Gross domestic product by industry

New sources and methods publication

June 2006

The Canadian economy remained stable in June, after registering increases of 0.2% in April and 0.1% in May. The production of goods, which has shown signs of weaknesses since the beginning of the year, declined 0.2% in June. Service industries gained 0.1%. Oil and gas extraction, the manufacturing of chemical products, wholesale trade as well as construction recorded declines, while the manufacturing of motor vehicles and parts, of fabricated metal products, and forestry and logging posted the largest increases.

Economic growth slows

For a third consecutive month, the energy sector declined in June (-0.8%). This loss was largely attributable to a decrease in oil and gas extraction (-3.1%), particularly of natural gas. Declining prices and high level of inventories of natural gas were the main factors behind this contraction. The reduced production of oil and natural gas contributed to a 2.7% decrease in pipeline transportation. However, electricity and natural gas distribution advanced 0.9% and 3.1% respectively.

Oil and gas producers reduce their output

Manufacturing output was essentially unchanged in June. Of the 21 major groups, ten, accounting for 54% of total manufacturing output, boosted their production. An increase in durable goods production (+0.4%) was offset by a decline in non-durable goods output (-0.6%). The largest increases were reported by manufacturers of light motor vehicles and parts, fabricated metal products, and computers and electronic equipment. A rise in US demand resulted in an increase in exports of some models of Canadian-made cars. There was, however, a marked decrease in the production of heavy trucks. Manufacturers of chemical and wood products recorded some of the largest decreases.

Industrial production, the output of mines, factories and utilities, slipped 0.2%, with utilities alone reporting a gain (+1.0%). In the United States, industrial production increased 0.8% in June, with the three sectors posting increases.

Construction activities declined 0.3% for a second consecutive month, largely as a result of a decrease in residential construction (-1.2%), while non-residential construction edged down 0.1% and engineering and repair work rose 0.3%.

Wholesale trade fell 0.5%, with notable weakness in sales of motor vehicles and parts and of computers and office equipment. Retail trade advanced 0.2% in June. New and used car dealers contributed notably to the slower growth of retail trade. Excluding new and used vehicle dealers, retail sales advanced 0.5%.

A slump in stockbrokers activities (-2.1%) that began in May contributed to hold back growth in the financial sector in June (+0.1%). As well, despite a rebound in activity in May, real estate agents and brokers saw a 1.6% decline in June, in line with the weakening of the home resale market observed since March.

Main industrial sectors’ contribution to total growth - June 2006

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Second quarter 2006

Economy activity grew at a slower pace in the second quarter of 2006 than in the first. An increase in the production of services (+0.8%) more than offset the decline (-0.3%) observed in the goods-producing industries. The growth came mainly from retail and wholesale trade, finance and public administration. For a second consecutive quarter, industrial production (the output of utilities, mines and factories) contracted overall.

Retail trade rose 2.0%, led by increased sales of automotive products, and by pharmacies and retailers of other goods. Wholesale trade continued to grow at a healthy pace (+1.1%). The main contributors were wholesalers of motor vehicles, of computers and other electronic equipment, and of household and personal products. The financial sector advanced 0.8% in the second quarter, despite reduced activities in the insurance industries (-0.1%), and by real estate agents and brokers (-3.0%). The resale market for existing homes declined substantially during this quarter.

Construction activities rose 0.4% in the second quarter, a much slower pace than in the two previous ones (+2.4%). All of the strength was in engineering and repair work, as both residential and non-residential building construction fell in the second quarter.

Industrial production dropped 0.6% in the second quarter, marking a second consecutive quarterly decline. Both the manufacturing and the mining and oil and gas extraction sectors receded, while utilities gained ground. In the United States, industrial production rose 1.5% with all three sectors showing strength.

Manufacturing output fell 0.5% during the second quarter. Of the 21 major groups, eleven, accounting for 50% of total manufacturing output, declined. The production of both non-durable (-0.4%) and durable goods (-0.6%) retreated. The appreciation of the Canadian dollar with respect to the US currency during the quarter (+2.8%) played a role in weakening efforts by export-oriented manufacturers. The mining and oil and gas extraction sector decreased 1.2% in part because of unexpected maintenance work on oil extraction sites. Output of utilities increased 0.7%, partially offsetting the downturns in the manufacturing and mining sectors.

In the second quarter, output of the federal public administration excluding defence increased 2.5% largely as a result of the activities related to the 2006 Census.

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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.