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Real gross domestic product (GDP) declined 1.4% in the first quarter, the largest quarterly decrease since 1991. Both domestic and international demand continued to weaken. Real GDP fell 0.3% in March. The declines in February and March were less pronounced than those in the preceding three months.
Lower spending in Canada and the United States, particularly business investment in plant and equipment, led to a sharp decline in Canada's exports and imports. Business investment in Canada fell at the fastest rate since 1982. Final domestic demand was down 1.5% as personal spending, particularly on durable goods, continued to decline. Corporate and personal income also fell in the quarter.
As was the case in the fourth quarter of 2008, lower production of goods (-4.0%) led the decline in the first quarter of 2009, while the production of services decreased 0.5%. All goods producing sectors retreated. The manufacturing sector, pulled down by a 26% reduction in motor vehicle and parts production, accounted for about half of the overall decline in the first quarter of 2009. Wholesale trade and transportation services declined the most among the service producing sectors. The increases in the public sector (which includes education, health and social services, as well as public administration) helped mitigate the decline in the production of services.
Real GDP contracted at an annualized rate of 5.4% in the first quarter, compared with a 5.7% decline in the US economy.
Note to readers
Percentage changes for expenditure-based and industry-based statistics (such as personal expenditures, investment, exports, imports and output) are calculated using volume measures that are adjusted for price variations. Percentage changes for income-based statistics (such as labour income, corporate profits and farm income) are calculated using nominal values, that is, not adjusted for price variations.
With the first quarter 2009 release of the Income and Expenditure Accounts, the data are revised back to the first quarter of 2005. Two articles on revisions are available in Canadian Economic Accounts Quarterly Review (13-010-X, free).
Domestic and international demand continue to weaken
Consumer spending on goods and services contracted 0.4%, a slower pace of decline than the previous quarter. Spending on durable goods (-1.8%) was the major contributor to the first quarter decline, but did not drop as much as in the previous quarter. Purchases of services slipped for a second consecutive quarter.
Exports of goods and services dropped 8.7% in the first quarter, a faster rate of decline than in the fourth quarter (-4.8%). Exports of automotive products were down for the eighth consecutive quarter, falling an additional 33%.
Imports were down for a third quarter in a row, falling 11%, as both goods and services imports declined. Weak domestic demand led to decreases in nearly all major import categories. The Canadian dollar depreciated 2.6% against its US counterpart in the quarter.
Business investment down sharply
Business investment in machinery and equipment was down 11% in the first quarter, as investment declined in all categories.
Businesses reduced investment in non-residential structures by 3.8%. A contraction in engineering construction activity was the major contributor.
Non-farm inventories fall
Non-farm inventories were drawn down for the first time since the second quarter of 2004. Manufacturers, retailers and wholesalers all lowered their inventories.
Farm inventories accumulated in the first quarter but at a much slower pace than in 2008.
Prices fall for the second quarter in a row
The price of goods and services produced in Canada fell 1.7%, following a 2.9% drop in the fourth quarter of 2008. A sharp drop in prices for natural resources drove the decline. Export prices (-6.7%) fell more quickly than import prices (-1.6%).
The price of final domestic demand edged up 0.2% in the first quarter as consumer prices remained flat.
Purchasing power declines
Real gross domestic income (GDI), a measure of Canada's purchasing power, fell 3.0% in the first quarter (-6.2% year over year). Canada's terms of trade, a measure of export prices relative to import prices, deteriorated for the third consecutive quarter as commodity prices fell and the Canadian dollar depreciated relative to its US counterpart. As a result, the decline in real GDI was much sharper than real GDP; the third consecutive quarter this has occurred.
Economy-wide incomes down sharply
Nominal GDP decreased 3.0% in the quarter, a second consecutive sharp drop. Corporate profits fell 24% in the first quarter following a similar decrease in the fourth quarter of 2008. Both financial and non-financial industries posted lower profits.
Labour income (in nominal terms) fell 0.7% in the first quarter. Employment was down (-1.4%) as were average hours worked. Wages and salaries in goods producing industries led the decline, particularly the manufacturing and construction industries.
The personal saving rate was 4.7%, similar to the previous quarter. Prior to the fourth quarter of 2008, the personal saving rate had been below 4% for 10 consecutive quarters.
Gross domestic product by industry, March 2009
Real gross domestic product declined 0.3% in March after a 0.1% decrease in February. The declines in February and March were less pronounced than those in the preceding three months.
The output of the energy and manufacturing sectors were the main sources behind the March contraction. Lower activity in wholesale trade, construction, transportation, accommodation and food services, and forestry added to the weakness. The finance and insurance sector, the public sector (health, education and public administration combined), retail trade, and mining excluding oil and gas extraction all advanced.
The output of the energy sector fell 1.9% in March. A significant drop in support activities for oil and gas extraction along with a 1.5% decrease in oil and gas production lowered output in the sector. Both the extraction of natural gas and petroleum decreased.
The output of the mining sector excluding oil and gas extraction increased 1.1% in March. There was a partial rebound in potash production as the industry continued to adjust its output to weakened demand. Despite a significant contraction in iron ore mines as the demand for steel products continued to retreat, the output of metal ore mines increased on the strength of copper and nickel extraction.
Activity in the manufacturing sector retreated 1.0% in March, continuing its downward trend. Both durable and non-durable goods manufacturing fell. Of the 21 major manufacturing groups, 15 retreated. Machinery, primary metal products and motor vehicle parts manufacturing led the reduction in durable goods. Motor vehicle production grew for a second consecutive month.
The volume of activities in wholesaling industries declined 0.7% in March, mirroring the decrease in exports and imports. The most notable drop was in the wholesaling of machinery and electronic equipment. The wholesaling of automotive products moved ahead. Value added in retail trade edged up 0.3%.
Construction activity decreased 0.4% in March. The drops in residential building construction and engineering and repair work eclipsed the increase in non-residential building construction.
The finance and insurance sector rose 0.4%. The gain was mostly attributable to an increase in the volume of trading on the stock exchanges. The gain was partially offset by a fall in mutual fund sales.
Products, services and contact information
Detailed analysis and tables
The National economic accounts module, accessible from the home page of the agency's website, features an up-to-date portrait of national and provincial economies and their structure.
More detailed analysis on today's releases from the national accounts, including additional charts and tables, can be found in the first quarter 2009 issue of Canadian Economic Accounts Quarterly Review, Vol. 8, no. 1 (13-010-X, free) from the Publications module of our website.
Gross domestic product by industry
Available on CANSIM: table 379-0027.
Definitions, data sources and methods: survey numbers, including related surveys, 1301.
The March 2009 issue of Gross Domestic Product by Industry, Vol. 23, no. 3 (15-001-X, free) is now available from the Publications module of our website.
Data on gross domestic product by industry for April will be released on June 30.
For general information or to order data, contact our dissemination officer (613-951-4623; toll-free 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.
National economic and financial 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, 1804, 1901 and 2602.
The complete seasonally adjusted quarterly National Income and Expenditure Accounts: Data Tables (13-019-X, free), and Estimates of Labour Income: Data Tables (13-021-X, free) are also now available from the Publications module of our website.
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.
Table 1
| Change | Annualized change | Year-over-year change | |
|---|---|---|---|
| % | |||
| First quarter 2008 | -0.2 | -0.7 | 1.7 |
| Second quarter 2008 | 0.1 | 0.3 | 0.7 |
| Third quarter 2008 | 0.1 | 0.4 | 0.3 |
| Fourth quarter 2008 | -0.9 | -3.7 | -1.0 |
| First quarter 2009 | -1.4 | -5.4 | -2.1 |
Table 2
| Fourth quarter 2007 | First quarter 2008 | Second quarter 2008 | Third quarter 2008 | Fourth quarter 2008 | First quarter 2009 | |
|---|---|---|---|---|---|---|
| Using seasonally adjusted data (2002=100) | ||||||
| quarterly % change | ||||||
| Personal expenditure on consumer goods and services | 0.2 | 0.4 | 0.8 | 0.9 | -0.5 | 0.0 |
| Business gross fixed capital formation | -0.4 | 0.8 | 1.4 | 1.3 | 3.3 | 0.3 |
| Exports of goods and services | 0.4 | 5.8 | 7.4 | 3.1 | -4.1 | -6.7 |
| Imports of goods and services | -3.0 | 3.7 | 3.8 | 4.5 | 5.7 | -1.6 |
| Gross domestic product at market prices | 1.1 | 1.4 | 2.4 | 0.8 | -2.9 | -1.7 |
| Final domestic demand | 0.4 | 0.6 | 1.0 | 1.1 | 0.5 | 0.2 |
Table 3
| Fourth quarter 2007 | First quarter 2008 | Second quarter 2008 | Third quarter 2008 | Fourth quarter 2008 | First quarter 2009 | |
|---|---|---|---|---|---|---|
| Using seasonally adjusted data (2002=100) | ||||||
| year-over-year % change | ||||||
| Personal expenditure on consumer goods and services | 1.8 | 1.3 | 1.5 | 2.3 | 1.6 | 1.2 |
| Business gross fixed capital formation | 1.1 | 0.5 | 1.8 | 3.2 | 7.1 | 6.5 |
| Exports of goods and services | -1.5 | 1.3 | 10.8 | 17.6 | 12.4 | -0.9 |
| Imports of goods and services | -7.6 | -5.6 | 1.1 | 9.1 | 18.9 | 12.8 |
| Gross domestic product at market prices | 3.6 | 3.5 | 4.9 | 5.8 | 1.6 | -1.4 |
| Final domestic demand | 1.9 | 1.4 | 1.6 | 3.1 | 3.3 | 2.8 |
Table 4
| Change | Annualized change | Year-over-year change | |
|---|---|---|---|
| % | |||
| First quarter 2008 | 0.5 | 2.2 | 4.0 |
| Second quarter 2008 | 1.3 | 5.5 | 3.9 |
| Third quarter 2008 | -0.3 | -1.1 | 3.1 |
| Fourth quarter 2008 | -4.3 | -16.0 | -2.7 |
| First quarter 2009 | -3.0 | -11.6 | -6.2 |
Table 5
| October 2008r | November 2008r | December 2008r | January 2009r | February 2009r | March 2009p | |
|---|---|---|---|---|---|---|
| Seasonally adjusted | ||||||
| month-to-month % change | ||||||
| All industries | -0.1 | -0.7 | -1.0 | -0.6 | -0.1 | -0.3 |
| Goods-producing industries | -0.1 | -1.4 | -1.9 | -1.6 | -0.5 | -1.1 |
| Service-producing industries | -0.1 | -0.3 | -0.5 | -0.1 | 0.1 | 0.0 |
| Industrial production | -0.2 | -1.7 | -2.0 | -1.8 | -0.5 | -1.3 |
| Manufacturing | -1.1 | -2.5 | -2.8 | -3.1 | -0.3 | -1.0 |
| Wholesale trade | -2.3 | -2.4 | -2.4 | -2.7 | -0.4 | -0.7 |
| Energy sector | 1.1 | -0.7 | -0.9 | 0.1 | -0.1 | -1.9 |
Table 6
| Fourth quarter 2007 | First quarter 2008 | Second quarter 2008 | Third quarter 2008 | Fourth quarter 2008 | First quarter 2009 | 2007 | 2008 | |
|---|---|---|---|---|---|---|---|---|
| Seasonally adjusted at annual rates | ||||||||
| millions of dollars at current prices | ||||||||
| Gross domestic product by income and by expenditure | ||||||||
| Wages, salaries and supplementary labour income | 799,508 | 812,496 | 820,916 | 827,116 | 831,936 | 826,304 | 784,839 | 823,116 |
| 1.9 | 1.6 | 1.0 | 0.8 | 0.6 | -0.7 | 5.6 | 4.9 | |
| Corporation profits before taxes | 207,212 | 213,056 | 229,532 | 237,708 | 182,900 | 138,676 | 204,131 | 215,799 |
| 0.8 | 2.8 | 7.7 | 3.6 | -23.1 | -24.2 | 4.1 | 5.7 | |
| Interest and miscellaneous investment income | 73,620 | 76,572 | 85,660 | 86,136 | 77,568 | 73,692 | 71,847 | 81,484 |
| 1.0 | 4.0 | 11.9 | 0.6 | -9.9 | -5.0 | 7.7 | 13.4 | |
| Net income of unincorporated business | 90,924 | 93,516 | 95,500 | 97,860 | 98,108 | 97,432 | 90,407 | 96,246 |
| 0.0 | 2.9 | 2.1 | 2.5 | 0.3 | -0.7 | 4.4 | 6.5 | |
| Taxes less subsidies | 169,128 | 164,368 | 166,016 | 166,464 | 163,220 | 160,280 | 166,443 | 165,017 |
| 0.9 | -2.8 | 1.0 | 0.3 | -1.9 | -1.8 | 3.7 | -0.9 | |
| Personal disposable income | 915,076 | 938,832 | 948,596 | 955,512 | 960,852 | 955,260 | 897,562 | 950,948 |
| 1.5 | 2.6 | 1.0 | 0.7 | 0.6 | -0.6 | 5.3 | 5.9 | |
| Personal saving rate2 | 1.9 | 3.3 | 3.4 | 3.1 | 4.9 | 4.7 | 2.5 | 3.7 |
| ... | ... | ... | ... | ... | ... | ... | ... | |
| millions of chained (2002) dollars | ||||||||
| Personal expenditure on consumer goods and services | 805,026 | 810,096 | 812,310 | 813,469 | 807,018 | 803,863 | 787,063 | 810,723 |
| 1.9 | 0.6 | 0.3 | 0.1 | -0.8 | -0.4 | 4.6 | 3.0 | |
| Government current expenditure on goods and services | 257,965 | 261,546 | 264,477 | 264,462 | 266,084 | 266,884 | 254,740 | 264,142 |
| 0.8 | 1.4 | 1.1 | -0.0 | 0.6 | 0.3 | 3.3 | 3.7 | |
| Gross fixed capital formation | 317,660 | 318,328 | 318,118 | 318,616 | 305,999 | 288,780 | 312,482 | 315,265 |
| 0.8 | 0.2 | -0.1 | 0.2 | -4.0 | -5.6 | 3.7 | 0.9 | |
| Investment in inventories | 25,132 | 9,362 | 14,466 | 14,872 | 10,386 | -5,823 | 15,006 | 12,272 |
| ... | ... | ... | ... | ... | ... | ... | ... | |
| Exports of goods and services | 501,456 | 498,552 | 493,352 | 488,152 | 464,964 | 424,655 | 510,323 | 486,255 |
| -1.7 | -0.6 | -1.0 | -1.1 | -4.8 | -8.7 | 1.1 | -4.7 | |
| Imports of goods and services | 592,697 | 585,633 | 589,968 | 584,824 | 547,196 | 485,937 | 572,078 | 576,905 |
| 1.6 | -1.2 | 0.7 | -0.9 | -6.4 | -11.2 | 5.8 | 0.8 | |
| Gross domestic product at market prices | 1,325,490 | 1,323,013 | 1,324,093 | 1,325,452 | 1,312,880 | 1,294,805 | 1,315,907 | 1,321,360 |
| 0.3 | -0.2 | 0.1 | 0.1 | -0.9 | -1.4 | 2.5 | 0.4 | |
| millions of chained (2002) dollars | ||||||||
| Gross domestic product by industry at basic prices | ||||||||
| Goods producing industries | 371,248 | 367,134 | 365,400 | 365,882 | 357,118 | 342,855 | 374,126 | 363,884 |
| -1.1 | -1.1 | -0.5 | 0.1 | -2.4 | -4.0 | 0.5 | -2.7 | |
| Industrial production | 271,769 | 267,075 | 264,894 | 264,930 | 257,134 | 245,769 | 274,908 | 263,508 |
| -1.5 | -1.7 | -0.8 | 0.0 | -2.9 | -4.4 | 0.2 | -4.1 | |
| Energy sector | 84,855 | 83,904 | 82,469 | 83,128 | 82,561 | 81,416 | 85,827 | 83,016 |
| -1.4 | -1.1 | -1.7 | 0.8 | -0.7 | -1.4 | 1.0 | -3.3 | |
| Manufacturing | 182,957 | 178,755 | 178,278 | 176,698 | 168,813 | 158,450 | 185,311 | 175,636 |
| -1.4 | -2.3 | -0.3 | -0.9 | -4.5 | -6.1 | -0.9 | -5.2 | |
| Non-durable manufacturing | 71,623 | 70,752 | 70,682 | 70,168 | 68,216 | 66,831 | 72,507 | 69,955 |
| -1.8 | -1.2 | -0.1 | -0.7 | -2.8 | -2.0 | -1.8 | -3.5 | |
| Durable manufacturing | 111,673 | 108,265 | 107,847 | 106,769 | 100,720 | 91,483 | 113,149 | 105,900 |
| -1.2 | -3.1 | -0.4 | -1.0 | -5.7 | -9.2 | -0.3 | -6.4 | |
| Construction | 73,467 | 74,367 | 74,840 | 75,508 | 74,695 | 72,185 | 72,890 | 74,853 |
| 0.3 | 1.2 | 0.6 | 0.9 | -1.1 | -3.4 | 2.9 | 2.7 | |
| Services producing industries | 857,799 | 861,637 | 865,248 | 867,494 | 863,153 | 858,866 | 846,591 | 864,383 |
| 0.8 | 0.4 | 0.4 | 0.3 | -0.5 | -0.5 | 3.5 | 2.1 | |
| Wholesale trade | 72,063 | 71,837 | 71,722 | 71,009 | 67,030 | 63,291 | 70,256 | 70,399 |
| 1.6 | -0.3 | -0.2 | -1.0 | -5.6 | -5.6 | 5.5 | 0.2 | |
| Retail trade | 73,734 | 74,486 | 74,983 | 75,154 | 73,654 | 73,067 | 72,391 | 74,570 |
| 1.5 | 1.0 | 0.7 | 0.2 | -2.0 | -0.8 | 5.8 | 3.0 | |
| Transportation and warehousing | 56,863 | 56,845 | 57,122 | 56,966 | 56,093 | 54,959 | 56,624 | 56,757 |
| -0.2 | -0.0 | 0.5 | -0.3 | -1.5 | -2.0 | 1.7 | 0.2 | |
| Finance, insurance, real estate and renting | 243,946 | 245,802 | 246,485 | 247,682 | 247,775 | 248,699 | 240,536 | 246,936 |
| 0.7 | 0.8 | 0.3 | 0.5 | 0.0 | 0.4 | 4.0 | 2.7 | |
| Information and communication technologies | 58,065 | 58,327 | 58,805 | 58,967 | 58,758 | 58,318 | 57,199 | 58,714 |
| 0.7 | 0.5 | 0.8 | 0.3 | -0.4 | -0.7 | 4.0 | 2.6 | |
