Canadian economic accounts, first quarter of 2014 and March 2014
Real gross domestic product (GDP) rose 0.3% in the first quarter, following 0.7% growth in the fourth quarter of 2013. This was the smallest increase since the fourth quarter of 2012. On a monthly basis, real GDP by industry edged up 0.1% in March.
Final domestic demand was down 0.1% in the first quarter, as lower business gross fixed capital formation offset increased household final consumption expenditure. Government final consumption expenditure was 0.1% lower.
Household final consumption expenditure rose 0.3%, the smallest gain in four quarters. Increased spending on non-durable goods (+1.0%) more than offset decreased spending on durable and semi-durable goods. Outlays on services were up 0.2%.
Business gross fixed capital formation was down 0.9%, the third decrease in five quarters. Business gross fixed capital formation in residential structures declined 1.6%, with new home construction (-1.5%) and ownership transfer costs (-6.4%) both down. Business investment outlays on plant and equipment decreased 0.5%.
Businesses investment in inventories was $16.4 billion in the first quarter, down from $16.8 billion in the previous quarter, primarily as a result of lower investment in farm inventories.
Exports fell 0.6% despite a 3.8% increase in exports of energy products. Exports of goods were 0.8% lower while those of services rose 0.6%. Imports of goods and services fell 1.9%.
The output of goods-producing industries rose 0.6% in the first quarter while the output of service industries grew 0.3%.
Mining and oil and gas extraction was up 2.4% in the first quarter, while utilities rose 1.2%. Increases were also recorded in the finance and insurance sector, the public sector (education, health and public administration combined), accommodation and food services, manufacturing and retail trade.
A notable decline was recorded in the agriculture and forestry sector in the first quarter, mainly as a result of lower crop production. The arts and entertainment sector (-3.4%) also decreased, in large part as a result of the participation of National Hockey League players in the Sochi Winter Olympics, which resulted in fewer hockey games played in Canada in the first quarter.
Construction edged down 0.1% and professional services declined. Wholesale trade was unchanged.
Expressed at an annualized rate, real GDP expanded 1.2% in the first quarter. By comparison, real GDP in the United States declined 1.0%.
Household spending slows
Household final consumption expenditure increased 0.3% in the first quarter, half the pace of the previous quarter and the slowest pace since the first quarter of 2013. Lower expenditures on clothing and footwear (-1.7%) and on vehicle purchases (-1.1%) hampered overall growth.
Outlays on goods grew 0.4% as non-durable goods were up 1.0%, mainly as a result of increased spending on electricity, gas and other fuels (+2.1%). Expenditures on durable goods (-0.1%) and semi-durable goods (-1.0%) were lower.
Expenditures on services (+0.2%) decelerated, as spending by Canadians abroad (-2.9%) and food and beverage services (-0.6%) declined.
Business investment in plant and equipment down
Business gross fixed capital formation in non-residential structures, machinery and equipment fell 0.5% in the first quarter, the second quarterly decrease.
Investment in non-residential structures grew 0.1%, driven by increased outlays on engineering structures (+0.4%).
Investment in machinery and equipment decreased 1.5%. Computers and computer peripheral equipment (-4.1%) and medium and heavy trucks, buses and other motor vehicles (-3.5%) were the main contributors to the decrease. Outlays on industrial machinery and equipment were up 0.9%, following five quarters of decline.
Slowdown in business inventory accumulation
Businesses increased inventories by $16.4 billion in the first quarter, down from $16.8 billion in the fourth quarter of 2013. Retail trade inventory accumulation was lower in the first quarter.
Wholesalers, on the other hand, significantly added to their stocks of durable goods during the quarter (+$9.6 billion) compared with last quarter (+$243 million). Manufacturers' inventories increased by $2.8 billion. Accumulation of farm inventories, at $1.2 billion, was lower than in the previous quarter, primarily as a result of slower inventory accumulation of grains.
Housing demand decreases
Business investment in residential structures fell 1.6% in the first quarter, the second consecutive quarterly decline. The value of new home construction fell 1.5%, following a 1.3% increase in the fourth quarter of 2013.
Expenditures on renovation increased 0.8%, recovering from the 0.8% decline in the previous quarter. Resale activity (-6.4%), as reflected in ownership transfer costs, posted a second consecutive quarterly decline.
Exports of goods and services fell 0.6% in the first quarter, after five consecutive quarters of growth.
Exports of goods declined 0.8% following a 1.0% increase in the previous quarter. Motor vehicles and parts (-7.4%), basic and industrial chemical, plastic and rubber products (-6.2%) and forestry products and building and packaging materials (-3.7%) were the major contributors to the decline.
Exports of energy products rose 3.8%, a third consecutive quarterly increase. Higher exports of crude oil and crude bitumen (+6.0%) and natural gas, natural gas liquids and related products (+5.6%) contributed the most to the increase in the first quarter. Exports of aircraft and other transportation equipment and parts (+5.2%) were also up.
Exports of services increased 0.6% as a result of higher exports of commercial services (+1.6%). Exports of transportation services were down 1.4%.
Imports of goods and services fell 1.9% in the first quarter, following a 0.4% increase in the previous quarter.
Imports of goods declined 1.9%. Motor vehicles and parts (-4.8%), basic and industrial chemical, plastic and rubber products (-6.5%) and aircraft and other transportation equipment and parts (-10.1%) contributed the most to the decline.
Imports of metal and non-metallic mineral products (+4.5%) increased, after two consecutive quarters of decline. Imports of industrial machinery, equipment and parts (+3.1%) also rose during the quarter.
Imports of services fell 1.5%, the third consecutive quarterly decline, with travel services down 3.2%.
Economy-wide income expands at faster pace
Nominal GDP increased 1.7% in the first quarter, the fastest pace since the third quarter of 2011. The rising price of energy products contributed to the increase in nominal GDP.
Compensation of employees rose 1.2% in the first quarter following a 1.1% gain in the previous quarter. Overall, wages and salaries increased 1.0%. Wages and salaries were up in services-producing industries (+1.1%) and goods-producing industries (+0.7%).
The net operating surplus of corporations was up 5.8% in the first quarter after declining 0.3% in the previous quarter. The net operating surplus of non-financial corporations rose 6.2% while that of financial corporations was up 1.7%.
Household saving rate increases
The household saving rate was 4.9% in the first quarter, up from 4.8% in the previous quarter, with disposable income increasing at a slightly faster pace than household final consumption expenditure (in current dollars).
The household debt service ratio, defined as household mortgage and non-mortgage interest paid divided by disposable income, declined to 6.97%, its sixth consecutive quarterly decline.
The national saving rate was 5.0% in the first quarter, up from 4.3% in the previous quarter. The increase was mostly the result of higher savings of non-financial corporations.
Terms of trade strengthen
The terms of trade, measured by export prices relative to import prices, strengthened in the first quarter, contributing to the 0.6% increase in real gross domestic income.
Export prices were up 5.3% in the first quarter, the largest increase since the second quarter of 2008. Import prices rose 4.1%, the largest increase since the fourth quarter of 2008. The overall price of goods and services produced in Canada increased 1.3% following 0.1% growth in the previous quarter.
Gross domestic product by industry, March 2014
Real gross domestic product edged up 0.1% in March, after increasing 0.2% in February.
The output of goods-producing industries rose 0.3% in March, mainly as a result of increased mining and oil and gas extraction. Utilities and manufacturing also advanced. These gains were partly offset by declines in construction and the agriculture and forestry sector.
The output of service industries edged up 0.1% in March. Increases in the arts and entertainment sector and the finance and insurance sector outweighed declines in retail trade and accommodation and food services. The public sector (education, health and public administration combined) and wholesale trade were unchanged in March.
Mining and oil and gas extraction grew 0.9% in March, a third consecutive monthly increase. Oil and gas extraction advanced 0.6% as a result of higher oil production. Mining and quarrying (excluding oil and gas extraction) grew 1.1%, mainly as a result of increases in coal and metal ore mining. Support activities for mining and oil and gas extraction rose 1.9%, owing to a gain in rigging services.
Manufacturing output grew 0.3% in March. Durable-goods manufacturing rose 0.2%, mainly because of increases in non-metallic mineral products, machinery and primary metal products. Non-durable goods manufacturing was up 0.4%. Increases in food and chemical manufacturing outweighed the declines in petroleum and coal products, beverage and tobacco products and printing and related support activities.
The arts and entertainment sector increased 5.6% in March, after declining 5.1% in February. This was mostly due to a rebound in the number of hockey games played in Canada in March following the participation of National Hockey League players in the Sochi Winter Olympics in February.
Retail trade declined 0.4% in March, after increasing 0.3% in February. Notable declines were recorded at motor vehicles and parts dealers and general merchandise stores (which include department stores). Wholesale trade was unchanged in March, after two consecutive monthly increases.
Construction was down 0.2% as a result of declines in residential building and repair construction. The output of real estate agents and brokers increased 2.0%, as activity in the home resale market rose.
The agriculture and forestry sector fell 0.7%, mainly as a result of lower crop production.
Utilities increased 0.9%, as demand for both electricity and natural gas grew.
Transportation and warehousing services edged up 0.1% in March. Increased rail transportation services more than offset the decline in trucking services.
The finance and insurance sector rose 0.2% as a result of increases in banking and financial investment services.
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Detailed analysis and tables
The System of macroeconomic accounts module, accessible from the Browse by key resource module of our website, features an up-to-date portrait of national and provincial economies and their structure.
Links to other releases from the national accounts can be found in the first quarter 2014 issue of Canadian Economic Accounts Quarterly Review, Vol. 13, no. 1 (Catalogue number13-010-X). This publication is now available from the Browse by key resource module of our website under Publications. This publication will be updated on June 19, at the time of the release of the national balance sheet and financial flow accounts.
Real gross domestic product by expenditure account, quarterly change – Seasonally adjusted at annual rates, chained (2007) dollars
Real gross domestic product by expenditure account, annualized change – Seasonally adjusted at annual rates, chained (2007) dollars
Real gross domestic product by expenditure account, year-over-year change – Chained (2007) dollars
Monthly gross domestic product by industry at basic prices in chained (2007) dollars – Seasonally adjusted
Quarterly gross domestic product by industry at basic prices in chained (2007) dollars – Seasonally adjusted
Note to readers
The Canadian System of macroeconomic accounts is implementing a new revision policy. Annual revisions, which affect the three most recent calendar years, will take place in November rather than May, as was previously the practice. In addition, comprehensive revisions (for which the time series is open beyond three years) will occur on a more frequent basis. The next annual and comprehensive revisions are planned for November 2014. For more information see Latest Developments in the Canadian Economic Accounts (Catalogue number13-605-X).
For more information on seasonal adjustment, see "Seasonal adjustment and identifying economic trends."
Percentage changes for expenditure-based and industry-based statistics (such as personal expenditures, investment, exports, imports and output) are calculated from volume measures that are adjusted for price variations. Percentage changes for income-based and flow-of-funds statistics (such as labour income, corporate profits, mortgage borrowing and total funds raised) are calculated from nominal values; that is, they are not adjusted for price variations.
There are four ways of expressing growth rates for gross domestic product (GDP) and other time series found in this release.
1. Unless otherwise stated, the growth rates of all quarterly data in this release represent the percentage change in the series from one quarter to the next, such as from the fourth quarter of 2013 to the first quarter of 2014.
2. Quarterly growth can be expressed at an annual rate by using a compound growth formula, similar to the way in which a monthly interest rate can be expressed at an annual rate. Expressing growth at an annual rate facilitates comparisons with official GDP statistics from the United States. Both the quarterly growth rate and the annualized quarterly growth rate should be interpreted as an indication of the latest trend in GDP.
3. The year-over-year growth rate is the percentage change in GDP from a given quarter in one year to the same quarter one year later, such as from the first quarter of 2013 to the first quarter of 2014.
4. The growth rates of all monthly data in this article represent the percentage change in the series from one month to the next, such as from February to March 2014.
Data on gross domestic product by industry for April will be released on June 30.
Revised gross domestic product by income and by expenditure accounts for the first, second, third and fourth quarters of 2013 is now available, along with those for the first quarter of 2014. These data incorporate new and revised source data and updated data on seasonal patterns.
Data on gross domestic product by income and by expenditure for the second quarter will be released on August 29. For more information, consult the Guide to the Income and Expenditure Accounts (Catalogue number13-017-X).
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