CA: Monthly GDP

Thu Mar 29 07:30:00 CDT 2018

Consensus Actual Previous
Month over Month 0.1% -0.1% 0.1%
Year over Year 2.7% 3.3%

January real gross domestic product edged down a monthly 0.1 percent, offsetting part of the 0.2 percent growth in December. Expectations were for a minimal increase of 0.1 percent. The decline was mainly the result of lower output of non-conventional oil extraction and decreased activity in real estate. The 20 industrial sectors were evenly split between increases and decreases. The last time monthly GDP contracted was in August 2017. On the year, GDP was up 2.7 percent after increasing 3.4 percent in December.

The output of services-producing industries was essentially unchanged in January, as a decline in real estate and rental and leasing was offset by increases in the wholesale, retail, and finance and insurance sectors. This was the weakest monthly growth for services-producing industries in more than a year. Oil and gas extraction declined 3.6 percent on the month following two months of growth. Unscheduled maintenance shutdowns at some facilities contributed to a 7.1 percent drop in non-conventional oil extraction. Conventional oil and gas extraction was down for the third consecutive month, contracting 0.5 percent on lower crude petroleum and natural gas extraction.

The output of real estate agents and brokers dropped 12.8 percent, its largest monthly decline since November 2008. This more than offset the increases of the previous five months. Home resale activity was down in most Canadian markets, as new mortgage lending rules, including stress-testing for uninsured mortgages, announced in October 2017 took effect in January 2018. Retail trade was up 0.2 percent with its 12 subsectors evenly split between increases and decreases. The construction sector was up 0.5 percent, with increases in the majority of subsectors. The finance and insurance sector grew 0.3 percent in January.

Manufacturing was up 0.7 percent in January, the third increase in four months after having declined in December. The January gain came from a 1.6 percent increase in non-durable manufacturing, while durable manufacturing was essentially unchanged as 4 of 10 subsectors contracted in January.

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.