Latest Developments in the Canadian Economic Accounts
The 2016 to 2018 revisions of the Income and Expenditure Accounts

Release date: November 29, 2019

Introduction

This article describes revisions to the Gross Domestic Product (GDP) by Income and by Expenditure Accounts for the 2016 to 2018 period. These data are released at the same time as the 2018 Provincial and Territorial Economic Accounts estimates, which include revisions to the time series.

The first two quarters of 2019 are also revised. However, in accordance with standard revision practice, these estimates will continue to be revised during upcoming cycles. Therefore, they are excluded from the analysis in this article.

Revision process

GDP estimates by Income and by Expenditure Accounts (IEA) are subject to three types of revisions. The first incorporates the latest benchmark from the supply and use tables. The second incorporates data from the latest annual surveys and administrative sources. The third, which is performed less frequently, incorporates new concepts, methods, accounting standards and classification systems.

The 2016 to 2018 GDP revisions by IEAs include all three types of revisions. In general, the first two, which are statistical in nature, are carried out annually and affect only the last three years of the time series. 

The statistical revisions to GDP reflect the incorporation of the most current data sources, including survey results, administrative data, public accounts and the annual supply and use tables. These tables integrate data from the highest-quality sources available to Statistics Canada in a rigorous, detailed accounting framework. They represent the most detailed, coherent accounting system for the structure of the Canadian economy and are considered the most accurate benchmarks on which to base estimates. In this release, new benchmark values from the supply and use tables for the 2016 reference year have been incorporated into the GDP by IEAs. New benchmark data (from annual surveys and administrative sources) is also included for the last two years (2017 and 2018).

The third type of revision, conducted this cycle, reflects the historical updates to travel services. By incorporating exports and imports of travel services, Statistics Canada has expanded the coverage of international trade. The statistical revisions in international travel services are related to two areas—education—related travel and non-education related travel—which cover revisions to other business travel and other personal travel.

The revisions are based on expanded travel survey coverage as well as the use of more accurate data on education-related international travel, and other improvements in methodology related to international travel services of the Balance of International Payments Account. The travel services revision led to an increase in the share of both exports and imports of services in GDP. The net impact on GDP, however, was negligible as increases in exports were largely offset by increases in imports.  

This article briefly describes and explains the impact of the 2016 to 2018 revisions on annual and quarterly GDP, on both a nominal and a real basis. It also examines the revisions to the various components of GDP by income and by expenditure accounts.

Revisions to the growth rate of nominal GDP

With the incorporation of new benchmark data from the supply and use tables, the level of nominal GDP was revised down by $2.7 billion in 2016; consequently, the nominal GDP growth rate underwent a 0.1 percentage point downward revision. The downward revision resulted largely from the revised household final consumption expenditure and business gross fixed capital formation.

In 2017, the level of nominal GDP was revised down by $0.4 billion, largely because of a downward revision of household final consumption expenditure. The relatively larger downward adjustment to the 2016 GDP caused a 0.1 percentage point upward revision to the growth rate in 2017.

In 2018, the level of nominal GDP was revised up by $4.8 billion, resulting largely from higher household final consumption expenditure and increased governments’ gross fixed capital formation. Consequently, the 2018 growth rate underwent a 0.2 percentage point upward revision.

The absolute revision to the growth rate—the difference between the revised average growth rate and the published average growth rate—was 0.1 percentage point for the 2016 to 2018 period.


Table 1
Revisions to the growth in nominal gross domestic product, annual
Table summary
This table displays the results of Revisions to the growth in nominal gross domestic product Revised annual nominal GDP, Previously-published annual nominal GDP, Revision, Revised growth in annual GDP, Previously-published growth in annual GDP and Absolute revision to the growth in annual GDP, calculated using billions of dollars, percent and percentage point units of measure (appearing as column headers).
Revised annual nominal GDP Previously-published annual nominal GDP Revision Revised growth in annual GDP Previously-published growth in annual GDP Absolute revision to the growth in annual GDP
billions of dollars percent percentage point
2016 2,025.54 2,028.22 -2.69 1.76 1.90 0.14
2017 2,141.11 2,141.51 -0.40 5.71 5.59 0.12
2018 2,223.86 2,219.06 4.80 3.86 3.62 0.24
2016 to 2018 average 2,130.17 2,129.60 0.57 3.78 3.70 0.08

On a quarterly basis, the revisions to the growth rates of nominal GDP resulted in little change relative to the previous estimates. The magnitude of the revisions for the 12 quarters covered by the revision period (2016 to 2018) ranged between an upward revision of 0.2 percentage point and a downward revision of 0.2 percentage point. These revisions are consistent with historical averages. Throughout the period, the quarterly trend remained similar to the trend based on the previously published estimates.


Table 2
Revisions to the growth in nominal gross domestic product, quarterly
Table summary
This table displays the results of Revisions to the growth in nominal gross domestic product Revised average growth in quarterly GDP, Previously-published average growth in quarterly GDP and Mean absolute revision to the growth in quarterly GDP, calculated using percent and percentage point units of measure (appearing as column headers).
Revised average growth in quarterly GDP Previously-published average growth in quarterly GDP Mean absolute revision to the growth in quarterly GDP
percent percentage point
2016 0.93 0.97 0.04
2017 1.38 1.29 0.09
2018 0.54 0.51 0.03
2016 to 2018 average 0.95 0.92 0.03

Revisions to the growth rate of real GDP

The growth rate of real GDP was revised down by 0.1 percentage point in 2016; the growth rates were revised up by 0.2 percentage point in 2017, and by 0.1 percentage point in 2018. These revisions moved in tandem with revisions in nominal GDP growth rates, reflecting a stable GDP implicit price index for the period.    

Chart 1 Revisions to the growth of real gross domestic product, annual

Data table for Chart 1 
Data table for Chart 1
Table summary
This table displays the results of Data table for Chart 1 Previous estimate and Revised estimate, calculated using annual percent change, chained (2012) dollars units of measure (appearing as column headers).
Previous estimate Revised estimate
annual percent change, chained (2012) dollars
2016 1.1 1.0
2017 3.0 3.2
2018 1.9 2.0

The mean absolute percentage point revision to the annual average growth rate of real GDP for the 2016 to 2018 period was 0.1 (Table 3).


Table 3
Revisions to the growth in real gross domestic product, annual
Table summary
This table displays the results of Revisions to the growth in real gross domestic product Revised growth in annual real GDP, Previously-published growth in annual real GDP and Absolute revision to the growth in annual real GDP, calculated using percent and percentage point units of measure (appearing as column headers).
Revised growth in annual real GDP Previously-published growth in annual real GDP Absolute revision to the growth in annual real GDP
percent percentage point
2016 1.00 1.11 0.11
2017 3.17 2.98 0.19
2018 2.01 1.88 0.13
2016 to 2018 average 2.06 1.99 0.07

On a quarterly basis, the movement of real GDP between 2016 and 2018 differed slightly from the previously-published estimates (Chart 2).

Revisions to the growth of real gross domestic product, quarterly

Data table for Chart 2 
Data table for Chart 2
Table summary
This table displays the results of Data table for Chart 2 Previous estimate and Revised estimate, calculated using quarterly percent change, chained (2012) dollars units of measure (appearing as column headers).
Previous estimate Revised estimate
quarterly percent change, chained (2012) dollars
2016
I 0.6 0.5
II -0.5 -0.5
III 1.1 1.0
IV 0.6 0.6
2017
I 1.0 1.2
II 1.1 1.2
III 0.3 0.4
IV 0.4 0.4
2018
I 0.4 0.5
II 0.6 0.4
III 0.5 0.6
IV 0.1 0.2

In 2016, real GDP estimates on a quarterly basis underwent slight downward revisions as a result of the annual downward revision. The revised estimates closely followed the previous estimates in each quarter.

In 2017, real GDP growth rates were revised up in the first three quarters: 0.2 percentage point in the first quarter, and 0.1 percentage point in the next two quarters. The growth rate remained unchanged in the fourth quarter.

A 0.2 percentage point downward revision in the second quarter of 2018 was offset by 0.1 percentage point upward revision in each of the remaining quarters. Overall, the mean absolute revision to the quarterly growth rate of real GDP for the entire period was negligible.


Table 4
Revisions to the growth in real gross domestic product, quarterly
Table summary
This table displays the results of Revisions to the growth in real gross domestic product Revised average growth in quarterly real GDP, Previously-published average growth in quarterly real GDP and Mean absolute revision to the growth in quarterly real GDP, calculated using percent and percentage point units of measure (appearing as column headers).
Revised average growth in quarterly real GDP Previously-published average growth in quarterly real GDP Mean absolute revision to the growth in quarterly real GDP
percent percentage point
2016 0.41 0.45 0.04
2017 0.78 0.71 0.07
2018 0.45 0.40 0.05
2016 to 2018 average 0.55 0.52 0.03

Revisions to the level of annual nominal GDP

For the period from 2016 to 2018, the revisions to the GDP by income and by expenditure accounts were mainly attributable to the new supply and use benchmarks for the 2016 reference year and to the incorporation of updated source data in subsequent years.

Overall, relative to the previously estimated nominal GDP, the average yearly upward revision was $0.6 billion for the 2016 to 2018 period. The downward revision in 2016 in the amount of $2.7 billion was largely due to a drop in household spending and business investment. The downward revision in 2017 was $0.4 billion, and in 2018, the nominal GDP was revised up by $4.8 billon.

In each of these years, revisions were made to various components of GDP. The main contributors on the income side were gross operating surplus, gross mixed income, and taxes. On the expenditure side, the main contributors were gross fixed capital formation and exports of goods and services. In 2016, the supply and use tables utilized the detailed information in the annual business surveys and the final estimates of the Capital and Repairs Expenditure Survey. In 2018, the contributing components to the upward revisions were general government expenditure, gross fixed capital formation, and net trade.

Revisions to the components of GDP by income account

In 2016, gross operating surplus underwent a $1.1 billion upward revision, and taxes-less-subsidies on products and imports were revised down by $0.8 billion. In 2017, gross mixed income was revised up by $2.2 billion, and taxes-less-subsidies on products and imports were revised down by $1.5 billion. In 2018, gross operating surplus was revised up $6.5 billion, and taxes-less-subsidies on products and imports were revised down by $3.3 billon.

These large revisions are mainly due to the new supply and use system benchmarks in 2016, and the incorporation of compensation of employees and operating surplus estimates for corporations based on tax data from the Canada Revenue Agency.


Table 5
Revisions to income-based gross domestic product components
Table summary
This table displays the results of Revisions to income-based gross domestic product components Revised average level, Previously-published average level and Average revision, calculated using millions of dollars units of measure (appearing as column headers).
Revised average level Previously-published average level Average revision
millions of dollars
2016
Compensation of employees 1,026,483 1,026,483 0
Gross operating surplus 526,024 524,953 1,071
Gross mixed income 244,403 244,722 -319
Taxes less subsidies on production 90,516 90,686 -170
Taxes less subsidies on products and imports 139,429 140,222 -793
GDP at market prices 2,025,535 2,028,223 -2,688
2017
Compensation of employees 1,069,956 1,070,831 -875
Gross operating surplus 573,257 572,951 306
Gross mixed income 256,757 254,554 2,203
Taxes less subsidies on production 95,563 96,024 -461
Taxes less subsidies on products and imports 145,647 147,101 -1,454
GDP at market prices 2,141,107 2,141,508 -401
2018
Compensation of employees 1,120,520 1,119,903 617
Gross operating surplus 590,510 583,967 6,543
Gross mixed income 265,147 265,036 111
Taxes less subsidies on production 98,698 98,493 205
Taxes less subsidies on products and imports 148,921 152,208 -3,287
GDP at market prices 2,223,856 2,219,061 4,795
2016 to 2018 average
Compensation of employees 1,072,320 1,072,406 -86
Gross operating surplus 563,264 560,624 2,640
Gross mixed income 255,436 254,771 665
Taxes less subsidies on production 94,926 95,068 -142
Taxes less subsidies on products and imports 144,666 146,510 -1,845
GDP at market prices 2,130,166 2,129,597 569

Revisions to the components of GDP by expenditure account

Table 6 summarizes the revisions to the main components of the GDP by expenditure account. From 2016 to 2018, major upward revisions occurred in governments’ final consumption expenditure, in governments’ gross fixed capital formation, and in exports. The upward revisions were partly offset by downward revisions in household spending and business gross fixed capital formation. The net upward revision for the period was $0.6 billion.

In 2016, household final consumption expenditure was revised down by $3.1 billion, and business gross fixed capital formation by $4.5 billion. An upward revision of exports by $5.7 billion was largely offset by a $4.7 billion upward estimate of imports. Consequently, GDP was revised down by $2.7 billion. 

In 2017, large downward revisions occurred in household final consumption expenditure (-$3.2 billion), and in business gross fixed capital formation (-$1.1 billion). These were partly offset by a $1.3 billion upward revision in governments’ final consumption expenditure and a $1.9 billion upward revision in governments’ gross fixed capital formation. A $7.8 billion upward revision in exports was partly offset by a $5.5 billon upward revision in imports. Overall, GDP was revised down by $0.4 billion in 2017.

In 2018, a $3.1 billion upward revision in governments’ final consumption expenditure was partly offset by a $2.4 billion downward revision in household final consumption expenditure. Similarly, a $7.3 billion upward revision in exports was moderated by a $3.9 billion upward revision in imports. A $3.4 billion upward revision in governments’ gross fixed capital formation contributed to the $4.8 billion upward revision in GDP in 2018.


Table 6
Revisions to expenditure-based gross domestic product components
Table summary
This table displays the results of Revisions to expenditure-based gross domestic product components Revised average level, Previously-published average level and Average revision, calculated using millions of dollars units of measure (appearing as column headers).
Revised average level Previously-published average level Average revision
millions of dollars
2016
Household final consumption expenditure 1,153,668 1,156,810 -3,142
Government final consumption expenditure 426,335 426,282 53
Non-profit institutions serving households' final consumption expenditure 30,951 30,975 -24
Business gross fixed capital formation 382,196 386,668 -4,472
Government gross fixed capital formation 76,854 75,064 1,790
Non-profit institutions serving households' gross fixed capital formation 2,212 2,905 -693
Inventories -228 -606 378
Exports 638,095 632,438 5,657
Imports 685,868 681,156 4,712
Gross domestic product at market prices 2,025,535 2,028,223 -2,688
2017
Household final consumption expenditure 1,208,438 1,211,648 -3,210
Government final consumption expenditure 444,149 442,831 1,318
Non-profit institutions serving households' final consumption expenditure 31,976 32,490 -514
Business gross fixed capital formation 401,686 402,774 -1,088
Government gross fixed capital formation 82,784 80,872 1,912
Non-profit institutions serving households' gross fixed capital formation 2,290 3,077 -787
Inventories 17,088 17,515 -427
Exports 672,533 664,772 7,761
Imports 719,909 714,424 5,485
Gross domestic product at market prices 2,141,107 2,141,508 -401
2018
Household final consumption expenditure 1,255,327 1,257,675 -2,348
Government final consumption expenditure 465,792 462,662 3,130
Non-profit institutions serving households' final consumption expenditure 33,207 34,028 -821
Business gross fixed capital formation 409,835 410,214 -379
Government gross fixed capital formation 89,087 85,685 3,402
Non-profit institutions serving households' gross fixed capital formation 2,325 3,094 -769
Inventories 11,904 12,136 -232
Exports 713,351 706,029 7,322
Imports 756,913 753,008 3,905
Gross domestic product at market prices 2,223,856 2,219,061 4,795
2016 to 2018 average
Household final consumption expenditure 1,205,811 1,208,711 -2,900
Government final consumption expenditure 445,425 443,925 1,500
Non-profit institutions serving households' final consumption expenditure 32,045 32,498 -453
Business gross fixed capital formation 397,906 399,885 -1,980
Government gross fixed capital formation 82,908 80,540 2,368
Non-profit institutions serving households' gross fixed capital formation 2,276 3,025 -750
Inventories 9,588 9,682 -94
Exports 674,660 667,746 6,913
Imports 720,897 716,196 4,701
Gross domestic product at market prices 2,130,166 2,129,597 569

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