Natural resource indicators, first quarter 2020
Natural resources real gross domestic product declines
Real gross domestic product (GDP) of the natural resources sector edged down 0.4% in the first quarter, the third consecutive quarterly decline.
The drop in the natural resources sector was modest, compared with the sharp decline in the economy-wide real GDP (-2.1%) owing to far-reaching restrictions imposed to contain the spread of COVID-19.
Impacts of COVID-19
In the first quarter of 2020, impacts of the COVID-19 pandemic on natural resources prices and production diverged markedly by type of natural resource and activity. In the case of mining and oil and gas extraction, the effects were minimal. However, petroleum refinement activities were subject to restrictions imposed on non-essential businesses.
Additionally, demand for and prices of natural resources were influenced by other sectors of the economy (transportation, housing, and manufacturing) and by conditions in the rest of the world, as Canada is a net exporter of natural resources. Prices of crude oil and crude bitumen plummeted, due to reduced demand and a world-wide excess oil supply in March.
Activity in the forestry subsector remained relatively stable in the first quarter, as it had already contracted in 2019 due to mill closures in British Columbia, labour disputes, higher stumpage fees, and lower demand for timber in the United States.
The first quarter decline in real GDP of the natural resources sector was broad-based. Real GDP of the energy subsector edged down 0.3%, largely because of a 3.9% drop in refined petroleum products resulting from reduced demand due to COVID-19-related restrictions on non-essential businesses.
Real GDP of the mineral and mining subsector (-0.4%) declined for the third consecutive quarter. Non-metallic minerals fell 8.8%, following a 20.2% drop in the previous quarter, as weak international demand led to a continued slowdown in potash production.
Real GDP of the forestry subsector edged down 0.2%, the seventh consecutive quarterly decline. The forestry subsector had already absorbed a substantial shock in 2019 due to mill closures in British Columbia, reflecting lower global demand for forestry products and increased production costs due to higher stumpage fees and labour strikes. Hunting, fishing and water GDP declined 0.7% in the first quarter.
Export and import volumes fall
Natural resources export volumes fell 1.2% in the first quarter, because of a lower shipment flow due to rail blockades coupled with weak international demand resulting from the onset of COVID-19 in March.
The decline in import volumes (-5.6%) was substantial and widespread, with energy (-4.4%), minerals and mining (-7.8%), and forestry (-4.5%) reflecting weak domestic demand and a sharp contraction of GDP.
Natural resource prices and nominal GDP decline
Overall, natural resource prices fell 5.3% in the first quarter, led by an 8.4% drop in energy prices due to weaker demand for air and road transportation and a higher global energy supply.
A 20.6% decline in crude oil and crude bitumen prices, lowered the overall natural resources nominal GDP (-5.7%). Nominal GDP of the minerals and mining subsector increased 1.1%, while the nominal GDP of the forestry subsector was flat. Expressed at an annual rate, nominal natural resources GDP was $205 billion in the first quarter, representing 9.5% of the Canadian economy.
As a share of total natural resources, the energy subsector fell from 68% in the fourth quarter of 2019 to 65% in the first quarter of 2020. The shares rose for the minerals and mining (21%), forestry (8%), and hunting, fishing and water (6%) subsectors.
Employment continues to drop
Employment in the natural resources sector (-0.8%) declined for the third consecutive quarter. Shutdowns of non-essential businesses and economic uncertainties contributed to job loss across all subsectors: energy (-2,300 jobs), minerals and mining (-1,190), forestry (-1,010), and hunting, fishing and water (-135).
Downstream activities fall
For analytical purposes, secondary and tertiary processing for the forestry and minerals and mining subsectors are identified separately. Real GDP of these downstream activities declined 1.0% in the first quarter, despite a substantial increase in the production of converted paper products.
Note to readers
Data on natural resources for the first quarter of 2020 have been released along with revised data back to the first quarter of 2019.
The natural resource indicators provide quarterly indicators for the main aggregates in the Natural Resources Satellite Account (NRSA), namely, gross domestic product, output, exports, imports, and employment. The estimates from this account are directly comparable to the estimates in the Canadian System of Macroeconomic Accounts.
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.
Data on natural resource indicators for the second quarter will be released on September 23.
The Economic accounts statistics portal, accessible from the Subjects module of our website, features an up-to-date portrait of national and provincial economies and their structure.
Additional information can be found in the articles "The Natural Resources Satellite Account: Feasibility study" and "The Natural Resources Satellite Account – Sources and methods," which are part of the Income and Expenditure Accounts Technical Series (13-604-M).
The Latest Developments in the Canadian Economic Accounts (13-605-X) is available.
The User Guide: Canadian System of Macroeconomic Accounts (13-606-G) is available.
The Methodological Guide: Canadian System of Macroeconomic Accounts (13-607-X) is available.
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