CA: Monthly GDP

Tue Oct 31 07:30:00 CDT 2017

Consensus Actual Previous
Month over Month 0.1% -0.1% 0.0%
Year over Year 3.5% 3.8%

August monthly gross domestic product was down 0.1 percent after being essentially unchanged the month before. Expectations had been for an increase of 0.1 percent. Declines in manufacturing and mining &quarrying and oil & gas extraction more than offset increases in most other sectors (12 out of 20). The data indicate that the Bank of Canada was correct in its assessment of the economy in its decision not to increase its policy interest rate after two consecutive increases.

Goods producing industries contracted for the second consecutive month, declining 0.7 percent in August in part due to temporary reduced capacity in the manufacturing and the mining, quarrying & oil & gas extraction sectors. Services producing industries edged up 0.1 percent. Following a 0.2 percent dip in July, the manufacturing sector contracted 1.0 percent in August as both durable and nondurable manufacturing declined. Nondurable manufacturing decreased 2.0 percent following three consecutive months of growth as the majority of subsectors registered declines. There were notable decreases in manufacturing of petroleum & coal products and plastic & rubber products. Food & beverage & tobacco product manufacturing were the only nondurable subsectors to increase.

Durable manufacturing declined 0.1 percent as 6 of 10 subsectors contracted. Mining & quarrying (except oil and gas) expanded 2.5 percent in August. After growing 2.0 percent in July, wholesale trade gained 0.4 percent in August as five of nine subsectors grew. The retail trade sector posted a 0.4 percent decline as its 12 subsectors were evenly split between increases and decreases. The finance & insurance sector posted a gain of 0.2 percent, following a 0.6 percent decline in July, which was the largest in two years. Transportation & warehousing grew 0.2 percent as four of nine subsectors increased. The construction sector declined for a second consecutive month, edging down 0.1 percent in August. The declines in July and August have only given back part of June's 1.8 percent increase.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. In contrast to most industrialised countries a monthly estimate is provided derived from the value added by labour and capital in transforming inputs purchased from other producers into that industry's output. Data for the reference month are usually released close to the end of the second month after the reference period.

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.