Gross domestic product, income and expenditure, fourth quarter 2015
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Real gross domestic product (GDP) grew 0.2% in the fourth quarter, following a 0.6% increase in the third quarter. Lower final domestic demand and exports both contributed to the slower growth.
Final domestic demand decreased 0.2% after flat second and third quarters. The decline was the result of lower business gross fixed capital formation, mainly in non-residential structures.
Business gross fixed capital formation decreased 1.7%, the fourth consecutive quarterly decline, as business investment in non-residential structures and machinery and equipment fell 3.3%.
Household final consumption expenditure rose 0.2%, following a 0.5% increase in the third quarter. Expenditure on services (+0.4%) largely contributed to the growth. The last decline in household spending occurred in the first quarter of 2009.
Final consumption expenditure of the government sector increased 0.4% after a flat third quarter.
Exports of goods and services decreased 0.6%, following a 2.6% gain in the third quarter. Imports were down 2.3%, the third consecutive quarterly decline.
Businesses reduced their inventories by $4.0 billion, after accumulating $1.0 billion in the previous quarter. Non-farm inventories were down $3.6 billion, after a $2.3 billion accumulation in the third quarter.
Expressed at an annualized rate, real GDP rose 0.8% in the fourth quarter, after increasing 2.4% in the third quarter. By comparison, real GDP in the United States advanced 1.0%.
Household spending slows
Household final consumption expenditure rose 0.2% in the fourth quarter, decelerating from a 0.5% increase in the third quarter. The advance in the fourth quarter was driven by higher expenditure on services (+0.4%). Outlays on goods edged up 0.1%, as lower spending on non-durable goods (-0.3%) offset gains in durable (+0.4%) and semi-durable (+0.6%) goods.
Expenditure on recreation and culture (+0.7%), clothing and footwear (+0.9%) and transport (+0.2%) all contributed to growth in household spending. Vehicle purchases edged up 0.1%, following two consecutive quarters of strong growth.
Investment in housing increases
Business investment in residential structures advanced 0.4% in the fourth quarter, the fourth consecutive quarterly increase. Both ownership transfer costs (+3.5%), which reflect movement in the resale market, as well as renovations (+0.7%), were up in the fourth quarter, after decreasing in the third quarter. Business investment in new housing construction declined 1.2%, after a 3.1% gain in the third quarter.
Further declines in business investment
Business investment in non-residential structures and machinery and equipment fell 3.3% in the fourth quarter.
Investment in non-residential structures decreased 3.9%, continuing the downward trend seen over the last two years. Lower investment in engineering structures (-4.2%) largely contributed to the decline in the fourth quarter, in the wake of lower oil prices and weakened investment in the oil and gas sector. Business investment in non-residential buildings (-2.9%) also continued to fall.
Business outlays on machinery and equipment fell 2.3%, the fourth consecutive quarterly decline, with computers and computer peripheral equipment (-7.9%) and communications and audio and video equipment (-8.9%) leading the decrease in the fourth quarter.
Business investment in intellectual property products was down 1.2%, as mineral exploration and evaluation, affected by lower energy prices, fell 8.2% following larger declines earlier in the year.
Business inventories down
Business investment in inventories was reduced by $4.0 billion, as a result of a drawdown of mostly non-farm stocks in the fourth quarter, following an accumulation of $1.0 billion in the third quarter.
Farm inventories of grain increased by $1.1 billion, following seven consecutive quarters of depletion. Inventories of other crops were reduced by $1.6 billion.
Retailers' inventories of durable goods declined by $3.4 billion, mainly as a result of lower stocks of motor vehicles (-$4.0 billion), which had accumulated substantially over the last two years. Wholesalers' inventories of non-durable goods were down $1.4 billion in the fourth quarter. Manufacturers' inventories of non-durable goods declined by $1.4 billion.
Despite the drawdown in inventories in the fourth quarter, sales declined at a faster pace than stocks, leading to an increase in the economy-wide stock-to-sales ratio to 0.763.
Exports of goods and services were down 0.6% in the fourth quarter, following a 2.6% gain in the third quarter. Exports of goods decreased 0.5%, with aircraft and other transportation equipment and parts (-10.4%) contributing the most to the decline.
Exports of energy products (-2.8%) and farm, fishing and intermediate food products (-2.5%) also fell. Motor vehicles and parts grew 1.7%, led by a 4.6% increase in exports of passenger cars and light trucks.
Service exports decreased 0.7%, following a gain of similar magnitude in the third quarter. The decrease was attributable to lower exports of commercial services (-1.0%).
Imports of goods and services fell 2.3% in the fourth quarter, after decreasing 0.6% in the third quarter.
Imports of goods were down 2.5%, led by electronic and electrical equipment and parts (-6.2%), consumer goods (-3.1%) and energy products (-8.1%). An increase in aircraft and other transportation equipment and parts (+5.6%) partially offset these declines.
Imports of services decreased 1.3%, the second consecutive quarterly decline. Imports of transportation services (-2.8%) and travel services (-1.9%) contributed to the decrease, in tandem with the weaker Canadian dollar.
Real gross domestic income declines
Real gross domestic income, a measure of the real purchasing power of income earned from Canadian production, decreased 0.3% in the fourth quarter. The decline reflected a continued weakening in the terms of trade, which fell for a fifth consecutive quarter. (Terms of trade are measured as export prices relative to import prices.)
Export prices declined 1.0% in the fourth quarter, while import prices were 0.7% higher, influenced by a depreciation in the exchange rate. The price of final domestic demand rose 0.3%. The GDP implicit price index edged down 0.1%.
Nominal gross domestic product growth slows
The growth of nominal GDP slowed to 0.1% in the fourth quarter, following a 0.8% gain in the third quarter.
Compensation of employees rose 0.7%, as a result of increases in both wages and salaries (+0.7%) and employers' social contributions (+0.9%). Wages and salaries were up 0.4% in goods-producing industries, led by a 2.0% gain in manufacturing, while they rose 0.8% in services-producing industries, driven by gains in professional and personal services industries (+1.1%) and finance, real estate and company management (+1.8%).
The gross operating surplus declined 1.6%, following a 1.4% increase in the third quarter. The gross operating surplus of financial corporations was down 8.2%, while that of non-financial corporations fell 1.2%.
Modest increase in household disposable income
Household disposable income increased 0.5% in the fourth quarter, with household final consumption expenditure keeping pace. As a result, the household saving rate was unchanged from the third quarter at 4.0%.
The household debt service ratio (defined as household mortgage and non-mortgage payments divided by disposable income) fell from 14.00% in the third quarter to 13.96% in the fourth quarter. Household disposable income outpaced the growth in obligated payments.
The national saving rate fell for a fifth consecutive quarter, reaching 2.8% in the fourth quarter. National disposable income edged up 0.1%.
Real GDP advanced 1.2% in 2015, about half the pace recorded in 2014, as lower business gross fixed capital formation constrained economic growth. Final domestic demand grew 0.5% after increasing 1.6% in 2014.
Real gross domestic income fell 1.1%, following a 2.0% increase in 2014. Canada's terms of trade declined 6.9%, after decreasing 1.3% in 2014. Falling oil prices contributed to a 3.1% decline in overall export prices, while a depreciating dollar contributed to a 4.1% increase in import prices. As a result, the implicit price of GDP fell 0.5% in 2015, the first decline since 2009.
Business gross fixed capital formation contracted 4.8%, following five consecutive annual increases. The decline was mainly attributable to a 12.7% decrease in business investment in non-residential structures.
Business investment in residential structures increased 3.9%, after advancing 2.5% in 2014. Outlays on new construction (+4.1%) and renovations (+1.4%), as well as ownership transfer costs (+8.0%) all increased.
Businesses added $4.5 billion to inventories in 2015, following an accumulation of $9.9 billion in 2014.
Household final consumption expenditure grew 1.9% after advancing 2.6% in 2014, as outlays on goods (+1.7%) and services (+2.1%) both increased. Household spending on durable (+3.3%), semi-durable (+2.4%) and non-durable (+0.7%) goods was higher.
Exports of goods rose 3.4%, while those of services were up 0.9%. Overall, exports advanced 3.0%. Imports of goods increased 0.2%, while imports of services were flat. Overall, imports edged up 0.1%.
Compensation of employees (in nominal terms) increased 2.6% in 2015, the slowest pace since 2009. After advancing 6.2% in 2014, the gross operating surplus of corporations fell 5.5% in 2015, as oil prices declined.
Household disposable income grew 3.9% in 2015, a faster pace than the 3.0% growth rate in 2014. Combined with slower growth in household final consumption expenditure, the household saving rate increased from 4.2% in 2014 to 4.4% in 2015.
Real gross domestic product by expenditure account, quarterly change – Seasonally adjusted at annual rates, chained (2007) dollars
Real gross domestic product by expenditure account, annualized change – Seasonally adjusted at annual rates, chained (2007) dollars
Real gross domestic product by expenditure account, year-over-year change – Seasonally adjusted at annual rates, chained (2007) dollars
Note to readers
For information on seasonal adjustment, see Seasonally adjusted data – Frequently asked questions.
Percentage changes for expenditure-based statistics (such as personal expenditures, investment, exports, and imports) are calculated from volume measures that are adjusted for price variations. Percentage changes for income-based and flow-of-funds statistics (such as labour income, corporate profits, mortgage borrowing and total funds raised) are calculated from nominal values; that is, they are not adjusted for price variations.
There are two ways of expressing growth rates for gross domestic product (GDP) and other time series found in this release.
- Unless otherwise stated, the growth rates in this release represent the percentage change in the series from one quarter to the next, such as from the third quarter of 2015 to the fourth quarter of 2015.
- Quarterly growth can be expressed at an annual rate by using a compound growth formula, similar to the way in which a monthly interest rate can be expressed at an annual rate. Expressing growth at an annual rate facilitates comparisons with official GDP statistics from the United States. Both the quarterly growth rate and the annualized quarterly growth rate should be interpreted as an indication of the latest trend in GDP.
Data on GDP for the fourth quarter were released along with revised data for the first, second, and third quarters of 2015. These data incorporate new and revised data, as well as updated data on seasonal trends. While GDP data prior to 2015 were not revised, improvements were introduced to other selected time series included in the Canadian economic accounts back to 1981.
Real-time CANSIM tables
Data on gross domestic product by income and expenditure for the first quarter will be released on May 31.
The System of macroeconomic accounts module, accessible from the Browse by key resource module of our website, features an up-to-date portrait of national and provincial economies and their structure.
The quarterly estimate of consumption of fixed capital is based on the quarterly stock and consumption of fixed capital program. This program incorporates quarterly estimates of geometric net stock and depreciation of non-residential (buildings, engineering, machinery and equipment, and intellectual property products) and residential assets, which are available in the new CANSIM table 031-0009.
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