into that industry's output. Monthly GDP consists of chained volume estimates with 2007 as the reference year. This means that the data for each industry and each aggregate are obtained from a chained volume index multiplied by the industry's value added in 2007.

Instead of producing an advanced quarterly GDP figure and revising it the following two months, Statistics Canada releases monthly estimates of real GDP at Basic Prices. This release breaks down real output by seven goods-producing industries and twelve service-producing industries, and includes special aggregations such as business sector, non-business sector, and industrial production.

The sources of data used for monthly and quarterly estimates often differ and leads to very different estimates for certain items, such as price deflators. As a result, the monthly figures are not perfectly correlated with the quarterly numbers. However, the monthly data do give some idea of where the quarter is headed and especially in an uncertain environment, they are closely watched. While industrial production is closely watched in the U.S., it is not in Canada especially since the economy has become increasingly dominated by services. However, the goods sector is more vulnerable to wide swings in output compared to services, and exports remain dominated by industrial output.