Activities of foreign affiliates

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Sales of goods and services of foreign affiliates of Canadian businesses rose for a fourth consecutive year in 2007. Employment at foreign affiliates grew at a brisk pace in 2007.

Sales of goods and services by Canadian foreign affiliates increased 3.6% in 2007 to $458 billion; this was much slower than the increase of 10.2% in 2006. However, this deceleration was partly related to the re-statement of sales in Canadian dollars. Sales in the home currency of affiliates abroad were actually much stronger in 2007 as the Canadian dollar appreciated strongly during the year.

Robust growth in the mining and oil and gas sectors accounted for over 80% of the increase in total sales of foreign affiliates. Sales in the mining and oil and gas were up 14.3%. However, sales of manufactured goods declined 3.7%, slowing sales of goods to 3.4%. Service sector sales grew at a somewhat faster pace of 4.2%. Once again, the financial sector led the sales gains in the service sector with an increase of 11.5%.

Following a slight decline in 2006, employment in foreign affiliates grew in 2007. This was in line with strong sales, denominated in domestic currency of the affiliates operating abroad.

Employment in the goods-producing industries rose by 12,000 (+1.7%) in 2007 to 698,000, led by the mining and oil and gas extraction industries.

Non-renewable resource extraction industries added a further 16,000 workers in 2007, in light of the strong world markets in those commodities.

Employment in manufacturing industries was reduced by 5,000 workers to 527,000.

After a decline in workers in 2006, the service-producing industries added 39,000 jobs in 2007 to reach 437,000 workers. Gains were concentrated in the information and cultural sector along with the other services category, which includes restaurants, hotels and the entertainment sectors.

Sales and employment growth in United Kingdom and United States affiliates lagged behind that of affiliates in the European Union, other Organisation of Economic Co-operation and Development (OECD) and other reporting countries in 2007. While sales declined slightly in the United States and the United Kingdom, they rose by 6.4% in other European countries and over 10% in the other OECD and other reporting countries; however, part of the difference is attributable to the Canadian dollar conversion effect of weaker domestic currencies in the United States and the United Kingdom. Nevertheless, employment growth was weaker for United States and United Kingdom affiliates, with employment declining by 8.1% in the United Kingdom and up by just under 2% in the United States. On the other hand, employment gains of 10% or more were experienced in some other regions.

Note: The strong growth in Canadian direct investment abroad, evidenced since the mid-1990s, has given rise to interest in understanding the activities of foreign affiliates of Canadian enterprises.

This release provides some perspective on the sales and employment of foreign affiliates, including both industry and geographical detail.

To be consistent with the international practice for measuring the activities of foreign affiliates, also known as Foreign Affiliate Trade Statistics, only the data on majority-owned foreign affiliates are included. For operational reasons, depository institutions and foreign branches of firms are excluded from the estimates. Sales and employment figures of majority-owned foreign affiliates represent 100% of the sales and employment, even if the Canadian ownership is less than 100%.

Available on CANSIM: tables 376-0060 and 376-0061.

Definitions, data sources and methods: survey number 1539.

For more information, contact Client Services (613-951-1855; infobalance@statcan.gc.ca). To enquire about the concepts, methods or data quality of this release, contact Bruce Nichols (613-951-5665; bruce.nichols@statcan.gc.ca), Balance of Payments Division.