CA: Monthly GDP

Wed Jan 31 07:30:00 CST 2018

Consensus Actual Previous
Month over Month 0.0% 0.4% 0.0%
Year over Year 3.5% 3.4%

November monthly GDP increased a more than anticipated 0.4 percent. Growth was widespread across industries as 17 of 20 industrial sectors increased. On the year, monthly GDP was up 3.5 percent. This report will undoubtedly attract attention from the Bank of Canada in its assessment of the economy for its next rate meeting in March.

Goods-producing industries rose a monthly 0.8 percent after declining 0.5 percent in October. The gain was mainly due to increases in the manufacturing and mining, quarrying and oil and gas extraction sectors partly as a result of restoration in production capacity. Meanwhile, services-producing industries rose 0.3 percent, led by the real estate and rental and leasing, wholesale, and retail trade sectors.

Manufacturing was up 1.8 percent, the largest monthly increase since February 2014 as the majority of subsectors grew. Non-durable manufacturing rose 1.1 percent, while durable manufacturing jumped 2.5 percent. The rise in durable manufacturing, the largest monthly increase since December 2011, was led by a 6.5 percent increase in transportation equipment. Non-durable manufacturing was up for the sixth time in seven months in large part due to the 5.3 percent expansion of chemical manufacturing following three months of declines.

Following 1.2 percent growth in October, retail trade was up 0.6 percent in November as 7 of 12 subsectors increased. Electronics and appliance stores gained along with clothing and clothing accessories and general merchandise stores. Wholesale trade increased for the fourth time in five months, rising 0.5 percent as eight of nine subsectors grew. After four consecutive months of decline, the finance and insurance sector grew 0.3 percent in November. Also advancing were transportation and warehousing.

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.