Canadian economic accounts

Real gross domestic product (GDP) rose 0.3% in the third quarter, following a 0.6% gain in the previous quarter. Final domestic demand grew 0.9%, as business investment in plant and equipment advanced. On a monthly basis, real GDP by industry declined 0.1% in September.

Business investment in plant and equipment recorded its strongest quarterly increase so far this year, as investment in machinery and equipment expanded 6.5% in the third quarter. An increase in consumer spending also contributed to the growth in final domestic demand.

Lower exports (-1.3%) and lower investment in housing (-1.3%) restrained GDP growth.

Expressed at an annualized rate, real GDP grew 1.0% in the third quarter, after expanding 2.3% in the second quarter. In comparison, real GDP in the United States grew 2.5% in the third quarter.

The increase in the goods-producing industries (+0.8%) significantly outpaced that of the services industries (+0.1%) for a fourth consecutive quarter.

Manufacturing, mining and the public sector were the main sources of growth in the third quarter. The increase in manufacturing was concentrated in the production of durable goods, while the strength in mining was attributable largely to higher activity at copper, nickel, lead, and zinc mines. Construction and retail trade also contributed to the overall increase in GDP. Conversely, decreases were recorded in the output of real estate agents and brokers, as well as in wholesale trade and in the finance and insurance sector.

Consumer spending growth remains steady

Consumer spending on goods and services advanced 0.9% in the third quarter, similar to the average growth of the previous five quarters. Consumers increased their purchases of services and their purchases of all three major categories of goods.

Expenditures on new and used motor vehicles grew 1.8% after two consecutive quarters of decline.

Purchases of clothing and footwear also bounced back after falling in the previous quarter.

Spending on furniture, furnishings, and household equipment and maintenance declined 0.6% after edging down 0.2% in the previous quarter.

Housing investment falls

Housing investment declined 1.3% in the third quarter, the first decline since the first quarter of 2009. Expenditure on ownership transfer costs related to housing resale activity was down 10%, on the heels of a 13% drop in the second quarter.

Business investment in plant and equipment expands

Business investment in plant and equipment expanded 4.6%. This was the third quarterly increase in 2010, and the first time that quarterly growth exceeded 4% since 2005.

Investment in machinery and equipment rose 6.5%, a third consecutive quarterly increase. The main contributors to the third-quarter gain were industrial machinery (+7.9%) as well as computers and other office equipment (+11%).

Investment in buildings and engineering projects grew 2.6%.

The 8.7% year-over-year increase in business investment in plant and equipment was in sharp contrast to the 20% annual decline registered in 2009.

Exports decline while imports rise

Exports of goods and services declined 1.3% after four consecutive quarters of growth. The main contributors to the decline in goods exports were automotive products (-2.1%) and energy products (-8.5%), while commercial services (-1.7%) contributed the most to the decline in services exports.

Imports of goods and services were up 1.6%, the fifth consecutive quarterly increase. Machinery and equipment (+6.3%) contributed the most to the 2.4% increase in imported goods. Imports of services fell 2.1%, with declines in four out of five major categories.

Inventories increase again

Business inventories rose $18 billion in the third quarter, an accumulation similar to that recorded in the second quarter.

Manufacturers' inventories, especially inventories of durable goods, increased again in the third quarter. Wholesale trade inventories of both durable and non-durable goods, as well as the inventories of retail motor vehicle dealers, were up.

Agricultural inventories fell for a third consecutive quarter with lower crop production.

Businesses held inventories equivalent to 65 days of sales in the third quarter, the same as in the previous quarter. This was slightly higher than the average of 62 days recorded from 2004 to 2008. In 2009, sales declined more rapidly than inventories. As a result, businesses held, on average, inventories equivalent to 68 days of sales in 2009.

Prices rise

The price of goods and services produced in Canada rose 0.4% in the third quarter.

Overall, the price of final domestic demand was also up 0.4%. The price of engineering structures as well as the price of non-durable goods, such as food and non-alcoholic beverages, electricity, and tobacco products, were contributors to the increase in the price of final domestic demand. In contrast, there were lower prices for several products, notably renovations, clothing and footwear, and office equipment.

Purchasing power increases

Canada's real gross domestic income, a measure of purchasing power, edged up 0.1% in the third quarter. The increase in real GDP was offset mostly by a decline in Canada's terms of trade (-0.6%), which measures export prices relative to import prices.

Incomes up again

Nominal GDP expanded 0.7%. Labour income rose 0.9% as wages and salaries increased in both the goods-producing and services industries.

Corporate profits increased 0.7% in the third quarter, after a 0.6% decline in the previous quarter. Earnings results were mixed with notable increases in oil and gas extraction and motor vehicle parts manufacturing. Wholesale and retail trade industries were among those with lower earnings. Government business enterprise profits fell 3.9%.

Personal income increased 0.6%. Personal disposable income, however, declined 1.5% as income taxes paid returned to a more typical level. There were large income tax refunds in the second quarter and lower payments on filing related to the 2009 tax year.

The personal saving rate was 3.3% in the third quarter, following an unusually high 6.1% in the previous quarter.

The national saving rate was 4.7%, down from 5.6% in the second quarter. Government saving has been negative since the fourth quarter of 2008.

Financial flows: Financing activity decreases

Total funds raised by domestic non-financial sectors reached $195 billion (seasonally adjusted at annual rates) in the third quarter, down from $273 billion in the second quarter.

The decrease in overall borrowing by domestic non-financial sectors was concentrated in provincial and local governments, and was due mainly to net repayments of short-term paper. However, the federal government increased its borrowing through short-term paper, reversing the trend of the previous four quarters, where short-term paper had been repaid. Bond issuance by both the federal government and other levels of government declined in the third quarter.

Funds raised by non-financial private corporations amounted to $40 billion. Bond issuance was the major source of financing as share issuance and mortgage borrowing slowed.

Household borrowing increased slightly in the third quarter after decreasing in the previous quarter. Higher borrowing through loans and consumer credit accounted for the third-quarter increase. In contrast, mortgage borrowing declined with the slowdown in the resale housing market.

The non-resident sector continued to be a net lender to the domestic economy in the third quarter. This lending reflects Canada's quarterly current account deficit, which has continued since the fourth quarter of 2008. Non-resident investors continued to supply large inflows of funds to the economy through investment in Canadian securities, especially bonds.

Gross domestic product by industry, September 2010

Real gross domestic product declined 0.1% in September after a 0.3% increase in August. Output of the goods-producing industries decreased 0.7%, largely as a result of lower extraction of oil and natural gas, and reduced manufacturing activity. Increases at copper, nickel, lead and zinc mines and in utilities helped to offset the weakness in the production of goods. The service sector edged up 0.1%, with increases in the public sector, retail trade and accommodation and food services. Conversely, the finance and insurance sector as well as wholesale trade retreated.

Mining and oil and gas extraction declined 2.0% in September. Oil and gas extraction fell 2.8%, with both natural gas and crude oil decreasing. Support activities for mining and oil and gas extraction declined as well, partly as a result of unfavourable weather. In contrast, output at copper, nickel, lead and zinc mines continued its recent upward trend after the end of labour disputes, returning to its level reached during the second quarter of 2009.

Manufacturing output declined 0.6% in September, with 10 of the 21 major groups contracting. Both durable goods (-0.8%) and non-durable goods (-0.4%) manufacturing were down. In particular, manufacturing of machinery, food products, transportation equipment, wood products and chemicals decreased. The output of primary metal products and printing increased.

The public sector (health, education and public administration combined) rose 0.2% in September. Retail trade increased by 0.5%, with higher activity recorded at general merchandise stores and at new car dealers. Retailers of building materials and garden equipment and supplies reported a decline, partly mirroring the weakness in residential construction in September.

The finance and insurance sector decreased by 0.7% in September, following a 0.4% increase in August. Weaker financial intermediation (personal and business loans, mortgages, mutual fund sales), lower activity at insurance carriers and a reduced volume of trading on the stock exchanges were contributing factors.

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 third quarter 2010 issue of Canadian Economic Accounts Quarterly Review, Vol. 9, no. 3 (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 December 14, at the time of the release of Labour productivity, hourly compensation and unit labour cost. Revised estimates of the Income and expenditure accounts for the first and second quarters of 2010 have been released, along with those for the third quarter of 2010. These estimates incorporate new and revised source data and updated estimates of seasonal patterns.

Gross domestic product by industry

Available on CANSIM: table 379-0027.

Definitions, data sources and methods: survey number: 1301.

The September 2010 issue of Gross Domestic Product by Industry, Vol. 24, no. 9 (15-001-X, free), is now available from the Key resource module of our website under Publications.

Data on gross domestic product by industry for October will be released on December 23.

For more information, or to order data, contact the dissemination agent (toll-free 1-800-887-4623; 613-951-4623; 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 third quarter 2010 issues of National Income and Expenditure Accounts: Data Tables, Vol. 3, no. 3 (13-019-X, free), and Estimates of Labour Income: Data Tables, Vol. 3, no. 3 (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 third quarter 2010 issue of Financial Flow Accounts: Data Tables, Vol. 3, no. 3 (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.