Canadian economic accounts

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Real gross domestic product (GDP) increased 1.5% in the first quarter of 2010, after growing 1.2% in the fourth quarter of 2009. Final domestic demand advanced 1.1% as spending on housing as well as consumer goods and services continued to grow. Real GDP increased 0.6% in March, a seventh consecutive monthly advance.

Production grew faster in the first quarter of 2010 than in the fourth quarter of 2009, and inventory levels rose after being drawn down in all four quarters of 2009.

Residential investment increased for a fourth consecutive quarter, as did consumer spending on goods and services. Export and import volumes both rose for a third consecutive quarter, with growth in imports outpacing growth in exports in the first quarter.

Expressed at an annualized rate, real GDP grew 6.1% in the first quarter after advancing 4.9% in the fourth quarter of 2009. This compared with a 3.0% first quarter rate of increase in the US economy.

The output of the goods-producing industries (+2.7%) increased for a second consecutive quarter, mainly on the strength of manufacturing and, to a lesser extent, construction and mining. In manufacturing, the gains were widespread, with durable and non-durable goods advancing 5.9% and 2.1% respectively. Services-producing industries (+1.1%) continued to rise, with wholesale and retail trade leading the way.

Consumer spending increases

Consumers increased their spending on goods and services by 1.1% in the first quarter of 2010, following a 1.0% gain in the fourth quarter. Household spending on semi-durable goods advanced, particularly for clothing, footwear, and accessories. Expenditure on new motor vehicles grew, but at a much slower pace than in the previous three quarters. Spending on services was up 0.7%, after advancing 1.0% in the fourth quarter.

Government spending increases at a slower rate

The growth in government current expenditure on goods and services slowed to 0.5%, following increases of 1.6% in the third quarter of 2009 and 1.7% in the fourth. After five quarters in which growth averaged over 4%, government capital expenditure advanced 1.1% in the first quarter.

Housing demand continues to advance

Investment in residential structures increased 5.4%, the fourth consecutive quarterly gain in this activity. New housing construction (+11%) pushed investment higher, while renovation activity was up 6.3%. February 1 was the deadline for expenditures to quality for the federal government's Home Renovation Tax Credit.

Ownership transfer costs related to housing resale activity declined for the first time since the fourth quarter of 2008. Transfer costs grew 57% over the last three quarters of 2009.

Nominal mortgage borrowing by households was up sharply in the first quarter, recording its fourth consecutive quarterly advance.

Investment in machinery and equipment rises

Business investment in plant and equipment grew 0.2%. Expenditure on machinery and equipment advanced 1.8%, but was, nonetheless, 23% below the peak attained in the first quarter of 2008. Investment in industrial machinery was a major contributor to the first quarter gain.

Business investment in non-residential structures fell 1.4%, the sixth consecutive quarterly contraction in this type of investment. Both building and engineering investment continued to decline, a trend that began in 2008.

Exports and imports up again

Exports of goods and services grew 2.9%, the third consecutive quarterly gain following five quarters of decline. Industrial goods and materials (+9.4%) as well as automotive products (+4.1%) had notable increases. Following six consecutive quarters of decline, exports of travel services rose 4.1%, partly as a result of the Vancouver 2010 Olympic and Paralympic Winter Games held in February and March.

Imports of goods and services were up 3.4%, following a similar rise in the fourth quarter. Imports of industrial goods and materials, automotive products as well as machinery and equipment were the main contributors to the increase.

Inventories accumulate

Business inventories rose in the first quarter after being drawn down for four consecutive quarters. Retail inventories increased while manufacturers drew down their inventories.

The economy-wide ratio of stock to sales was down for a third consecutive quarter, and has fallen to its lowest level since the third quarter of 2008. Businesses held inventories equivalent to 65 days of sales; this was down from 66 days in the previous quarter. Nevertheless, the stock to sales ratio in the first quarter was higher than in any quarter from the fourth quarter of 2001 through the third quarter of 2008.

Prices rise

The price of goods and services produced in Canada rose 1.1% in the first quarter. Prices for exported energy products and exported industrial goods and materials registered notable gains, while the overall price of imports declined 0.6%.

The price of final domestic demand was up 0.4%. This was the fourth consecutive quarter in which the growth of the final domestic demand price was lower than that of the price of goods and services produced in Canada.

The price of consumer goods and services in Canada rose 0.3%, following a 0.8% increase in the fourth quarter.

The price of both residential and non-residential structures increased in the first quarter, while the price of business machinery and equipment declined for a fourth consecutive quarter.

Gross domestic income rises

Real gross domestic income (GDI), a measure of the purchasing power Canada acquires from its production of goods and services, grew 2.1% in the first quarter, a third consecutive gain. Canada's terms of trade, a measure of export prices relative to import prices, improved for a fourth consecutive quarter.

Whereas real GDP measures the volume of production, real GDI accounts for both the volume of production as well as changes in relative prices. When export prices rise relative to import prices, Canada's ability to purchase goods and services (real GDI) increases more than the rise in real GDP.

Incomes up again

Nominal GDP expanded 2.5% following a 2.4% gain in the fourth quarter of 2009. Labour income advanced 1.2%, slightly less than it did in the fourth quarter. Wages and salaries increased 2.7% in the goods-producing industries and were up 0.7% in the service-producing industries.

Corporate profits advanced 8.6%, the third consecutive quarterly gain. Likewise, government business enterprise profits were up 12%, following an 18% increase in the fourth quarter.

Personal disposable income rose 0.6%, a slower pace than in the previous quarter. Current transfers from government to the household sector declined for the first time since the second quarter of 2008, as Employment Insurance payments fell 9.5%.

The personal saving rate was 2.8%, its lowest level since the third quarter of 2008. The national saving rate, however, increased from 3.8% in the fourth quarter of 2009 to 5.5% in the first quarter, as corporate profits moved upward and government income increased more than government outlays.

Financing activity increases

Total funds raised by domestic non-financial sectors increased in the first quarter of 2010. The increase in financing was widespread among the various sectors of the Canadian economy.

Borrowing by the household sector grew. Higher mortgage borrowing was partially offset by lower borrowing by way of consumer credit.

The household sector debt-service ratio increased slightly, reaching 7.44%. The debt-service ratio is a measure of household interest payments as a percentage of personal disposable income.

Borrowing by all levels of government was up as bond issuance rose, particularly for the federal government.

Funds raised by non-financial private corporations increased, largely due to higher debt financing.

The non-resident sector continued to be a net lender to the Canadian economy. This reflects the quarterly current account deficit recorded by Canada since the fourth quarter of 2008.

Gross domestic product by industry, March 2010

Real GDP grew 0.6% in March, with most major industrial sectors increasing their production. Output of goods-producing industries advanced 1.4% while the service sector rose 0.3%. Manufacturing, mining and oil and gas extraction, wholesale and retail trade, as well as residential construction were the main sources of growth.

Conversely, output in performing arts and spectator sports, accommodation services, and radio and television broadcasting declined, as it returned to more normal levels following the Vancouver 2010 Winter Olympic Games in February. The utilities sector also retreated, as unseasonably warm weather throughout most of Canada lowered the demand for both electricity and natural gas.

Manufacturing rose 1.8% in March with 20 of the 21 major groups advancing. Manufacturers of machinery, primary and fabricated metal products, as well as non-metallic mineral and food products recorded significant production increases.

Mining and oil and gas extraction rose 2.7%, mainly as a result of a significant increase in oil extraction. Increased activity at copper, nickel, lead and zinc mines, as well as at gold and silver ore mines also contributed to the growth. Support activities for mining and oil and gas extraction retreated after seven consecutive monthly increases.

Retail trade grew 1.8% in March. New and used car dealers recorded a significant increase in their volume of activity. Wholesale trade advanced 2.0%, with most types of wholesalers increasing. In both retail and wholesale trade, there was a significant increase in the demand for building and outdoor home supplies, mirroring increased activity in construction.

Construction rose 0.9%, largely on the strength of residential building construction (+2.5%). Engineering construction retreated while non-residential construction edged up.

The finance and insurance sector rose 0.3%, as the volume of trading on the stock exchanges went up.

Products, services and contact information

Detailed analysis and tables

The National economic accounts module, accessible from the Key resource module of our website, features an up-to-date portrait of national and provincial economies and their structure.

Additional tables and links to other releases from the national accounts can be found in the first quarter 2010 issue of Canadian Economic Accounts Quarterly Review, Vol. 9, no. 1 (13-010-X, free). This publication is now available from the Key resource module of our website under Publications. This publication will be updated on June 21, at the time of the release of the National Balance Sheet Accounts. Revised estimates of the Income and Expenditure Accounts covering the period 2006 to 2009 have been released along with those for the first quarter of 2010. These estimates incorporate new and revised source data and updated estimates of seasonal patterns. For a detailed analysis of the annual and quarterly revisions to gross domestic product and its components, consult the article "The 2006 to 2009 revisions of the Income and Expenditure Accounts" in the publication Latest Developments in the Canadian Economic Accounts (13-605-X, free). From the Key resource module of our website, choose Publications.

Gross domestic product by industry

Available on CANSIM: table 379-0027.

Definitions, data sources and methods: survey number, including related surveys, 1301.

The March 2010 issue of Gross Domestic Product by Industry, Vol. 24, no. 3 (15-001-X, free), is now available from the Key resource module of our website under Publications.

For more information, or to order data, contact the dissemination agent (613-951-4623; toll-free at 1-800-887-4623; iad-info-dci@statcan.gc.ca). To enquire about the concepts, methods or data quality of this release, contact Bernard Lefrançois (613-951-3622), Industry Accounts Division.

Income and expenditure accounts

Available on CANSIM: tables 026-0009, 380-0001 to 380-0017, 380-0019 to 380-0035, 380-0056, 380-0059 to 380-0062 and 382-0006.

Definitions, data sources and methods: survey numbers, including related surveys, 1901 and 2602.

The first quarter 2010 issues of National Income and Expenditure Accounts: Data Tables, Vol. 3, no. 1 (13-019-X, free), and Estimates of Labour Income: Data Tables, Vol. 3, no. 1 (13-021-X, free), are also now available from the Key resource module of our website under Publications.

For more information, or to enquire about the concepts, methods or data quality of this release, consult the Guide to the Income and Expenditure Accounts (13-017-X, free) or contact the information officer (613-951-3640, iead-info-dcrd@statcan.gc.ca), Income and Expenditure Accounts Division.

Financial flow accounts

Available on CANSIM: tables 378-0015 to 378-0048.

Definitions, data sources and methods: survey number 1804.

The first quarter 2010 issue of Financial Flow Accounts: Data Tables, Vol. 3, no. 1 (13-020-X, free), is also now available from the Key resource module of our website under Publications.

For more information, or to enquire about the concepts, methods or data quality of this release, contact the information officer (613-951-3640, iead-info-dcrd@statcan.gc.ca), Income and Expenditure Accounts Division.