Gross domestic product by industry

December 2004 and fourth quarter 2004

The Canadian economy ended the year on a robust path, growing by 0.2% in December following a 0.3% increase in November and a flat performance in October. The growth in December was mainly on the strength of wholesaling activity, the energy sector, and motor vehicle production. Disappointing retail sales reined in economic growth in the final month of 2004.

Economic activity rises

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Wholesaling up while retailing is driven down by cars and alcohol

Wholesaling activity increased 0.8% in December with strength concentrated in motor vehicles. Wholesalers of household goods and petroleum products also enjoyed increased activity. Wholesaling of machinery and electrical equipment, including computers, lost some ground after a strong November.

Retailing activity decreased 1.5% in December. New car sales and a strike by employees of Quebec liquor stores accounted for much of the decline. Lower than usual Christmas sales also factored in the drop in retailing activity. Retail trade excluding new car dealerships and beer, liquor and alcohol stores decreased 0.2%. Retailers of computers, home electronics, clothing, footwear and sporting goods, however, did report significant gains.

Wholesaling is booming while retailing awaits better times

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Industrial production advances

Industrial production (the output of Canada’s factories, mines and utilities) grew 0.5% in December will all three sectors increasing. Manufacturing output and mining, oil and gas extraction were up 0.3%. Utilities were up 2.9% due to increased demand for electricity brought about by cold weather in much of central Canada and the Prairies. The energy sector increased 1.4%. In the United States, the index of industrial production increased 0.7% with all three sectors showing strength.

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Motor vehicles drive manufacturing higher

Output in the manufacturing sector increased by 0.3% in December. Overall, only 12 of the 21 major groups advanced. The production of motor vehicles (+1.7%) was responsible for much of this growth as it partially recovered from a November decrease. The output of motor vehicle parts, plastic components and tires increased 0.6% in December. Output of refineries was up 2.9%.

Paper manufacturing was up 1.4% with increases in every type except paper bags and coated paper products (-1.0%). Sawmills increased their output 2.4% partly because of the continued high levels of residential construction in Canada and the United States.

Meat products manufacturers reduced their output by 2.8%. Seafood products manufacturers (+4.1%), however, continued to benefit from increased demand abroad.

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Fortunes in the mining, oil and gas sector mixed

The mining, oil and gas extraction sector increased by 0.3% in December. Oil and gas extraction retracted by 0.3% because of production difficulties in Alberta and the oil spill at the Terra Nova platform. Support activities for mining, oil and gas extraction (mostly drilling and rigging) continued to soar, rising 5.3% in December on the heels of a 5.1% increase in November and an 11% jump in October.

Output from metal mines increased 0.7% in December, lifted by iron, gold and silver ore mines. Output of copper ores and concentrates fell due to reduced demand on foreign markets. The production of potash increased 18% spurred by new contracts with China. Reduced diamond finds pulled down the output of miscellaneous non-metallic minerals mines (-21%). The output of this industry has fallen dramatically since the August 2004 peak, reaching the levels of 2002.

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The slide in non-residential building construction halted

Output of the construction sector increased 0.3% in December. Much of this growth was attributable to increased activity in engineering and repairs construction (+0.6%). Non-residential building construction activity inched 0.1% higher, stopping a downward slide that started in July 2003. A sharp increase in the construction of industrial buildings was offset by a further decline in institutional structures. The construction of new commercial buildings was flat.

Growth in residential construction was flat in December. An increase in the construction of new single detached dwellings was offset by decreases in multiple dwellings units, such as row houses and apartment buildings. Housing starts in urban areas decreased in Quebec, Ontario and the western provinces, while there were increases in the Atlantic provinces and British Columbia. Sales of existing homes decreased in December, lowering the activity of real estate agents and brokers by 1.7%.

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Other industries

The transportation and warehousing sector increased by 0.8% in December. Pipeline transportation was up 2.1% with increases in the transportation of crude petroleum and natural gas. Air transportation was up (+1.7%) as were rail (+0.8%) and truck transportation (+0.1%). Activity in the warehousing of farm products jumped 11%. Telecommunication industries increased their output 0.6% mostly because of a strong increase in long-distance calls and continued growth in cell phone popularity.

The arts, entertainment and recreation sector made some comeback in December after a September and October slide resulting from the National Hockey League (NHL) lockout. It is an indication that major league hockey fans were spending more on other forms of entertainment.

NHL on ice

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Industry profile, fourth quarter 2004

In the fourth quarter of 2004, the economic activity grew by 0.5%. Both the goods and services sectors of the economy advanced at a similar pace. A strong dollar (vis-à-vis the U.S. currency) hurt manufacturers as output in this sector was flat. Industrial production (the output of Canada’s factories, mines and utilities), however, was up 0.4% spurred by increased output from utilities (+2.3%) and in the mining, oil and gas sector (+0.6%).

Output of the finance, insurance and real estate and leasing industries was up 0.7% with increased activity at banks and other credit intermediation services (+0.4%). Higher volumes on the Canadian stock exchanges helped raise the output of securities brokers and other financial activities by 0.2%. The activity of real estate agents and brokers (-3.3%) was hampered by reduced sales of existing homes.

Wholesaling activity increased 1.2%, benefiting from increased demand for imported goods. Gains were widespread across the industry, particularly machinery and equipment, building supplies and motor vehicles. Wholesaling of food products and beverages was down. Weak December sales restrained retailing activity in the fourth quarter (+0.6%), particularly in beer, wine and liquor stores, which were affected by a Quebec strike. Increased retailing activity was recorded in automotive products stores and supermarkets.

Output in the manufacturing sector was flat in the fourth quarter. Only 10 of the 21 major groups recorded gains. Increases in the manufacturing of food, furniture, wood and fabricated metal products were offset by decreases in transportation equipment, primary metal products, printing and clothing.

Mining and oil and gas extraction was up 0.6%. High energy prices spurred oil and gas exploration activity, up 17% in the fourth quarter. Iron mining rebounded after a major strike shaved off nearly half of its output in the third quarter. These more than offset a drop in miscellaneous non-metallic mineral products extraction (which includes diamonds). A slight reduction in crude petroleum extraction resulted from various production difficulties. Output of utilities was up 2.3% on account of increased electricity generation. The overall energy sector was up 1.7%.

Construction activity was up 1.2%. Residential construction increased by 2.6%. This sector has increased steadily on a quarterly basis since the third quarter of 2000. Non-residential construction was down 1.4%, its fifth consecutive quarterly decline.

Activity in the arts, entertainment and recreation sector declined due to the NHL lockout. Output in the public sector was dampened by strike activity in the federal government.

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Industry profile, 2004

Economic activity advanced by 3.0% in 2004, exceeding the 2003 pace (+2.2%) with a backdrop of a strong Canadian dollar, a strengthening of most natural resource prices and continued low interest rates. In 2004, the dollar reached its highest level vis-à-vis the U.S. currency since 1993. Demand from China was particularly strong for certain basic commodities. The price of a barrel of crude oil on international markets reached an all-time high due to worries about supply disruptions and reviews of proven reserves.

Manufacturers, wholesalers and residential contractors were among those to reap the economic benefits of this growth.

The manufacturing sector was up 3.9%, after posting virtually no gain in 2003. Except for textile and leather products, clothing and paper products, all the major groups saw an increase. Together the textile and leather products and clothing decreased 7.0% in 2004, standing 21% below their 2000 levels. With the reduction of trade barriers and fierce competition from Asian countries these industries have been in sharp decline since the turn of the century.

Transportation equipment rose 6.3%. Chemical products manufacturing increased 6.6% with strong advances for most chemical products. The pharmaceutical industry that was expanding at double digit growth rates in past years, only advanced modestly in 2003 and 2004. Production of machinery jumped 7.8%. There was a rebound in the manufacturing of information and communication technologies products (+12%) after three years of decreases. The fabrication of computers and electronic products increased 13%.

Wholesale trade activity increased 6.2% with particular strength in household and personal goods, pharmaceuticals, automotive products, building materials and computers. Retail trade services increased 3.9% led by home furnishings, furniture, home electronics, and hardware stores, as well as pharmacies.

The transportation and warehousing sector increased 4.4% due to increased foreign demand for Canadian products. The year 2004 saw railcar shortages and delays at harbours.

The finance and insurance industries had a bright year, increasing by 4.8%. Banks, insurance and investment dealers all posted strong gains.

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Mining and oil and gas extraction was up 2.7%. Oil and gas extraction was up 2.1% due to the increased demand brought about by supply uncertainties, but various production difficulties hampered this industry during the year. Support activities for mining, oil and gas extraction (mostly drilling and rigging) were up 3.6% after a banner 2003 year. Strong international demand for steel also helped coal (+8.2%) and copper, nickel, lead and zinc mines (+4.9%) to rebound. A strike in iron mines reduced their output by 11%. Demand from China and improved sowing conditions in Canada helped pushed the output of potash mines by 11%. Increased production of diamonds bolstered the output of miscellaneous non-metallic mineral mines (+15%).

Construction activity was up 3.8%. Residential building construction was booming (+8.7%), while non-residential building construction retracted for the first time in 3 years (-4.9%). Engineering, repairs and other construction activities were up 3.6%. Activities of real estate agents and brokers increased 5.1%.

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Statistical tables

• Real Gross domestic product by industry, at basic prices, monthly
• Real Gross domestic product by industry, at basic prices, quarterly and annually

Information on methods and data quality available in the Integrated Meta Data Base: 1301.