Economic Insights
Recent Developments in the Canadian Economy: Spring 2019

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This article in the Economic Insights series provides users with an integrated summary of recent changes in output, employment, household demand, international trade and prices. Organized as a statistical summary of major indicators, the report is designed to inform about recent developments in the Canadian economy, highlighting major changes in the economic data during the second half of 2018 and early 2019. Unless otherwise noted, the tabulations presented in this report are based on seasonally adjusted data available as of April 18, 2019.

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Overview

Economic growth slowed in the second half of 2018 as business investment in machinery and equipment and non-residential structures declined. Investment in housing also contracted in the second half of the year. While households continued to support growth, the pace of household spending slowed as outlays on durables declined. Following slower growth in the third quarter, export volumes edged down in the fourth.

In contrast, employment strengthened in the second half of the year, led by increases among private sector employees and core-age workers. Increases in both full-time and part-time work contributed to higher employment as overall gains were concentrated in services. Over two-thirds of the net increase in employment during the last six months of 2018 reflected gains in British Columbia and Ontario.

Overall, the growth in real gross domestic product, measured on a year-over-year basis, slowed to 1.1% in December, matching the increase in employment. The output of goods industries at year end was down 1.2% from levels in December 2017 while services rose 1.9%. More recently, the pace of output and employment growth strengthened in early 2019 (Chart 1). 

Data table for Chart 1



Data table for Chart 1
Output and employment
Table summary
This table displays the results of Output and employment Real gross domestic product and Employment (appearing as column headers).

	Real gross domestic product	Employment
2010
January	0.8	0.0
February	1.9	0.4
March	3.2	0.6
April	3.4	1.3
May	4.0	1.6
June	4.1	2.1
July	4.1	2.0
August	4.5	2.1
September	3.7	1.7
October	4.1	1.8
November	4.0	1.5
December	4.4	1.8
2011
January	4.1	1.9
February	3.4	1.8
March	3.2	1.8
April	3.3	1.6
May	2.6	1.4
June	2.8	1.2
July	3.4	1.4
August	3.6	1.5
September	3.9	1.7
October	3.4	1.4
November	3.0	1.2
December	2.8	1.2
2012
January	2.4	0.7
February	2.3	0.7
March	2.2	1.1
April	2.6	1.5
May	3.0	1.4
June	2.6	1.3
July	2.1	1.0
August	1.4	1.2
September	1.1	1.3
October	1.1	1.5
November	1.4	1.7
December	0.9	1.8
2013
January	1.6	2.0
February	2.2	2.2
March	2.3	1.5
April	2.1	1.1
May	2.2	1.5
June	1.8	1.4
July	2.2	1.5
August	2.8	1.4
September	3.1	1.2
October	3.7	1.2
November	3.5	1.0
December	3.1	0.7
2014
January	2.5	0.7
February	2.7	0.6
March	2.7	0.9
April	2.7	0.7
May	3.0	0.4
June	3.9	0.5
July	3.5	0.7
August	2.8	0.4
September	2.8	0.5
October	2.6	0.8
November	2.4	0.7
December	3.0	0.6
2015
January	2.5	0.7
February	1.9	0.8
March	1.5	0.8
April	1.3	0.8
May	0.6	1.1
June	0.4	1.0
July	0.5	0.9
August	0.9	1.1
September	0.1	0.9
October	0.0	0.7
November	0.1	0.7
December	0.0	0.9
2016
January	1.0	0.7
February	1.0	0.6
March	0.8	0.7
April	0.9	0.8
May	0.4	0.6
June	0.6	0.6
July	0.9	0.4
August	1.0	0.5
September	1.6	0.9
October	1.5	1.0
November	1.6	1.0
December	1.9	1.1
2017
January	1.7	1.5
February	2.1	1.6
March	2.9	1.5
April	3.3	1.6
May	4.3	1.8
June	4.0	2.0
July	3.6	2.2
August	3.2	2.1
September	3.2	1.8
October	3.3	1.7
November	3.5	2.1
December	3.4	2.3
2018
January	2.7	1.5
February	2.7	1.5
March	2.6	1.6
April	2.1	1.5
May	2.0	1.2
June	1.9	1.2
July	2.0	1.3
August	2.2	0.9
September	1.9	1.3
October	2.0	1.2
November	1.4	1.3
December	1.1	1.1
2019
January	1.6	1.8
February	Note ..: not available for a specific reference period	2.0
March	Note ..: not available for a specific reference period	1.8
.. not available for a specific reference period Sources: Statistics Canada, tables 36-10-0434-01 and 14-10-0287-01.

For 2018 as a whole, real GDP in Canada increased 1.8%, following 3.0% in 2017. Increased household spending accounted for about two-thirds of economic growth in 2018, while higher goods exports also supported gains (Chart 2). In the United States, real GDP rose by 2.9% in 2018.

Data table for Chart 2



Data table for Chart 2
Contributions to real GDP growth, selected components

Table summary
This table displays the results of Contributions to real GDP growth. The information is grouped by Selected components (appearing as row headers), 2017 and 2018, calculated using percentage-point contributions units of measure (appearing as column headers).

Selected components	2017	2018
	percentage-point contributions
Imports—services	-0.157	-0.080
Imports—goods	-1.256	-0.847
Exports—services	0.178	0.208
Exports—goods	0.181	0.800
Investment in inventories	0.821	-0.204
Business investment—machinery and equipment	0.175	0.214
Business investment—non-residential structures	0.063	-0.049
Business investment—residential structures	0.186	-0.175
Household final consumption expenditure	2.041	1.178
Gross domestic product at market prices	2.979	1.834
Notes: Data on gross domestic product (GDP) are annual growth rates; all other data are percentage-point contributions to the annual growth rates in real GDP. For additional data on these contributions, see the table noted below. Source: Statistics Canada, table 36-10-0128-01.

Household spending slowed as outlays on consumer durables fell

The pace of economic growth slowed in the second half of 2018, as business investment contracted and household spending slowed.^{Note 1} Real GDP rose 0.1% in the fourth quarter, the smallest quarterly increase since the most recent decline in GDP in the second quarter of 2016. Investment in housing continued to decline in the second half of the year, while exports weighed on growth in the fourth quarter. In the United States, real GDP growth slowed to 2.2% (annualized) in the fourth quarter, after 3.4% in the third.

Consumers contributed to growth throughout 2018 although the pace of spending slowed (Chart 3). Household final expenditures rose 0.2% in the fourth quarter and 0.3% in the third. Outlays on consumer durables decreased throughout the second half as households spent less on autos.^{Note 2} Outlays on services increased in the second half, supported by higher spending on life insurance and financial services late in the year.

For 2018, household final expenditures rose by 2.1%, down from 3.6% in 2017.  

Data table for Chart 3



Data table for Chart 3
Real gross domestic product, selected aggregates
Table summary
This table displays the results of Real gross domestic product. The information is grouped by Selected aggregates (appearing as row headers), Household expenditure, Government current expenditure, Non-residential business investment, Goods exports and Housing, calculated using index (first quarter of 2010 = 100) units of measure (appearing as column headers).

Selected aggregates	Household expenditure	Government current expenditure	Non-residential business investment	Goods exports	Housing
	index (first quarter of 2010 = 100)
2010
First quarter	100.0	100.0	100.0	100.0	100.0
Second quarter	100.8	99.9	104.8	104.0	98.8
Third quarter	101.7	100.2	108.7	103.7	97.0
Fourth quarter	102.6	100.9	114.1	106.5	96.3
2011
First quarter	102.8	101.0	117.3	106.9	98.2
Second quarter	103.2	101.4	120.2	104.5	98.1
Third quarter	103.7	101.8	120.6	111.1	100.6
Fourth quarter	104.3	102.1	124.2	112.4	101.6
2012
First quarter	104.9	102.2	127.1	112.1	106.1
Second quarter	105.1	101.9	131.1	112.0	105.5
Third quarter	105.7	102.6	131.4	111.3	104.6
Fourth quarter	106.3	102.5	134.3	110.9	104.6
2013
First quarter	106.9	101.4	136.7	113.1	103.7
Second quarter	107.9	101.0	138.1	115.2	105.3
Third quarter	108.7	101.5	139.0	113.7	104.6
Fourth quarter	109.4	102.1	141.0	115.7	104.5
2014
First quarter	109.8	102.4	142.5	114.7	103.2
Second quarter	110.8	102.0	143.9	122.3	105.6
Third quarter	111.6	102.0	145.9	124.5	108.0
Fourth quarter	112.4	101.7	148.8	124.8	108.3
2015
First quarter	112.6	103.1	136.2	123.1	109.1
Second quarter	113.2	103.2	130.6	125.1	109.2
Third quarter	114.0	103.8	125.7	128.1	111.3
Fourth quarter	114.8	103.5	122.6	126.7	111.8
2016
First quarter	115.1	104.3	117.4	129.3	113.5
Second quarter	115.5	105.7	115.7	122.7	114.4
Third quarter	116.4	105.4	118.0	126.6	114.1
Fourth quarter	117.3	105.9	112.7	127.3	114.9
2017
First quarter	118.5	106.5	116.2	127.6	117.2
Second quarter	119.9	107.2	118.0	129.5	115.9
Third quarter	120.9	107.7	119.5	125.1	115.6
Fourth quarter	121.7	108.8	121.8	127.0	119.1
2018
First quarter	122.1	109.4	123.8	126.7	116.1
Second quarter	122.6	110.1	123.4	132.0	116.3
Third quarter	123.0	110.5	119.9	133.5	114.6
Fourth quarter	123.2	111.1	116.5	133.0	110.2
Source: Statistics Canada, table 36-10-0104-01.

Export volumes slowed in the third quarter before declining 0.1% in the fourth on lower exports of forestry products, building materials, and metal products. Exports of passenger cars and light trucks also declined throughout the second half, while energy exports edged down in the fourth quarter on lower shipments of refined petroleum products.^{Note 3} Imports edged down 0.3% in the fourth quarter following a 2.2% decline in the third. Lower imports of basic and industrial chemicals and motor vehicles and parts contributed to declines throughout the second half. Energy imports were unchanged in the fourth quarter, following an 8.7% decline in the third.^{Note 4}

The terms of trade declined in the fourth quarter on notable reductions in the price of crude oil exports.^{Note 5} Real gross domestic income, a measure of the purchasing power of domestic production, decreased 1.1% in fourth quarter. At the same time, nominal GDP fell 0.7%, the first quarterly decline in economy-wide income in three years.   

For 2018, export volumes rose 3.3%, following a 1.1% increase in 2017. Import volumes rose 2.9% in 2018, after advancing 4.2% in 2017.

Lower business investment in non-residential structures and M&E

Non-residential business investment contracted during the second half of 2018 after trending higher during 2017 and early 2018 (Chart 4). Combined outlays on non-residential structures and machinery and equipment (M&E) were down 2.9% in the fourth quarter following a similar decline in the third. Business spending on these non-residential assets in the fourth quarter was down 4% from levels in late 2017, and 22% below levels observed in late 2014.

Data table for Chart 4



Data table for Chart 4
Business gross fixed capital formation
Table summary
This table displays the results of Business gross fixed capital formation Total business gross fixed capital formation, Residential structures, Non-residential structures, Machinery and equipment and Intellectual property products, calculated using index (first quarter of 2014 = 100) units of measure (appearing as column headers).

	Total business gross fixed capital formation	Residential structures	Non-residential structures	Machinery and equipment	Intellectual property products
	index (first quarter of 2014 = 100)
2014
First quarter	100.0	100.0	100.0	100.0	100.0
Second quarter	101.2	102.3	100.8	101.4	98.5
Third quarter	102.7	104.7	102.0	103.3	97.9
Fourth quarter	104.2	105.0	103.9	105.5	100.9
2015
First quarter	98.6	105.7	93.6	99.4	92.9
Second quarter	95.8	105.9	89.2	96.4	87.2
Third quarter	94.3	107.9	85.1	94.3	85.3
Fourth quarter	93.3	108.4	81.8	94.1	86.2
2016
First quarter	91.6	110.0	78.1	90.6	84.6
Second quarter	91.2	110.9	75.3	92.4	84.5
Third quarter	91.7	110.6	80.0	88.3	81.4
Fourth quarter	89.8	111.4	74.6	87.6	80.6
2017
First quarter	92.2	113.6	75.9	92.0	83.6
Second quarter	92.5	112.4	77.0	93.6	84.1
Third quarter	93.1	112.1	78.7	93.6	84.1
Fourth quarter	95.0	115.4	79.6	96.4	83.5
2018
First quarter	95.2	112.5	79.2	101.4	86.8
Second quarter	95.0	112.7	78.6	101.8	86.8
Third quarter	93.0	111.1	76.9	97.8	85.2
Fourth quarter	90.7	106.8	73.9	96.6	90.4
Source: Statistics Canada, table 36-10-0108-01.

Business investment in non-residential structures declined 4.0% in the fourth quarter, following a 2.1% decline in the third. Lower outlays on non-residential buildings and engineering structures contributed to declines late in the year. Investment in M&E fell 1.2% in the fourth quarter following a 3.9% decline in the third, as businesses spent less on industrial M&E. Business investment in intellectual property rose 6.1% in the fourth quarter, supported by higher spending on mineral exploration and evaluation. Outlays on research and development and software also increased in the fourth quarter. Overall business spending on intellectual property in the fourth quarter was 8% higher than in late 2017, but about 10% below levels reported in late 2014.   

For 2018, non-residential business investment rose 1.7% following a 2.5% increase in 2017.

Going forward, private sector organizations anticipate spending 2.8% more on non-residential tangible assets in 2019, following a 0.7% increase in 2018 (Chart 5).^{Note 6} Private-sector outlays are expected to increase in Quebec, British Columbia and Ontario and decrease in Alberta. Oil and gas extraction industries anticipate spending $36.7 billion on capital assets in 2019, matching reported outlays in 2018. Oil and gas producers in Alberta expect to spend $25.9 billion, down 3% from outlays in 2018. Manufacturing industries expect to spend $19.1 billion in 2019, a 4.9% increase over 2018 levels. Higher intentions among chemical producers supported the gain, while manufacturers of transportation equipment and petroleum and coal products anticipate lower outlays. Manufacturing intentions rose in Quebec and Alberta and declined in Ontario and British Columbia.

Data table for Chart 5



Data table for Chart 5
Non-residential capital expenditures on tangible assets

Table summary
This table displays the results of Non-residential capital expenditures on tangible assets
2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018 and 2019, calculated using index (2010=100) units of measure (appearing as column headers).

	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
	index (2010=100)
Total	100.0	107.7	114.2	117.3	124.7	115.2	105.4	110.0	112.7	115.5
Private sector organizations	100.0	113.1	121.8	127.9	138.6	120.8	107.3	108.8	109.6	112.6
Public sector organizations	100.0	97.4	99.6	97.2	98.0	104.4	101.7	112.1	118.7	121.1
Note: Data for 2018 are preliminary actual estimates; data for 2019 are intentions. Source: Statistics Canada, table 34-10-0037-01.

Investment in housing contracted in the second half

Investment in residential structures contracted during the second half of 2018. Outlays on housing fell 3.9% in the fourth quarter, following a 1.4% decline in the third. Spending on new construction and renovations declined in both quarters. Ownership transfer costs, which reflect the volume of activity in resale markets, were down in the fourth quarter after advancing in the third. Spending on ownership transfer costs in the fourth quarter was down 13% from levels in late 2017, prior to the introduction of the new minimum qualifying rate for uninsured mortgages which took effect in January 2018.

For 2018, investment in housing fell 2.3% following a 2.4% increase in 2017.^{Note 7}

Lower labour productivity in late 2018

Business sector labour productivity declined by 0.4% in the fourth quarter, following two consecutive quarterly increases. Declines in construction, agriculture and forestry and wholesale trade weighed on labour productivity late in the year. Industrial capacity utilization also fell in the fourth quarter, reflecting declines in manufacturing and construction. For 2018 as a whole, business sector labour productivity was unchanged, after increasing by 1.9% in 2017.

Declines in construction contributed to lower goods output

Goods output contracted during the second half of 2018. Broad-based declines in construction activity contributed to lower goods production in the third and fourth quarters, along with declines in support activities for mining and oil and gas extraction. Lower manufacturing output weighed on goods production in the fourth quarter, following gains in the third (Chart 6).

Data table for Chart 6



Data table for Chart 6
Real gross domestic product, selected industries
Table summary
This table displays the results of Real gross domestic product Mining, quarrying, and oil and gas , Construction, Manufacturing and Professional, scientific and technical services, calculated using index (January 2010=100) units of measure (appearing as column headers).

	Mining, quarrying, and oil and gas	Construction	Manufacturing	Professional, scientific and technical services
	index (January 2010=100)
2010
January	100.0	100.0	100.0	100.0
February	103.1	100.5	101.3	100.0
March	104.5	100.9	102.9	100.4
April	104.0	101.3	102.8	100.5
May	109.2	101.1	103.3	100.3
June	108.5	101.6	104.6	100.4
July	108.3	101.8	104.6	101.2
August	107.9	102.4	104.5	101.0
September	106.2	102.7	103.8	101.3
October	110.0	103.1	103.7	101.9
November	111.4	103.4	103.1	102.5
December	114.0	103.6	104.8	103.2
2011
January	111.4	104.6	105.8	103.8
February	110.9	105.0	104.9	104.3
March	113.4	104.4	105.7	104.6
April	114.2	104.2	105.7	104.7
May	110.0	104.0	105.1	105.0
June	111.9	105.1	105.5	105.9
July	115.3	105.8	107.1	105.9
August	119.3	106.5	106.9	106.4
September	119.5	107.0	108.1	107.0
October	117.5	107.1	108.3	107.6
November	116.6	107.6	108.9	108.0
December	116.9	108.7	110.7	108.5
2012
January	116.7	109.6	110.2	108.3
February	113.6	110.8	108.3	108.4
March	113.4	112.1	108.8	108.2
April	114.6	113.9	109.6	108.4
May	114.5	113.9	109.3	108.6
June	112.4	114.1	109.3	108.6
July	110.5	114.5	109.3	109.5
August	108.4	115.0	108.7	109.5
September	109.6	115.6	107.5	109.6
October	110.5	116.7	106.6	109.3
November	112.4	117.1	107.5	109.1
December	113.7	117.5	106.2	109.5
2013
January	114.8	117.5	107.3	109.8
February	117.7	118.1	107.6	109.7
March	118.2	118.8	108.1	110.1
April	117.5	119.6	107.3	110.7
May	116.4	120.1	107.4	111.4
June	115.3	117.2	107.3	111.5
July	117.3	119.7	107.1	111.6
August	119.3	120.1	107.7	112.2
September	120.2	119.7	109.1	113.3
October	121.6	120.1	110.4	113.5
November	121.7	120.3	110.0	114.1
December	121.0	119.0	107.7	114.6
2014
January	121.9	120.1	108.2	114.1
February	124.4	120.8	109.8	114.7
March	127.0	120.3	109.0	115.5
April	129.9	120.0	109.4	116.2
May	130.1	121.6	111.2	116.7
June	131.6	122.2	112.2	118.3
July	128.5	123.2	113.1	119.5
August	125.4	122.8	111.7	119.8
September	128.9	123.2	112.5	119.2
October	130.1	124.7	112.6	119.0
November	130.2	124.9	111.7	119.5
December	128.6	124.3	113.9	118.9
2015
January	129.3	122.9	112.5	118.7
February	126.7	121.4	111.2	118.2
March	121.8	120.0	112.3	117.8
April	120.1	119.5	112.1	117.5
May	120.5	120.4	111.9	117.3
June	124.6	119.6	110.8	116.9
July	128.0	119.2	111.4	116.8
August	129.5	119.3	113.1	116.9
September	122.7	118.5	112.0	116.4
October	124.0	118.2	111.7	116.6
November	123.8	117.7	111.7	116.8
December	123.1	117.2	112.4	116.9
2016
January	123.6	116.9	113.7	117.1
February	121.7	116.5	112.6	116.9
March	118.2	115.2	112.4	117.2
April	115.9	115.0	112.4	117.1
May	108.4	113.8	110.3	117.3
June	113.4	112.9	112.3	117.3
July	119.3	113.1	112.5	117.5
August	120.3	112.2	113.0	117.4
September	123.0	113.1	113.5	117.9
October	124.0	113.2	112.0	118.1
November	127.1	113.8	113.4	118.1
December	128.1	114.6	114.5	118.2
2017
January	129.3	115.7	115.3	118.5
February	128.3	116.6	114.9	119.1
March	127.3	116.8	115.7	119.6
April	130.0	118.1	116.1	120.2
May	133.5	117.1	117.2	120.7
June	131.8	119.2	118.5	120.4
July	132.4	119.6	117.8	120.7
August	132.5	119.9	116.4	121.0
September	132.7	121.3	116.8	121.2
October	129.0	122.1	116.6	121.2
November	131.1	122.4	118.7	121.9
December	131.9	122.3	119.4	122.7
2018
January	131.0	121.9	118.7	122.3
February	134.4	122.8	119.4	122.8
March	138.2	122.4	119.6	123.1
April	139.7	122.2	119.1	123.6
May	140.8	122.4	118.0	123.8
June	138.1	122.0	119.6	124.3
July	138.4	120.4	120.7	124.7
August	138.9	118.9	120.1	125.0
September	137.0	117.7	119.9	125.4
October	136.4	116.7	120.6	125.8
November	135.9	115.7	120.0	126.4
December	135.1	114.7	119.1	127.2
2019
January	130.8	116.9	120.9	127.6
Source: Statistics Canada, table 36-10-0434-01.

Construction activity contracted for seven consecutive months from June to December. Construction output at year end was 6% lower than levels at mid-year, reflecting broad-based declines in residential and non-residential building construction and engineering construction.

Manufacturing declined during four of the last six months of 2018. Factory output at year end was little changed from mid-year levels (-0.4%). Declines among automotive and parts manufacturers weighed on factory output during the second half. Wood products, paper manufacturing and printing products also trended lower, while fabricated metal products and computer and electronic products strengthened.

Gains among service industries offset lower goods output during the second half of 2018. Finance and insurance and professional services contributed to growth in the third and fourth quarters, while retail trade edged down. Activities of real estate agents and brokers decreased in the fourth quarter, offsetting gains in the third. These activities declined during the last four months of 2018. At year end, the output of real estate agents and brokers was 23% below levels at the end of 2017.

Support activities for mining and oil and gas extraction trended lower

Oil and gas extraction moderated in the second half of 2018 as output levels fluctuated in response to maintenance and shutdown activities. Output in the oil sands declined in four of the last six months (Chart 7). Oil sands production in December was down slightly from levels at mid-year, but about 2% higher on a year-over-year basis. Excluding production in the oil sands, oil and gas extraction in December was 7% higher year-over-year.

Output fell sharply in the second half of 2018 among businesses that provide support activities for mining and oil and gas extraction. These activities, which include rigging and drilling services, declined in five of the last six months of the year, with a 17% decline in December. Output at year end was down 23% from levels at mid-year, and 11% below levels at the end of 2017, despite gains in the first half of 2018.  

Data table for Chart 7



Data table for Chart 7
Real gross domestic product, selected industries
Table summary
This table displays the results of Real gross domestic product Oil and gas extraction (except oil sands), Oil sands extraction, Support activities for mining and oil and gas extraction, Crude oil and other pipeline transportation and Petroleum refineries, calculated using index (January 2010=100) units of measure (appearing as column headers).

	Oil and gas extraction (except oil sands)	Oil sands extraction	Support activities for mining and oil and gas extraction	Crude oil and other pipeline transportation	Petroleum refineries
	index (January 2010=100)
2010
January	100.0	100.0	100.0	100.0	100.0
February	98.6	111.7	108.4	99.3	93.7
March	100.0	115.9	99.2	106.9	93.7
April	100.2	118.8	96.4	104.7	90.6
May	102.1	127.3	108.3	107.3	93.6
June	102.1	128.0	104.4	107.2	97.4
July	103.0	123.3	104.4	109.6	94.3
August	105.8	119.9	98.3	109.8	92.9
September	104.4	115.9	89.8	97.8	96.0
October	103.6	122.2	102.9	100.8	83.2
November	103.7	130.8	103.1	107.1	88.3
December	105.7	134.9	108.4	106.9	91.2
2011
January	105.7	128.7	99.1	119.3	87.3
February	103.2	130.5	98.9	125.2	86.8
March	104.8	129.0	116.1	121.0	87.8
April	105.3	133.2	113.3	116.1	89.1
May	103.9	119.2	114.4	115.4	78.1
June	102.1	128.0	114.7	117.8	82.6
July	104.9	132.7	116.7	123.1	83.3
August	107.1	135.4	137.1	129.6	86.0
September	107.5	136.6	137.1	129.7	94.2
October	106.6	133.1	136.9	129.7	90.3
November	105.1	133.3	136.1	127.1	88.5
December	105.2	134.5	132.2	129.2	87.6
2012
January	104.7	139.4	131.2	135.8	86.6
February	102.8	136.8	130.5	133.9	89.3
March	102.3	128.0	137.3	134.3	86.2
April	102.0	136.9	130.3	138.9	91.0
May	98.9	145.7	121.0	142.7	87.6
June	95.5	139.9	122.7	142.2	86.5
July	93.3	141.3	118.5	140.4	90.5
August	91.4	140.7	115.9	138.7	88.9
September	91.6	141.2	120.6	135.2	87.0
October	96.3	139.9	116.0	126.6	93.5
November	99.7	134.6	116.8	134.3	92.7
December	97.7	144.0	121.2	140.6	92.1
2013
January	98.4	140.2	131.0	141.7	93.3
February	99.3	142.4	138.0	143.7	89.1
March	100.1	147.1	131.6	146.1	90.9
April	99.6	146.2	127.8	143.7	89.0
May	101.6	138.6	123.3	141.1	80.0
June	102.4	142.5	114.6	142.6	94.0
July	103.5	143.8	120.0	139.5	88.3
August	103.9	153.8	123.1	145.6	90.8
September	103.9	151.3	126.8	145.8	94.2
October	102.6	153.6	131.0	150.3	89.0
November	103.1	159.1	122.7	148.4	94.0
December	104.5	159.4	112.4	140.8	88.9
2014
January	105.2	157.3	120.9	141.5	89.6
February	107.1	157.5	126.0	145.6	95.4
March	106.6	166.5	131.8	144.9	84.3
April	106.0	172.6	140.1	143.9	87.8
May	107.0	173.8	141.0	152.5	91.4
June	108.4	175.9	136.1	156.5	102.7
July	107.4	173.2	127.6	152.2	97.7
August	103.5	171.7	121.7	151.5	93.8
September	105.7	177.4	130.0	151.5	87.7
October	106.6	183.4	127.5	151.6	90.9
November	107.4	180.9	134.0	153.2	96.5
December	105.6	179.5	132.1	154.2	97.3
2015
January	106.0	192.0	108.0	149.6	94.5
February	105.0	197.8	95.2	154.5	92.4
March	102.3	196.2	77.2	151.0	95.6
April	101.1	191.2	78.3	162.7	96.6
May	99.0	186.3	89.6	156.9	96.8
June	98.6	197.3	99.9	160.7	88.9
July	98.2	218.8	95.2	168.8	89.5
August	98.9	221.9	100.9	177.4	94.4
September	99.1	191.2	93.8	170.6	91.6
October	97.6	203.3	95.7	164.5	92.0
November	99.1	206.3	92.4	170.4	88.4
December	99.7	207.3	84.1	175.8	92.1
2016
January	98.9	208.7	86.5	179.4	93.6
February	100.2	204.7	77.3	182.0	92.5
March	100.7	206.4	63.5	174.1	94.6
April	101.6	199.2	58.8	166.2	95.8
May	103.0	146.0	60.4	159.0	83.1
June	102.9	168.6	62.1	162.8	92.6
July	102.9	209.9	63.7	168.0	98.5
August	105.4	210.0	64.2	179.6	94.1
September	106.3	219.3	67.2	179.2	91.0
October	102.5	220.9	73.3	175.9	83.9
November	102.4	229.3	76.2	181.9	92.2
December	99.9	215.9	90.0	179.6	91.5
2017
January	102.0	218.9	89.8	178.2	91.5
February	100.5	224.5	91.3	179.7	92.7
March	104.4	214.9	92.0	179.3	95.1
April	105.2	209.5	100.1	179.7	95.9
May	108.3	225.7	95.6	186.8	98.0
June	109.4	220.8	91.4	185.6	100.1
July	108.5	224.0	89.9	193.2	97.6
August	105.2	230.8	86.3	189.9	93.5
September	108.5	227.7	85.0	192.5	100.7
October	110.1	209.3	80.8	189.4	101.4
November	109.1	225.8	84.5	175.3	96.0
December	107.9	238.3	83.8	181.7	97.5
2018
January	108.4	224.2	87.6	185.0	98.5
February	110.5	231.0	91.7	185.4	98.8
March	112.5	240.0	99.4	191.0	95.7
April	114.2	237.8	110.6	192.1	74.2
May	114.6	252.2	105.1	194.2	73.6
June	115.5	245.7	97.1	195.5	91.8
July	116.4	236.1	96.8	194.3	99.0
August	117.1	243.0	93.0	195.8	97.0
September	114.2	234.3	90.9	193.4	99.4
October	115.3	246.5	87.1	192.7	100.0
November	111.6	244.0	89.6	193.7	96.9
December	115.1	242.9	74.4	193.2	93.7
2019
January	113.7	233.0	71.5	191.0	98.2
Source: Statistics Canada, table 36-10-0434-01.

More recently, real GDP rose 0.3% in January 2019 led by broad-based increases in manufacturing and construction. Gains in January were partly offset by lower oil and gas extraction and a continued decline in support activities for mining and oil and gas extraction.

Employment strengthened in late 2018

Total employment rose by 174,000 (+0.9%) in the last six months of 2018, led by increases among private-sector employees and core-age workers. Overall gains in the second half reflected increases in full-time and part-time work and were concentrated in services (Chart 8). Over two-thirds of the net gain in the second half reflected higher employment in British Columbia and Ontario.   

The national unemployment rate edged down to a record low of 5.6% in late 2018. Ontario’s unemployment rate averaged 5.6% during the last six months of the year, compared to 5.4% in Quebec. The unemployment rates in British Columbia and Alberta averaged 4.5% and 6.7%, respectively, during this period. 

For 2018, total employment rose by 196,000, about one-half of the increase observed in 2017.^{Note 8} All of the net increase was in full time-work and reflected gains among core-age workers. Higher employment among private-sector employees accounted for two-thirds of the net gain.^{Note 9}

Data table for Chart 8



Data table for Chart 8
Type of employment
Table summary
This table displays the results of Type of employment Total, Full-time and Part-time, calculated using year-over-year change (thousands of persons) units of measure (appearing as column headers).

	Total	Full-time	Part-time
	year-over-year change (thousands of persons)
2010
January	4.9	-67.4	72.3
February	74.7	118.4	-43.7
March	105.4	89.3	16.1
April	225.1	138.3	86.7
May	266.0	230.7	35.2
June	345.6	303.0	42.6
July	336.3	118.4	218.0
August	342.3	206.9	135.4
September	279.1	134.8	144.3
October	306.8	159.5	147.3
November	257.4	113.6	143.9
December	307.9	180.3	127.5
2011
January	315.4	209.7	105.6
February	294.9	96.4	198.5
March	305.4	260.8	44.5
April	265.0	236.1	28.9
May	232.9	193.8	39.2
June	210.2	186.6	23.6
July	238.8	382.9	-144.1
August	250.9	353.2	-102.2
September	294.5	360.4	-65.8
October	239.3	232.8	6.5
November	202.6	269.2	-66.7
December	200.8	231.2	-30.2
2012
January	121.9	190.4	-68.5
February	122.9	229.0	-106.1
March	194.0	212.3	-18.2
April	250.7	250.8	-0.1
May	246.7	225.5	21.2
June	222.6	237.4	-14.8
July	179.2	213.0	-33.9
August	200.6	203.5	-2.9
September	227.3	188.4	38.8
October	266.7	288.2	-21.4
November	301.4	253.4	48.0
December	312.1	273.2	38.8
2013
January	351.4	289.5	62.1
February	377.6	327.2	50.4
March	253.0	195.4	57.6
April	192.9	183.2	9.7
May	253.6	275.1	-21.6
June	236.1	199.9	36.3
July	255.5	159.2	96.4
August	247.4	153.5	93.8
September	216.8	167.6	49.2
October	206.6	172.5	34.1
November	183.5	136.4	47.2
December	130.9	52.4	78.5
2014
January	129.4	64.7	64.7
February	114.0	72.0	42.0
March	160.7	105.6	55.2
April	119.4	52.2	67.2
May	66.8	-70.5	137.4
June	86.2	27.5	58.6
July	123.1	22.3	100.8
August	67.3	-6.2	73.4
September	92.4	24.1	68.3
October	138.5	28.1	110.4
November	115.5	67.1	48.3
December	108.2	145.5	-37.4
2015
January	128.3	116.6	11.7
February	136.8	128.7	8.1
March	133.8	126.5	7.2
April	136.0	171.9	-35.9
May	192.2	234.8	-42.6
June	174.2	235.2	-61.0
July	168.8	273.9	-105.1
August	199.0	323.8	-124.7
September	166.3	196.5	-30.2
October	130.8	174.3	-43.5
November	127.2	202.0	-74.8
December	152.0	148.9	3.2
2016
January	119.6	164.2	-44.7
February	108.9	59.7	49.2
March	121.5	102.0	19.5
April	146.9	80.6	66.3
May	110.5	105.6	5.0
June	108.2	24.5	83.7
July	68.2	-35.6	103.8
August	98.5	-17.8	116.3
September	160.3	73.6	86.7
October	174.3	33.3	141.0
November	178.2	-31.1	209.3
December	198.3	63.6	134.7
2017
January	276.2	77.1	199.1
February	290.0	253.6	36.4
March	275.0	221.9	53.2
April	282.9	192.6	90.3
May	328.1	232.5	95.5
June	360.9	263.2	97.7
July	391.9	360.4	31.5
August	384.0	225.1	158.8
September	325.0	294.2	30.7
October	318.1	405.4	-87.3
November	384.9	440.1	-55.2
December	417.4	386.8	30.6
2018
January	276.2	429.3	-153.1
February	270.1	276.2	-6.1
March	289.7	338.3	-48.7
April	274.3	379.8	-105.5
May	223.4	283.0	-59.6
June	215.4	280.0	-64.6
July	241.0	200.4	40.6
August	167.3	323.0	-155.6
September	236.9	215.6	21.5
October	221.4	170.1	51.4
November	249.6	231.9	17.7
December	195.8	194.5	1.3
2019
January	327.2	165.6	161.7
February	369.1	266.0	103.1
March	331.6	203.7	127.8
Source: Statistics Canada, table 14-10-0287-01.

The national employment rate—the number of employed persons expressed as a percentage of the working-age population—edged higher in late 2018, supported by higher employment among core-aged persons (those aged 25-54). The employment rate among 25 to 54 year-olds trended higher, rising to 83.3% at year end, while their unemployment rate fell below 5% from October to December (Chart 9). The employment rate among core-aged individuals in Quebec averaged 84.8% during the last six months of the year, compared to 81.8% in Ontario. In British Columbia, 84.0% of core-age persons were employed during this period, compared to 83.7% in Alberta.

Data table for Chart 9



Data table for Chart 9
Employment and unemployment rates, persons aged 25 to 54 years
Table summary
This table displays the results of Employment and unemployment rates Employment rate and Unemployment rate, calculated using percent units of measure (appearing as column headers).

	Employment rate	Unemployment rate
	percent
2010
January	80.4	7.1
February	80.4	7.1
March	80.4	7.1
April	80.6	7.0
May	80.6	6.9
June	80.7	6.9
July	80.5	7.0
August	80.5	7.0
September	80.4	7.0
October	80.4	6.6
November	80.5	6.6
December	80.5	6.5
2011
January	80.8	6.5
February	80.8	6.5
March	81.1	6.3
April	81.0	6.3
May	80.9	6.2
June	81.1	6.3
July	81.1	6.1
August	81.2	6.1
September	81.2	6.1
October	81.0	6.2
November	80.9	6.4
December	81.0	6.2
2012
January	80.9	6.3
February	81.0	6.1
March	81.0	6.2
April	81.4	6.1
May	81.4	6.2
June	81.6	5.8
July	81.4	6.0
August	81.5	5.9
September	81.7	5.9
October	81.6	6.1
November	81.7	5.9
December	81.9	5.9
2013
January	81.7	5.9
February	81.7	5.8
March	81.5	6.0
April	81.6	5.8
May	81.7	5.8
June	81.7	5.8
July	81.7	5.8
August	81.6	5.8
September	81.6	5.9
October	81.5	5.8
November	81.5	5.8
December	81.3	6.1
2014
January	81.4	5.8
February	81.4	5.9
March	81.5	5.8
April	81.1	5.8
May	81.0	5.8
June	80.9	6.0
July	80.9	6.1
August	81.1	5.8
September	81.2	5.5
October	81.4	5.5
November	81.5	5.5
December	81.5	5.4
2015
January	81.5	5.5
February	81.5	5.6
March	81.3	5.8
April	81.3	5.6
May	81.5	5.7
June	81.5	5.8
July	81.6	5.6
August	81.5	5.9
September	81.5	5.9
October	81.3	6.0
November	81.3	6.2
December	81.2	6.2
2016
January	81.3	6.2
February	81.2	6.3
March	81.3	6.1
April	81.4	6.1
May	81.4	6.0
June	81.4	5.8
July	81.3	5.8
August	81.2	5.9
September	81.3	5.8
October	81.4	5.8
November	81.6	5.9
December	81.7	5.9
2017
January	82.1	5.6
February	82.1	5.6
March	82.3	5.6
April	82.1	5.6
May	82.3	5.6
June	82.4	5.4
July	82.3	5.5
August	82.4	5.3
September	82.3	5.4
October	82.4	5.3
November	82.3	5.0
December	82.5	4.9
2018
January	82.3	5.0
February	82.5	4.9
March	82.5	4.9
April	82.6	4.9
May	82.4	5.0
June	82.5	5.1
July	82.6	5.0
August	82.5	5.2
September	82.9	5.0
October	83.0	4.9
November	83.2	4.6
December	83.3	4.7
2019
January	83.3	4.9
February	83.4	4.8
March	83.1	4.8
Source: Statistics Canada, table 14-10-0287-01.

Employment rose during the first quarter of 2019, led by gains in full-time work and among private sector employees. Employment among core-aged workers was little changed during the quarter, as the majority of gains reflected higher employment among youth. Higher employment in Ontario accounted for about 60% of the net increase in employment in the first quarter. The unemployment rate held steady at 5.8% from January to March.

The average annual increase in payroll earnings during the last six months of 2018 was 2.3%, down from 2.9% during the first half. After reaching the 3% mark from June to August, earnings growth fluctuated in subsequent months, edging below 2% in September and again at year end (+1.7%). Earnings growth in the goods sector moderated, as payroll earnings in construction slowed towards year end.^{Note 10}

Merchandise trade deficits widened in late 2018

Following modest deficits from August to October, Canada’s merchandise trade deficit widened in late 2018, rising to a record $4.8 billion at year end. Lower energy exports on sharp reductions in crude oil prices contributed to larger trade deficits late in the year (Chart 10).

Data table for Chart 10



Data table for Chart 10
Merchandise trade balance, energy and non-energy commodities
Table summary
This table displays the results of Merchandise trade balance Total, Energy and Non-energy, calculated using billions of dollars units of measure (appearing as column headers).

	Total	Energy	Non-energy
	billions of dollars
2010
January	0.3940	4.5516	-4.1576
February	0.0612	4.4315	-4.3703
March	-1.2558	3.7750	-5.0308
April	0.1096	3.8102	-3.7006
May	-0.8602	3.9468	-4.8070
June	-1.3962	3.9190	-5.3152
July	-2.0710	3.6363	-5.7073
August	-1.7715	3.0390	-4.8105
September	-2.3338	3.4017	-5.7355
October	-1.1825	3.7628	-4.9453
November	-0.5128	3.9555	-4.4683
December	1.1157	5.1043	-3.9886
2011
January	0.7441	5.0282	-4.2841
February	-0.0485	4.6027	-4.6512
March	-0.9995	4.0568	-5.0563
April	-0.2397	4.5920	-4.8317
May	-1.0860	4.3762	-5.4622
June	-1.1145	4.4570	-5.5715
July	0.1488	4.9600	-4.8112
August	0.2088	4.7108	-4.5020
September	1.0978	5.1549	-4.0571
October	-0.8401	4.7935	-5.6336
November	0.5753	5.3149	-4.7396
December	2.1211	6.3176	-4.1965
2012
January	-0.0347	6.1539	-6.1886
February	-0.0010	5.2140	-5.2150
March	-1.1621	5.1718	-6.3339
April	-0.7409	4.9959	-5.7368
May	-1.3866	4.0737	-5.4603
June	-2.3378	4.5044	-6.8422
July	-3.0420	3.8128	-6.8548
August	-1.0763	4.3878	-5.4641
September	-1.0511	4.7454	-5.7965
October	-0.3793	4.7582	-5.1375
November	-1.6733	4.6945	-6.3678
December	-0.4040	4.8585	-5.2625
2013
January	-0.8826	4.6380	-5.5206
February	-0.6904	5.1546	-5.8450
March	-0.1831	5.4548	-5.6379
April	-0.1531	5.3767	-5.5298
May	-0.8204	5.5301	-6.3505
June	-0.4440	5.3081	-5.7521
July	-1.6565	6.0635	-7.7200
August	-0.7976	6.5426	-7.3402
September	-0.0351	6.8405	-6.8756
October	-0.3717	6.4780	-6.8497
November	-1.2676	5.8469	-7.1145
December	-0.8433	6.2695	-7.1128
2014
January	-0.8764	7.0811	-7.9575
February	0.5745	8.1240	-7.5495
March	1.5233	8.6208	-7.0975
April	0.3225	6.9584	-6.6359
May	0.5675	7.5547	-6.9872
June	1.6283	7.4378	-5.8095
July	1.6949	7.0638	-5.3689
August	0.9228	7.2639	-6.3411
September	0.5855	6.8634	-6.2779
October	-0.1913	6.7952	-6.9865
November	-0.7962	6.1013	-6.8975
December	-1.2825	5.1985	-6.4810
2015
January	-2.4234	4.6408	-7.0642
February	-1.7219	5.1430	-6.8649
March	-3.4135	4.4895	-7.9030
April	-2.3809	4.4647	-6.8456
May	-2.6508	4.7351	-7.3859
June	-0.4176	4.9514	-5.3690
July	-0.4595	4.7942	-5.2537
August	-1.6078	4.2877	-5.8955
September	-2.0076	4.1832	-6.1908
October	-2.4134	4.1005	-6.5139
November	-3.1499	3.6657	-6.8156
December	-1.9895	3.4819	-5.4714
2016
January	-1.3591	3.4036	-4.7627
February	-3.1932	2.7842	-5.9774
March	-3.2488	2.7967	-6.0455
April	-3.1030	3.2194	-6.3224
May	-3.6522	3.1468	-6.7990
June	-3.8449	3.1083	-6.9532
July	-1.4968	3.5260	-5.0228
August	-1.5631	3.9994	-5.5625
September	-3.9846	4.2137	-8.1983
October	-1.3140	4.3895	-5.7035
November	0.9768	5.1943	-4.2175
December	0.2589	6.1102	-5.8513
2017
January	-0.1487	5.4312	-5.5799
February	-1.4328	5.3192	-6.7520
March	-1.0704	5.9121	-6.9825
April	-0.8936	5.5780	-6.4716
May	-1.3712	5.7266	-7.0978
June	-3.4594	4.7928	-8.2522
July	-2.7101	4.7278	-7.4379
August	-2.8614	5.1667	-8.0281
September	-3.2947	4.7613	-8.0560
October	-1.3786	5.1769	-6.5555
November	-2.9417	5.3464	-8.2881
December	-3.0816	5.4655	-8.5471
2018
January	-1.8461	6.3015	-8.1476
February	-2.3720	5.6075	-7.9795
March	-3.7124	6.1342	-9.8466
April	-1.5801	6.4000	-7.9801
May	-2.8578	5.8849	-8.7427
June	-0.7702	6.9110	-7.6812
July	0.0162	7.1579	-7.1417
August	-0.3843	6.8770	-7.2613
September	-0.7692	6.9446	-7.7138
October	-0.6186	6.2272	-6.8458
November	-2.1995	5.3106	-7.5101
December	-4.8043	3.1084	-7.9127
2019
January	-3.0862	5.5084	-8.5946
February	-2.8948	6.3881	-9.2829
Source: Statistics Canada, table 12-10-0121-01.

Despite larger monthly deficits late in the year, the cumulative merchandise trade deficit in the second half of 2018, at $8.8 billion, was smaller than in the first half of the year ($13.1 billion). A smaller deficit on non-energy products contributed to the decrease. For 2018, Canada’s merchandise trade deficit narrowed to $21.9 billion, down from $24.6 billion in 2017.

Total merchandise exports in the second half of 2018 were 2.3% higher than in the first six months of the year, reflecting higher shipments of non-energy products. Increases in metal ores and non-metallic minerals and consumer products contributed to higher exports, while lower exports of crude and crude bitumen offset gains (Chart 11). While the cumulative value of exports rose in the second half of 2018, monthly export flows trended lower, posting five consecutive declines from August to December. Lower energy exports contributed substantially to these declines, particularly during the last three months of the year. Energy exports in December were $6.3 billion, down from $10.0 billion in June, as exports of crude oil and crude bitumen at year end were down over 50% from levels at mid-year.      

More recently, merchandise exports rose 5.3% in January 2019, bolstered by higher crude oil prices. Despite continued support from higher crude prices in February, exports fell 1.3% on widespread declines in non-energy products.      

Data table for Chart 11



Data table for Chart 11
Merchandise exports by commodity group
Table summary
This table displays the results of Merchandise exports by commodity group Total, Energy and Non-energy (appearing as column headers).

	Total	Energy	Non-energy
2010
January	100.0	100.0	100.0
February	102.3	98.1	103.6
March	101.1	94.5	103.2
April	101.7	91.8	104.7
May	104.3	93.6	107.7
June	103.2	88.4	107.8
July	102.2	89.9	105.9
August	104.9	88.7	109.9
September	102.9	87.0	107.8
October	105.8	88.3	111.1
November	107.4	94.0	111.5
December	113.0	110.8	113.7
2011
January	116.0	114.6	116.5
February	110.2	107.2	111.2
March	112.3	111.2	112.7
April	113.8	116.1	113.1
May	113.3	114.8	112.8
June	112.2	110.4	112.8
July	116.4	111.5	118.0
August	119.7	111.6	122.2
September	123.3	120.7	124.1
October	120.8	119.4	121.3
November	124.1	127.4	123.1
December	129.2	132.2	128.3
2012
January	122.6	133.1	119.4
February	122.5	127.0	121.0
March	118.5	117.8	118.7
April	119.3	116.1	120.3
May	119.1	109.6	122.0
June	118.1	108.6	121.0
July	116.0	104.0	119.7
August	117.4	110.4	119.6
September	117.0	111.7	118.6
October	118.4	116.0	119.1
November	118.9	117.1	119.5
December	119.0	116.1	119.8
2013
January	119.3	118.5	119.6
February	122.1	121.9	122.1
March	123.8	124.7	123.5
April	125.4	123.4	126.0
May	122.5	122.0	122.7
June	122.2	121.2	122.5
July	119.5	124.3	118.0
August	125.7	138.0	122.0
September	126.9	141.2	122.5
October	124.6	132.9	122.1
November	124.1	121.8	124.9
December	125.3	133.4	122.8
2014
January	125.0	141.9	119.8
February	133.5	160.5	125.2
March	137.4	167.4	128.1
April	135.1	142.4	132.8
May	139.9	149.8	136.8
June	139.5	148.8	136.7
July	140.1	146.5	138.1
August	138.4	142.5	137.1
September	139.0	139.2	138.9
October	139.1	131.3	141.6
November	134.9	126.4	137.5
December	134.6	111.3	141.8
2015
January	130.7	95.8	141.4
February	132.4	104.2	141.1
March	133.4	97.1	144.6
April	132.6	99.2	142.9
May	131.4	99.9	141.1
June	138.6	103.0	149.6
July	140.9	98.2	154.0
August	138.4	92.1	152.6
September	137.1	88.0	152.2
October	134.0	85.1	149.1
November	133.1	80.0	149.5
December	137.6	75.7	156.6
2016
January	140.6	73.6	161.3
February	133.9	61.7	156.2
March	128.2	66.2	147.3
April	128.3	68.5	146.8
May	126.3	72.3	143.0
June	126.8	75.5	142.6
July	133.2	79.7	149.7
August	136.6	86.4	152.1
September	136.1	86.4	151.5
October	137.2	92.2	151.1
November	142.8	100.4	155.8
December	142.0	109.9	151.9
2017
January	144.1	109.5	154.8
February	141.0	110.7	150.3
March	144.5	112.6	154.3
April	145.9	110.0	157.0
May	149.9	111.9	161.7
June	141.6	98.5	154.9
July	135.2	94.4	147.8
August	135.8	97.0	147.7
September	134.9	100.4	145.5
October	138.2	104.2	148.6
November	143.1	106.6	154.3
December	144.5	114.3	153.8
2018
January	141.9	121.0	148.3
February	143.6	115.8	152.2
March	149.0	122.6	157.1
April	151.5	127.0	159.0
May	151.2	124.0	159.6
June	157.1	131.1	165.2
July	158.5	136.6	165.3
August	156.8	134.9	163.6
September	154.8	132.1	161.8
October	154.5	123.2	164.2
November	147.9	105.9	160.9
December	142.7	83.0	161.1
2019
January	150.3	109.3	162.9
February	148.3	122.1	156.4
Source: Statistics Canada, table 12-10-0121-01.

Petroleum, chemicals and fabricated metals bolstered manufacturing sales

Total manufacturing sales in the second half of 2018 were 1.9% higher than in the first six months of the year, supported by increases in petroleum and coal products, chemical products and fabricated metals. Total sales at auto and parts manufacturers were similar in the first and second halves of the year.   

Measured on a monthly basis, manufacturing sales trended lower during the second half of 2018 on declines late in the year. Lower sales of petroleum and coal products contributed to decreases in November and December as both prices and refinery volumes declined.    

For 2018, manufacturing sales rose 5.4% supported by higher sales of petroleum and coal products, primary and fabricated metals and machinery products. Higher sales of paper products, food products and chemical products also contributed to the gain. Annual sales at auto and parts manufacturers declined in 2018, reflecting lower sales at assembly plants. More recently, manufacturing sales rose 0.8% in January 2019 on higher sales of food products, machinery and electrical equipment. Sales edged down 0.2% in February.

Slower retail sales on lower gas prices

Total retail sales were 1.4% higher in the second half of 2018 than during the first six months of the year, supported by higher sales at food and beverage stores and motor vehicle and parts dealers. Sales at general merchandise stores also contributed to the increase in retail spending, while lower receipts at gasoline stations moderated gains. Higher sales in Ontario accounted for three-quarters of the net increase in retail spending. 

Measured on a monthly basis, retail spending levelled off during the second half of 2018 as price-led declines at gasoline stations weighed on spending late in the year. Sales at auto and parts dealers bolstered sales in August, October and December, while receipts at building materials and garden equipment suppliers declined from July to November before strengthening at year end.

For 2018, retail sales rose 2.9% as auto sales moderated. Higher spending in Ontario accounted for over one-half of the annual gain. More recently, retail sales declined 0.4% in January 2019 on lower receipts at gasoline stations. Retail sales rebounded in February (+0.8%) led by higher sales at auto dealers.     

Home prices continued to soften as prices declined in Vancouver

Home prices, measured year-over-year, continued to moderate in the second half of 2018 as prices declined in Vancouver (Chart 12). Based on estimates from the Aggregate Composite MLS Home Price Index, overall home prices were 1.6% higher at year end than at the end of 2017. Price growth continued to moderate in early 2019, slowing to 0.8% in January before declining on a year-over-year basis in February and March.^{Note 11}

Home prices in Greater Vancouver softened during the second half of 2018 as prices declined month-over-month from July to December. Measured on a year-over-year basis, price growth in Greater Vancouver slowed from 9.5% in June to 1.0% in October prior to outright declines in November and December. Home prices in Greater Vancouver continued to decline on a year-over-year basis in early 2019, and were down 7.7% in March. 

After declines from March to July, home prices in Greater Toronto edged higher on a year-over-year basis during the second half of 2018, rising to 3.0% at year end. Annual price increases in Greater Toronto moderated slightly in early 2019, before edging up to 2.6% in March. Meanwhile, annual home price inflation in Montreal has been around 6% during the second half of 2018, and continued at this pace into early 2019. 

Data table for Chart 12



Data table for Chart 12
Multiple listing service (MLS) home price index, selected cities
Table summary
This table displays the results of Multiple listing service (MLS) home price index Aggregate, Greater Vancouver , Calgary , Greater Toronto and Greater Montreal, calculated using index (January 2010=100) units of measure (appearing as column headers).

	Aggregate	Greater Vancouver	Calgary	Greater Toronto	Greater Montreal
	index (January 2010=100)
2010
January	100.0	100.0	100.0	100.0	100.0
February	101.3	101.1	101.4	101.4	101.6
March	102.5	102.4	103.0	102.6	102.8
April	103.1	103.2	103.7	103.3	103.7
May	103.3	103.0	104.4	103.3	104.3
June	103.0	102.6	104.4	102.8	104.8
July	102.5	101.5	103.7	102.1	105.1
August	102.0	100.9	102.3	101.8	105.4
September	101.8	100.6	101.3	101.9	105.5
October	101.6	100.4	100.3	102.0	105.7
November	101.5	100.6	99.4	102.4	106.0
December	101.4	100.5	98.8	102.9	106.4
2011
January	102.0	101.6	98.4	103.7	107.2
February	103.0	102.5	99.0	105.4	108.4
March	104.2	104.4	99.5	106.5	109.3
April	105.2	106.7	100.1	107.6	109.8
May	105.9	107.8	100.5	108.7	109.9
June	106.2	108.5	101.2	109.0	109.8
July	106.5	108.9	101.1	109.5	109.8
August	106.6	109.1	100.8	110.1	110.1
September	106.6	108.7	100.3	110.4	110.1
October	106.6	108.4	99.8	110.9	110.4
November	106.4	108.1	99.4	111.2	110.1
December	106.2	107.5	98.6	111.6	108.9
2012
January	106.6	107.7	98.4	111.9	109.6
February	107.5	108.7	99.1	113.3	110.1
March	108.8	110.0	99.9	115.1	111.6
April	109.9	110.7	100.8	116.4	112.4
May	110.6	111.2	101.9	117.5	112.6
June	110.8	110.4	102.6	117.7	113.0
July	110.6	109.5	102.9	117.3	112.6
August	110.5	108.4	102.9	117.1	112.6
September	110.3	107.8	103.0	117.1	112.7
October	110.0	107.3	102.7	116.9	112.6
November	109.6	106.4	102.6	116.6	112.2
December	109.3	105.3	102.5	116.3	112.3
2013
January	109.7	104.9	103.0	116.2	112.5
February	110.5	105.3	104.0	117.0	113.3
March	111.6	105.8	105.1	118.6	114.2
April	112.7	106.7	106.5	119.9	114.6
May	113.6	106.6	107.6	121.0	116.4
June	113.9	107.3	108.3	121.5	115.6
July	114.1	107.3	109.0	121.6	115.4
August	114.2	107.2	109.4	121.8	115.3
September	114.4	107.4	109.8	122.1	115.3
October	114.5	107.2	111.0	122.4	115.2
November	114.7	107.6	111.6	123.2	115.1
December	114.6	107.5	112.0	123.4	114.8
2014
January	114.9	108.2	112.6	124.4	114.6
February	116.1	108.9	114.0	125.6	116.1
March	117.3	109.9	115.5	127.2	116.4
April	118.4	110.6	117.2	128.5	116.4
May	119.4	111.6	119.0	129.6	116.5
June	120.0	112.1	120.2	130.9	116.5
July	120.2	112.2	120.7	131.2	116.0
August	120.2	112.6	121.1	131.0	115.6
September	120.4	113.0	121.5	131.3	115.4
October	120.7	113.6	121.8	132.1	115.6
November	120.8	113.8	121.6	132.7	115.4
December	120.9	114.1	121.5	133.0	115.1
2015
January	121.1	114.5	121.8	133.5	115.2
February	122.1	115.9	121.4	135.2	115.8
March	123.5	118.0	121.1	137.2	116.9
April	124.7	120.0	120.2	139.4	117.5
May	125.7	122.1	120.2	141.2	117.5
June	126.7	123.7	120.6	142.7	117.8
July	127.2	124.9	120.5	143.6	118.0
August	127.5	126.4	120.5	144.1	117.3
September	128.1	128.7	120.5	145.0	117.1
October	128.4	130.9	120.0	145.5	117.1
November	129.1	133.9	119.4	146.1	117.1
December	129.2	135.5	118.6	146.5	117.2
2016
January	130.1	138.1	117.7	147.1	116.8
February	132.0	142.2	117.0	149.8	117.7
March	134.4	145.9	116.2	153.2	118.7
April	137.1	151.1	115.9	157.0	119.2
May	140.8	158.6	115.7	162.2	119.7
June	143.1	163.5	115.9	165.1	120.0
July	144.5	165.7	115.8	167.0	120.0
August	145.5	166.2	115.8	168.7	120.3
September	146.3	165.3	115.8	170.8	120.1
October	147.2	163.9	115.6	173.9	120.2
November	147.6	162.3	115.0	175.3	120.6
December	147.9	160.1	114.8	177.0	121.0
2017
January	149.9	160.0	114.7	180.4	121.2
February	153.0	161.8	114.5	186.0	121.6
March	158.8	164.7	114.8	197.3	122.9
April	163.5	168.7	115.1	206.4	123.8
May	165.1	173.3	116.1	208.5	124.2
June	164.9	176.6	116.6	206.9	124.8
July	162.2	180.3	117.0	197.3	125.8
August	160.8	182.0	116.8	192.8	125.8
September	160.9	183.2	116.5	191.9	126.3
October	160.6	183.9	115.9	190.9	127.0
November	160.3	184.8	115.2	190.1	127.1
December	160.4	185.6	114.3	189.8	127.6
2018
January	160.9	186.8	114.1	189.7	127.4
February	162.8	189.4	114.7	191.9	129.0
March	164.8	191.6	115.2	194.2	130.4
April	165.8	192.8	115.2	195.6	131.6
May	166.8	193.2	115.4	197.1	132.5
June	166.5	193.2	115.4	197.1	132.9
July	166.0	192.2	115.1	196.1	132.9
August	165.1	189.5	114.1	195.6	133.1
September	164.6	187.3	113.4	195.7	134.0
October	164.4	185.8	112.9	196.0	134.9
November	163.6	182.3	111.9	195.3	135.0
December	162.9	180.6	110.7	195.4	135.2
2019
January	162.2	178.4	109.7	194.8	135.5
February	162.7	177.8	109.6	196.4	137.0
March	164.0	176.9	109.5	199.2	138.7
Note: Data for the time period above are MLS home price index values expressed using January 2010 as the base period. Source: The Canadian Real Estate Association.

Monthly housing starts averaged 207,000 units (seasonally adjusted an annual rates) during the second half of 2018, down from 221,000 in the first six months of the year. Average starts in Ontario and Quebec edged down in the second half. Ground-breaking on new homes in Quebec declined in the third quarter on lower apartment starts, before rebounding in the fourth. Urban single-detached starts in Ontario continued to edge lower during the second half of the year, while ground-breaking on multi-family units rose in the fourth quarter on increases in Toronto. More recently, average housing starts slowed to 187,000 annualized units in the first quarter of 2019.

Residential building permits edged lower during the second half 2018. Permits in the second half totalled $30.8 billion, down from $32.0 billion in the first. Lower permits for single-detached dwellings accounted for the decline.

Headline consumer inflation slowed on declines in gasoline prices

After rising to 3.0% in July, consumer price inflation moderated in the second half of 2018, slowing to 1.7% in November before edging up to 2.0% at year end. Changes in gasoline prices along with transitory changes in the prices for air transportation and travel tours contributed to movements in the headline rate.

Gasoline prices, measured year-over-year, moderated sharply in the second half of 2018, as annual price increases slowed from 25% at mid-year to 12% in October. Gasoline prices declined on a year-over-year basis late in the year and were down 8.6% in December. Higher prices for air transportation and travel tours contributed to increases in the headline rate during the summer months and again in December. In these months, the services index rose above 3% on a year-over-year basis. Food prices, measured year-over-year, increased towards year end, accelerating to 2.9% in December.

The homeowners’ replacement cost index, which in part reflects changes in new housing prices, moderated in the second half of the year, slowing to 0.2% at year end. In contrast, the mortgage interest cost index continued to increase during the second half of 2018. Mortgage interest costs in December were 7.5% higher on a year-over-year basis.

All of the Bank of Canada’s preferred measures of core inflation (CPI-common CPI-trim, and CPI-median) edged below the 2% mark in late 2018. At year end, the three core measures ranged from 1.8% to 1.9%.^{Note 12}

Movements in headline consumer inflation tracked year-over-year changes in average weekly earnings during the second half of 2018, as both slowed towards the end of the year following larger increases in the summer months. More recently, headline consumer inflation decelerated to 1.4% in January 2019 on downward pressure from lower gas prices. Consumer inflation edged up to 1.5% in February before accelerating to 1.9% in March.

Equities declined on broad-based losses

Toronto stock prices (S&P/TSX composite index) fell sharply in the second half of 2018, following little net change over the first six months of the year. The composite index closed at 14,323 at year end, down 12% from June, following sizable losses in the fourth quarter. The Canadian energy index fell by 33% in the second half, posting double-digit losses in October and November. Financials, industrials and consumer discretionary stocks also posted losses in the second half, reflecting large declines in December. The gold index strengthened towards year end, following declines in the third quarter.   

More recently, the S&P/TSX composite index rose by 9% in January and 3% in February as energy, financial, industrial and consumer stocks strengthened. Equity prices continued to increase in March, as the composite index closed at 16,102 at month end.       

Borrowing costs increased as the debt service ratio edged higher

Yields on benchmark Government of Canada five-year bonds rose from July to October, before edging lower late in the year. Five-year yields were at 1.93% at year end, down from a recent high of 2.42% in October. The spread between two- and ten-year yields narrowed late in 2018 as ten-year yields edged below 2%.

In October, the Bank of Canada raised the target for the overnight rate by 25 basis points to 1.75%, following a 25 basis point increase in July. October’s increase marked the fifth increase since mid-2017. Canada’s major banks announced on October 24th that they had increased their prime lending rates by a further 25 basis points to 3.95%.

The debt service ratio for the household sector—the total obligated payments of principal and interest on household credit market debt as a share of disposable income—continued to edge higher during the second half of 2018. The debt service ratio rose to 14.9% in the fourth quarter after increasing to 14.7% in the third. As of the fourth quarter, the household debt service ratio was at its highest level since the last quarter of 2007.

Commodity prices fell as the dollar weakened

The value of the Canadian dollar trended lower in the second half of 2018, as offsetting movements in the third quarter gave way to declines in the fourth. After trading as high as 78.1 cents U.S. at the start of October, the dollar depreciated towards year end, closing at 73.3 cents U.S. at the end of December.^{Note 13} More recently, the Canadian dollar strengthened in early 2019, trading at 76.1 cents U.S. at the end of January. The dollar trended lower during February and March, closing at 74.8 cents U.S. at the end of the first quarter.   

Commodity prices declined during the second half of 2018, offsetting gains earlier in the year. Commodity prices at year end were down 19% from levels at mid-year. Declines were-broad based across commodities, as prices for energy, metals and minerals, agricultural products and forestry products all fell.

Overall, commodity prices at year end were down 7% from price levels at the end of 2017. More recently, commodity prices advanced from January to March, led by a 16% increase in energy prices.

Lower household wealth on declines in equities and housing

The net worth of households fell 2.8% in the fourth quarter after edging down (-0.2%) in the third (Chart 13). The decline in late 2018 was the largest quarterly decrease in household net worth in ten years. The value of household equity and investment funds assets was down 7.5% in the fourth quarter, while lower values for residential real estate also detracted from household net worth. Total household assets at the end of 2018 were valued at $12.98 trillion, while total financial liabilities amounted to $2.24 trillion.

Data table for Chart 13



Data table for Chart 13
Change in household net worth
Table summary
This table displays the results of Change in household net worth Net worth, Non-financial assets, Financial assets and Financial liabilities, calculated using billions of dollars units of measure (appearing as column headers).

	Net worth	Non-financial assets	Financial assets	Financial liabilities
	billions of dollars
2010
First quarter	140.2	87.3	63.6	-10.8
Second quarter	-2.1	62.0	-30.3	-33.7
Third quarter	226.7	35.7	212.3	-21.3
Fourth quarter	165.8	49.0	138.7	-21.9
2011
First quarter	200.7	91.8	111.1	-2.1
Second quarter	86.2	85.9	32.2	-31.9
Third quarter	-58.4	72.6	-106.1	-24.9
Fourth quarter	135.8	48.3	109.5	-22.1
2012
First quarter	243.9	102.7	146.2	-5.1
Second quarter	62.5	98.8	-10.0	-26.3
Third quarter	176.3	58.1	142.7	-24.5
Fourth quarter	119.4	38.8	93.5	-12.9
2013
First quarter	208.0	70.7	147.4	-10.2
Second quarter	-7.8	87.8	-70.6	-25.0
Third quarter	166.9	89.9	102.7	-25.6
Fourth quarter	262.5	63.7	214.0	-15.1
2014
First quarter	240.1	71.2	175.7	-6.9
Second quarter	216.4	96.3	147.6	-27.5
Third quarter	97.7	60.5	65.8	-28.6
Fourth quarter	158.2	44.3	130.0	-16.1
2015
First quarter	279.5	53.3	237.0	-10.7
Second quarter	22.8	105.4	-46.8	-35.8
Third quarter	-13.4	86.2	-67.7	-31.8
Fourth quarter	204.2	118.7	108.1	-22.6
2016
First quarter	185.6	142.9	56.3	-13.7
Second quarter	202.2	85.6	155.9	-39.3
Third quarter	245.9	65.9	208.3	-28.3
Fourth quarter	135.2	118.6	41.1	-24.4
2017
First quarter	261.0	142.0	130.6	-11.6
Second quarter	38.7	18.8	59.6	-39.8
Third quarter	-9.9	9.3	9.8	-28.9
Fourth quarter	232.7	52.6	202.9	-22.8
2018
First quarter	65.1	72.0	-0.8	-6.1
Second quarter	101.4	28.6	105.0	-32.2
Third quarter	-17.8	-24.0	31.2	-25.0
Fourth quarter	-304.3	-60.8	-224.4	-19.0
Note: Negative values indicate a decline in the value of assets or an increase in the value of liabilities. Source: Statistics Canada, table 36-10-0580-01.

After slowing during the first two quarters of 2018, household borrowing edged higher during the second half of the year.^{Note 14} Total credit market borrowing among households—which includes mortgage loans, non-mortgage loans, and consumer credit—was $21.2 billion in the fourth quarter, up from $20.9 billion in the third. All of the increase late in the year reflected higher mortgage borrowing, which rose to $12.3 billion. Nonetheless, mortgage borrowing in the fourth quarter remained over 20% below levels in late 2017, before the new minimum qualifying rate for uninsured mortgages took effect in January 2018.  

The ratio of household credit market debt to disposable income, measured on a seasonally-adjusted basis, rose to 178.5% in the fourth quarter, while the household debt-to-asset ratio edged up to 17.3%. While the debt-to-asset ratio rose in both the third and fourth quarters, it has generally trended lower since the 2008-2009 recession.

References

Gellatly, G. and R. Morissette. 2017. Non-resident Ownership of Residential Properties in Toronto and Vancouver: Initial data from the Canadian Housing Statistics Program. Economic Insights, no. 78. Statistics Canada Catalogue no. 11-626-X. Ottawa Statistics Canada.

Gellatly, G. and R. Morissette. 2018. Immigrant Ownership of Residential Properties in Toronto and Vancouver. Economic Insights, no. 87. Statistics Canada Catalogue no. 11-626-X. Ottawa Statistics Canada.

Gellatly, G. and E. Richards. 2018. Recent Developments in the Canadian Economy: Fall 2018. Economic Insights, no. 85. Statistics Canada Catalogue no. 11-626-X. Ottawa Statistics Canada.

Gellatly, G. and E. Richards. 2019. Indebtedness and Wealth Among Canadian Households. Economic Insights, no. 89. Statistics Canada Catalogue no. 11-626-X. Ottawa Statistics Canada.

Heisz, A. and E. Richards. 2019. Economic Well-being Across Generations of Young Canadians. Are Millennials Better or Worse Off? Economic Insights, no. 92. Statistics Canada Catalogue no. 11-626-X. Ottawa Statistics Canada.

Patterson, M. M. Hazel and D. Saunders. 2019. Annual review of the labour market, 2018. Labour Statistics: Research Papers. Catalogue no. 75-004-M-2019002. Ottawa: Statistics Canada.

Statistics Canada. Bank of Canada’s preferred measures of core inflation. Last updated November 18, 2016. (accessed March 22, 2016). Available at: http://www23.statcan.gc.ca/imdb-bmdi/document/2301_D63_T9_V1-eng.htm (accessed March 22, 2016).