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The Daily. Friday, December 22, 2000

Gross domestic product at factor cost by industry

Gross domestic product advanced 0.5% in October, after levelling off at the end of the third quarter. The economy's resilience paralleled renewed employment growth in recent months. If the economy were flat for the remainder of the year, economic growth in 2000 would show a 4.6% annual gain.

Industries providing telecommunications products and services returned to their leading role in the expansion of the economy after an uncharacteristic decline in September. The economy was also bolstered by a broad-based gain in manufacturing output, as well as by increases in wholesaling and business services. However, a sharp decline in auto sales led to lower retail activity. Logging activity fell for a third consecutive month in October, bringing the industry back to production levels encountered early in the year. Construction output eased back slightly, capping four months of gains.

Resurgent electronics production led broad-based manufacturing increase

Total manufacturing production rose 1.3% on a broad-based gain that saw inventories continue to rise after building up in the third quarter. Manufacturing output was led by the electrical and electronic equipment industry, but was also buoyed by increased production of wood, plastic and primary metal products. The automotive industry, traditionally the engine of growth in manufacturing, saw only a modest gain. These increases were partly offset by declines in the rubber and beverages industries. Overall, 17 of 22 major industry groups, accounting for almost 90% of total manufacturing production, advanced in October.

Note to readers The gross domestic product of an industry is the value added by labour and capital in transforming inputs purchased from other producers into outputs. Monthly gross domestic product by industry is valued at 1992 prices. The estimates presented here are seasonally adjusted at annual rates.

After a decline in September, output of electrical and electronic products rose 3.2% in October, the ninth increase in 10 months. Output of telecommunications equipment rose the most, but significant gains were also reported by makers of other electronic products, the latter being related to new product launches. The electrical and electronic products industry has accounted directly for 75% of the manufacturing sector's growth so far this year.

Production of autos was flat in October, reflecting the marked slowdown in auto sales in the United States, the destination of about 90% of Canadian-produced vehicles. Parts production rose 1.3%, however, partly offsetting a September decline. Auto sales in the United States fell in both October and November, in tandem with a sharp drop in consumer purchase intentions. High inventory levels have led to production cutback announcements in the auto industry, which began to be implemented in November.

The wood product industries regained some of the ground lost since March; production rose 3.0% in October. An upswing in home-building in Canada and recent stability in U.S. housing starts after a precipitous decline in the first half of the year provided a much-needed respite to Canadian wood product manufacturers.

In an effort to cut back bloated inventories, wood producers had curtailed production sharply in recent months. Sash and door producers swung back with a 3.9% increase and sawmills' output came up 2.7% from some of the lowest levels seen since early 1999. Despite the latest increase, multi-year low prices meant that many sawmills were producing at or below break-even points in October. The glut in wood products had a negative impact on the logging industry, where production fell for a third consecutive month.

Pulp and paper mills posted yet another month of record production, on the strength of back-to-back increases in pulp production. Production in the non-ferrous smelting industries bounced back from a September shutdown, helping to lift the primary metal products industry by 2.0%. Plastics production rose 4.9% in October, primarily on higher output of other plastic products.

Wholesale gain erased previous months' declines

Wholesalers more than made up for two lacklustre months, posting a 1.4% increase in activity in October. Distributors of food, motor vehicles and parts and other products such as agricultural chemicals, seeds, newsprint and toys rebounded from declines in September, while receipts from computer and software sales continued to grow strongly for a second consecutive month. However, wholesalers of hardware and building products saw demand drop for the fifth time so far in 2000, leaving both of these store types at or below the levels of activity achieved at the beginning of the year.

Slump in auto sales slowed retail

Retail sales fell 0.5% in October, as sharply lower traffic at auto dealer showrooms more than offset higher sales at department and grocery stores. The year 2000 has seen the most significant decline in auto prices since 1991, as generous incentives were used to attract consumers to showrooms. With fewer incentives to sustain them, sales of cars and trucks plunged in October. Sales of larger gas-guzzling vehicles were the hardest-hit, although sales of cars also declined. Department stores were significantly busier in October, erasing a two-month slide, while grocery store sales increased after two flat months.

Engineering and scientific firms behind increase in business services

Business services advanced 1.3% in October. Almost half of the growth originated in firms providing architectural, engineering and scientific services, but most categories of business service firms enjoyed a good month. However, for the first time in seven months, computer service providers did not figure prominently in overall business services growth, as their output rose only marginally.

Exploration services buoyed mining

Mining sector output rose 0.9% in October, buoyed by a sharp increase in drilling and rigging activity. After poor weather conditions had dampened exploration activity in recent months, a return to more normal temperatures caused the number of rigs drilling in Western Canada to rise sharply. However, an unplanned extension of maintenance work helped keep a lid on oil production in October.

Modest slowdown capped recent construction gains

Output in the construction industry, essentially unchanged in September, fell 0.2% in October on continued weakness in non-residential construction and a modest reversal in residential building activity. The decline in work on non-residential projects was the third monthly drop in a row. This came after a slip in the value of building permits, especially for commercial building projects, where activity has consistently fallen since April 2000. October's modest decline in home-building activity followed three robust increases, as the industry bounced back from strike-induced period of weakness in the spring.

Other industries

Financial services output was up 0.7% in October, boosted by higher volumes of stock market activity. The telecommunications services industries were buoyed by increased long-distance use. The production of electricity turned down for a second month, reflecting mild October weather.

Available on CANSIM: matrices 4677-4681.

The October 2000 issue of Gross domestic product by industry (15-001-XIE, $11/$110) is scheduled for release in January 2001. A print-on-demand version is available at a different price. See How to order products.

To purchase data, contact Yolande Chantigny (1-800-887-IMAD; imad@statcan.gc.ca). For more information, or to enquire about the concepts, methods or data quality of this release, contact Richard Evans (613-951-9145; evanric@statcan.gc.ca), Industry Measures and Analysis Division.

Gross domestic product at factor cost by industry, 1992 prices