Gross domestic product by industry

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June 2007

Economic activity increased 0.2% in June, its average pace since the beginning of the year, after growing 0.3% in May and remaining essentially unchanged in April. Both the goods- and service-producing industries advanced. Significant increases in natural gas extraction and a rebound in oil and gas exploration largely contributed to the overall growth. Gains were also registered in construction, the financial sector and in personal and business service industries, notably the gambling industry and food services. These increases were partially offset by declines in manufacturing, retail trade, agriculture, forestry, as well as utilities.

Chart C.1 Economic activity moves ahead

Energy sector continues to seesaw

The energy sector advanced 1.5% in June, after declining in May. Natural gas extraction grew sharply helped by the strengthening of demand in the United States and the return to normal levels of storage in both countries. Domestic demand stayed relatively stable over the last several months. Crude oil production rose slightly. Oil and gas exploration grew strongly (+10%) after three months of significant decline, but its level is about a third lower than that of January. Electricity production slipped 0.3%.

The output of the mining sector, excluding oil and natural gas, increased 0.4% in June. The 2.7% drop experienced in miscellaneous non-metallic mineral mines (which include diamonds) was partly offset by the strength in metal ore mines (+0.8%). For the second consecutive month, the ongoing recovery from the iron ore labour disputes earlier this year, has significantly contributed to the strength of the metal ore mines.

Chart C.2 Natural gas production bolsters the energy sector

Construction moves forward

The construction sector rose 0.4% in June. Residential (+0.4%) and non-residential building (+0.7%) construction along with engineering and repair work (+0.3%), all posted increases for the month. The construction of single-family homes, which rose for the second consecutive month after a prolonged decline, largely contributed to the advances in residential construction in June. However, the construction of apartments declined. The non-residential sector benefited from robust commercial and industrial construction, while institutional building construction edged-up slightly.

The home resale market continued its ascent in June. In particular, the number of units sold in Quebec reached an all-time-high. This resulted in a 0.5% increase for the real estate agents and brokers industry.

Chart C.3 Main industrial sectors' contribution to total growth

Retail trade slips

Retail trade retreated 0.6% in June, following a very strong May (+2.3%). Sales by new car dealers remained high but returned to their April level. Used car and recreational motor vehicle dealers also saw their sales reduced. Lower spending in furniture and general merchandise stores (which include department stores) added to the weakness. Elsewhere, sales by clothing and home furnishings stores and supermarkets, advanced. Despite the overall decline in June, retailers’ activities have remained at a high level for a third consecutive month.

Wholesale trade edges down

Wholesale trade was stagnant in June, following a robust May (+1.5%). The gains recorded by motor vehicle, computers and machinery and equipment merchants, were partly offset by the declines posted by the office and professional equipment, and pharmaceutical vendors

Motor vehicle manufacturing decreases for the third straight month

The manufacturing sector slipped 0.4%. The 0.8% reduction in the production of durable goods overshadowed the 0.3% increase in non-durable goods. Of the 21 major manufacturing groups, 13 decreased, accounting for 61% of total manufacturing value added.

Recording their third consecutive monthly decrease, motor vehicle manufacturing (-5.3%) and associated parts production (-1.1%) led the decline for the month. Notable declines were also recorded in the manufacturing of fabricated and primary metal products, and machinery. Conversely, gains were posted by aerospace product and parts manufacturers (+1.7%), and industries engaged in chemical and plastic product manufacturing.

Industrial production (the output of mines, utilities and factories) rose 0.4% in June. The robust showing of mining outweighed the declines reported by factories and utilities. In comparison, all three sectors increased the United States resulting in an overall gain of 0.6% in June.

Other industries

Output in the finance and insurance sector grew 0.4%. This increase was fuelled by a modest rise in lending activities in June. However, trading on the financial markets was weak after a strong May. The gambling industry grew 10.9% in June mostly because of special draws to commemorate the anniversary of a lottery. Tourism-related industries presented a mixed picture, with accommodation services edging down 0.1% while food services posted a gain of 0.7%.

Second quarter 2007

Economic activity grew at a slightly slower pace in the second quarter of 2007 than in the first. After remaining essentially unchanged in April, output grew in both May and June.

Both the service (+0.9%) and goods (+0.3%) producing industries increased in the second quarter. Growth came mainly from retail and wholesale trade, utilities, the finance and insurance sector, and construction. The manufacturing sector posted its first quarterly increase since the fourth quarter of 2005. However, these gains were partly offset by declines in oil and gas exploration, accommodation and food services, agriculture, and forestry.

Retail trade leaped 2.5% in the second quarter largely due to a rebound in sales of motor vehicles. Used and recreational motor vehicle and parts dealers, gasoline stations, general merchandise stores (including department stores), home electronic and appliance stores, and supermarkets, also contributed to the increase. Imports of several categories of goods intended for personal consumption accelerated during the quarter. Conversely, specialized building materials and garden stores declined.

Wholesale trade edged forward 0.6% in the second quarter largely on the strength of sales by merchants of food products, household and personal products, machinery and equipment, and office and professional equipment. However, apparel and motor vehicle vendors fell back. Wholesalers as well as manufacturers benefited from the pick-up in demand for machinery and equipment.

The finance and insurance sector advanced 1.4% on the strength of banking and brokerage. Stockbrokers’ activities grew 4.9% due to healthy trading on the stocks markets. Real estate agents and brokers posted a robust gain, owing to a vibrant home-resale sector.

The energy sector increased 0.4%. Although oil and gas extraction (+2.0%) and utilities (+3.1%) realized sizeable gains, oil and gas exploration tumbled (-29%) during the quarter. Low natural gas prices have caused exploration companies to significantly reduce their activities. As well the current production capacity of existing wells appears to be sufficient to meet demand. As a result, the number of wells being utilized has decreased.

Construction activities grew 0.8% in the second quarter of 2007. All types of construction activities increased, with non-residential building construction leading the sector. The advance in residential construction reflected increased spending on renovations, as the work put in place for new dwellings was essentially unchanged from the first quarter.

Manufacturing activities increased 0.3% in the second quarter. Of the 21 major groups, 15 posted gains, accounting for 59% of total manufacturing value added. Despite a substantial appreciation of the Canadian dollar relative to its U.S. counterpart, exports also increased, outpacing first quarter gains. The production of non-durables grew 1.0%, while durables declined 0.1%. Food, and beverage and tobacco manufacturing increased, contrasting with previous quarters. Manufacturers of fabricated metal products and of machinery, as well as printing recorded notable increases. Motor vehicle manufacturing dropped 5.9%, heavy-duty trucks being the hardest hit. Paper and wood products manufacturing continued their decline.

Industrial production (the output of utilities, mines and factories) edged forward 0.4%. Utilities posted a significant gain, while manufacturing moved ahead slightly. Mining receded as a result of the decline in oil and gas exploration. In comparison, industrial production in the United States rose 0.8%, as manufacturers and mining posted gains, while utilities slipped.

The accommodation industry suffered its second dismal quarter, and food services lost ground. However, air carriers managed to post a gain (+0.3%).

Data tables

• Table C.1 Real gross domestic product by industry, at basic prices, monthly
• Table C.2 Real gross domestic product by industry, at basic prices, quarterly and annually

Information on methods and data quality available in the Integrated Meta Data Base: 1301.