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Natural resource indicators, first quarter 2018

Released: 2018-06-27

Volume of natural resource gross domestic product down

Real natural resource gross domestic product (GDP), or the volume of economic activity attributable to natural resources, was down slightly in the first quarter (-0.2%), following growth of 0.3% in the fourth quarter of 2017. By comparison, real GDP for the total economy grew 0.3% in the first quarter.

Energy (+0.5%) was the sole subsector to grow in the first quarter, almost offsetting the declines in all other subsectors. Growth came principally from services related to the energy subsector (+3.2%), a grouping whose movements often follow nominal oil and gas prices. Real GDP for primary manufacturing in the energy subsector, such as petroleum refining, declined 0.6%. This decline was spread across most product groupings.

Minerals and mining subsector real GDP decreased by 2.2% in the quarter as metallic mineral extraction fell 6.2%. Two uranium mines temporarily suspended operations due to low prices, while nickel and zinc production both declined. Real GDP in the forest subsector decreased 1.1%, as activity for primary sawmill and wood products was down 3.3%. Since the first quarter of 2017, real GDP in the forest subsector has grown by 0.3%.

Natural resource activity totalled $234 billion (nominal terms, at annual rates) in the first quarter, accounting for 11.5% of Canada's GDP, up from 11.1% in the previous quarter. This was its highest share since the fourth quarter of 2014. The percentage of economic activity attributable to natural resources peaked in the second quarter of 2014 at 14.4%, coinciding with a peak in energy prices. Since that time, real GDP in the natural resources sector has grown by 4.6%, while nominal GDP has decreased by 13.9%, reflecting a sharp drop in energy prices which have only recently started to rebound.

Chart 1  Chart 1: Growth in real gross domestic product attributable to natural resource activity
Growth in real gross domestic product attributable to natural resource activity

Natural resource prices continue to rise

Natural resource prices increased 4.3% in the first quarter, with prices up in every subsector. Prices in the energy subsector grew the fastest (+5.0%), with crude oil prices up 8.8% and fuel and lubricants prices gaining 5.4% due to price growth in motor gasoline, diesel and jet fuel.

Price growth continued in the forest subsector, up 2.1% in the first quarter and 11.2% year over year. There was a 2.5% rise in extracted product prices and a 1.7% increase in primary pulp and paper products during the quarter. Mining and mineral prices grew 4.1%, as coal prices increased 18.3%.

Chart 2  Chart 2: Natural resource price index, gross domestic product
Natural resource price index, gross domestic product

Export volumes edge up, while imports decline

Real natural resource exports edged up 0.4% in the first quarter, following a 1.3% decline in the fourth quarter of 2017. Energy exports were up 2.9%, with crude oil exports registering a sharp increase (+9.3%). Rail shipments of crude oil grew during the quarter, but shipping bottlenecks remained.

Forest subsector exports fell 5.5% as primary sawmill and wood products declined 12.3%. This drop coincided with the US Department of Commerce resuming the collection of import duties on Canadian lumber as of December 2017. Mineral and mining subsector exports were down 1.8% with a 12.0% drop in non-metallic minerals and a 3.1% reduction in primary metallic mineral products.

Real natural resource imports declined sharply (-4.2%) in the first quarter. The energy subsector fell 7.1%, with a large drop in crude oil imports (-16.2%). Minerals and mining imports edged up 0.4%, with primary metallic mineral product imports up 3.2%.

Employment increases in the first quarter

Employment in the natural resources sector edged up 0.1% in the first quarter of 2018, compared with a 0.3% increase in the fourth quarter of 2017. Growth in all the natural resources subsectors was subdued. Energy added approximately 300 jobs (+0.1%), the largest job gain of any subsector. Electricity had the largest gain of any product grouping, adding 500 jobs (+0.6%).

Employment in the mining and minerals subsector was virtually unchanged (+0.0%), despite a decrease of 600 jobs (-1.5%) in metallic mineral extraction as operations were suspended at two uranium mines due to weak global demand. Increases in related services (+200 jobs) and primary non-metallic mineral production (+250 jobs) helped to offset these losses.

Chart 3  Chart 3: Employment changes, first quarter 2018
Employment changes, first quarter 2018

Downstream forestry activities fall, while mineral and mining increase

Secondary and tertiary processing for the forest and the minerals and mining subsectors are identified in the natural resource indicators for analytical purposes. An additional 1.6% of Canadian GDP is attributable to these downstream activities.

Real GDP of these downstream activities was flat (0.0%) in the first quarter. Downstream forestry activities fell by 3.4%, with a large decline in secondary paper products of 5.4%. This counterbalanced 1.5% growth in downstream mineral and mining activity.

The production of bioproducts has doubled since 2007

With this release of the natural resource indicators, forest and energy bioproducts have been added for the first time.

Real GDP for bioproducts increased 136% from 2007 to 2017. The vast majority of the increase was from the production of biofuels such as ethanol and biodiesel (+165%).

Jobs attributable to the production of bioproducts increased from approximately 850 jobs in 2007 to 1,700 jobs in 2017 (+101%). The increase was driven by biofuels production as employment was up 156%.

Chart 4  Chart 4: Real gross domestic product, by type of bioproduct
Real gross domestic product, by type of bioproduct

  Note to readers

The Natural Resource Indicators (NRI) provide quarterly indicators for the main aggregates in the Natural Resource Satellite Account (NRSA), namely, nominal and real gross domestic product, output, real exports and imports, and employment. The estimates from this account are directly comparable to the estimates found in the Canadian System of Macroeconomic Accounts.

The energy subsector accounts for approximately two-thirds of the Canadian natural resource sector, while the mining subsector accounts for just over 20%. The forest (8%) and hunting, fishing and water (4%) subsectors account for the rest.

Core natural resources: The NRSA defines natural resource activities as those which result in goods and services originating from naturally-occurring assets used in economic activity, as well as their initial processing (primary manufacturing).

Downstream activities: Although not part of the core account, natural resources have important downstream effects on other sectors. In general, this production uses a large portion of primary manufactured products as inputs.

Note: Natural resource bioproducts have been added to the NRSA as of the first quarter of 2018 of the NRI release. For the purpose of the account, bioproducts are split into four categories:

Energy subsector

  1. Bioenergy
  2. Biofuels

Forest subsector

  1. Bioenergy and biofuels from forestry biomass (a subset of 1) and 2));
  2. Other bioproducts from forestry biomass

Total of natural resource bioproducts = Bioenergy (1) + Biofuels (2) + Other bioproducts from forestry biomass (2)

Next release

Data on natural resource indicators for the second quarter will be released on September 26.

Products

The article "Provincial and territorial natural resource indicators, 2009 to 2016," which is part of the Income and Expenditure Accounts Technical Series (Catalogue number13-604-M) is now available.

The Latest Developments in the Canadian Economic Accounts (Catalogue number13-605-X) is available.

The User Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-606-G) is available.

The Methodological Guide: Canadian System of Macroeconomic Accounts (Catalogue number13-607-X) is available.

Contact information

For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).

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