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Gross domestic product by income and by expenditureFirst quarter 2004
Economic growth slowed to 0.6% in the first quarter from 0.8% in the previous quarter. Renewed strength in consumer spending, a pick up of business investment, and higher exports contributed to economic growth. Final domestic demand grew 1.2%, double the pace of the previous quarter. Inventories were built up, but at a much slower pace than in the previous seven quarters. GDP grew 0.6% in the first quarter The Canadian economy grew at an annualized rate of 2.4% in the first quarter, down from 3.3% in the fourth. For comparison, the US economy grew at an annualized rate of 4.4% in the first quarter, similar to the 4.1% posted in the last quarter of 2003. Economy-wide prices as measured by the chain price index for GDP rose 1.2%, the fastest rate in four quarters. Excluding energy, the index was up 0.8%. Real Gross domestic product, chained (1997) dollars1
Consumer spending reboundsConsumer spending increased 1.3% in the first quarter compared to the flat 0.2% posted in the fourth. Purchases of semi-durable goods (+3.7%) and durable goods (+1.9%) recorded the strongest gains. Purchases of clothing and footwear jumped 4.1%, the strongest advance in decades. Consumer spending bounced back Purchases of furniture, furnishings and household equipment increased a substantial 3.2%, helped by the boom in housing and home renovations. Consumers spent 4.4% more on household appliances and 3.8% more on semi-durable household furnishings. Spending on recreation, entertainment, education and cultural services increased 1.4% after a flat fourth quarter. While at a decade high, expenditures by Canadians travelling abroad slowed considerably, following two very strong quarters. Trips to the US slowed, while trips overseas declined. Food and non-alcoholic beverage consumption was up 1.1%, more than twice the pace in the fourth quarter, helped by lower food prices over the winter months. Consumers also spent more on medical care and health services, notably drugs and pharmaceutical products (+3.7%). Demand for motor vehicle repairs and parts increased 5.9% in the first quarter, helping boost consumer spending on transportation and communication. Consumers purchased more new and used motor vehicles (+0.6%) than in the fourth quarter when their outlays dropped off significantly (-9.3%). Despite lucrative financial incentives, the purchases of new passenger cars declined again but not as sharply, while purchases of new trucks and vans were up. Purchases of motor vehicles edged up Labour income makes gainsLabour income increased 0.8% in the first quarter, in line with the growth posted over the previous two quarters. Wage bills increased in the mining, oil, and gas extraction industries (+2.2%), but edged up in manufacturing (+0.2%) and public administration (+0.4%). Few new workers were added to the labour force as employment growth decelerated in the first quarter to 0.3% from 0.9% in the fourth, mostly due to a reduction in part-time jobs. Employment advanced 0.5% in Ontario, despite some company restructuring, short-term plant shutdowns, and a work stoppage in February and March in rail transportation. Personal disposable income increased 1.1% in the first quarter. With consumer spending (at current prices) increasing faster, the saving rate fell to 0.5% from 1.3% in the previous quarter. Household borrowing increased, and the debt-to-income ratio rose to 103.8 (i.e., households carried one dollar and four cents of debt for each dollar of disposable income). Corporate profits reach record highCorporate profits posted a healthy 6.1% increase in the first quarter, to reach a record high, driven by strength in the mineral fuels and manufacturing industries. Government business enterprise profits were also up markedly with the strength coming mainly from provincial government owned electric-power utilities. The net lending position of corporations improved notably, due in part to weak investment in fixed capital and a selling off of inventories. Business investment in housing remains strongHistorically low mortgage rates and robust growth in personal disposable income continued to fuel the housing market. Business investment in residential structures increased 3.4% in the first quarter, up from 2.1% in the fourth. Expenditures on new housing construction, alterations and improvements, and transfer costs all increased. Sales of single dwellings were up 5.2%, while multiple dwellings were up 8.3%. Investment in housing remained strong Business investment in machinery and equipment picks upBusiness investment in machinery and equipment was up 1.6% in the first quarter, after growing 0.8% in the previous quarter, spurred in a large part by purchases of industrial machinery and telecommunications equipment. In contrast business investment in non-residential structures declined by 1.1%, mainly due to a 3.1% decline in building construction, such as office towers and shopping malls. Overall, business investment in plant and equipment slowed to 0.5% in the first quarter from 0.8% in the fourth. Non-farm inventories drawn downAlmost all businesses, except for wholesalers, reduced inventories in the first quarter. Retailers reduced inventories of both durable and non-durable goods as a result of increased consumer spending. Retailers of motor vehicles substantially reduced their inventories, while wholesalers accumulated motor vehicles. Inventories in utilities were also down on higher export demand. Demand for exports continues to recoverExports grew 1.5% in the first quarter, continuing the recovery in foreign demand established in the previous quarter. Higher exports coupled with weak imports boosted the surplus on trade in goods and services (at current prices) by 30%. Substantial increase in trade surplus The increase in exports was driven by 6.2% increases in shipments abroad of both machinery and equipment and energy products, especially natural gas. Exports of industrial goods and materials were up 1.4%, following upon the strong 6.7% growth posted in the previous quarter. Energy sector sustained export growth The demand for forestry products rebounded 0.9% from a decline of 0.4% in the fourth quarter, spurred by expansion of the US housing market. The demand for automotive products remained very weak throughout 2003, with the exception of the fourth quarter, and slipped again in the first quarter (-1.2%). Imports flatImports increased by only 0.1%, as shipments from abroad were down for many products, except agriculture and fish products, industrial goods and materials and machinery and equipment. Machinery and equipment imports were up 2.7%, the best showing in four consecutive quarters of gains. Import demand for energy products dropped off 1.1% in the first quarter, following two strong quarters. Statistical tables
Information on methods and data quality available in the Integrated Meta Data Base: 1804, 1901 and 2602. |
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