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Gross domestic product by industry
October 2002


Economic activity rose 0.3% in October, sustaining a 12-month stretch of consecutive monthly increases. Consumer spending continues to be the source of strength behind the numbers.

Almost every sector of the economy reported gains in October. However, Industrial production remained at September’s levels as manufacturing output was flat. Strong consumer demand for housing, cars, clothing and travel-related services propelled many sectors of the economy. Retailing activity surged 1.6% in October, after declining 0.5% in September. The strength in retailing was widespread as almost all store-types registered gains. Increased new motor vehicle purchases boosted activity levels for both retailers and wholesalers. This latest consumer-spending spree was not limited to just the purchase of new houses and cars but spilled over into travel-related goods and services. Output in the finance sector was propelled by a rally in equity markets in October.

Construction industry continues to benefit from low mortgage rates

Low mortgage rates continued to stimulate demand for new and existing housing, lifting activity levels for both the construction industry and the real estate agent and brokerage industry. New home construction advanced a further 0.4% in October; residential construction is now 19.3% higher than in October 2001. Housing starts in October soared 10.2%, with both single and multiple dwelling starts posting gains. All areas of the country reported significant increases in the number of housing starts. Housing starts have been above the 200,000 mark for much of 2002. The resale housing market rose sharply in October, the third consecutive monthly increase.

The strength in new home building continued to provide stimulus for the construction feeder industries in the manufacturing sector. Producers of wood products, paint, glass and glass products and heating and air-conditioning equipment all posted gains in October. Manufacturers, retailers and wholesalers of household furniture and appliances all reported increased activity levels in response to these new house purchases.

Spending spree for consumers

Shoppers were back in full force in October after a pause in spending in the previous three months. Retailing activity shot up 1.6% as consumers purchased everything from new cars to new shoes. Consumers were enticed back to new car showrooms by generous incentive offers from manufacturers on 2002 models and the introduction of 2003 models. Activity levels at new motor vehicle dealers increased 2.3%. Wholesalers of motor vehicles also reported higher sales in October. The arrival of unseasonably cold weather conditions in October propelled clothing sales after warm weather delayed purchases of seasonal clothing in September.

This latest shopping spree also extended into the travel and entertainment industries. Increased activity levels were reported for air travel, hotels, restaurants, motion picture exhibition, pay TV, and spectator sports. The air transportation industry remains 8.1% below the output level that existed prior to the events of September 11, 2001.

Industrial production flattens out

Industrial production (mining, utilities and manufacturing sectors) was flat in October, after a slight increase in September. Gains in the utilities sector were offset by lower mining output, while production in the manufacturing sector was unchanged. Comparable US statistics on industrial production showed a decrease of 0.6%, with every component of the US index experiencing a large decline in October.

Canadian mining sector output contracted 0.4% in October after gaining 1.3% in September. Production and exploration of oil and gas fell as did output from coal, lead and zinc mines. The utilities sector was buoyed by increased natural gas distribution. The electricity generation and transmission industry was hampered by lower hydro generation. Electricity generation dipped in every province but Saskatchewan and Alberta.

Manufacturing output remained unchanged from September’s level as gains by durable goods producers were offset by declines of non-durable producers. Increases by fabricators of wood products, chemicals, machinery and clothing were offset by declines in the production of paper, computers, electrical equipment and transportation equipment. Lower production of computers and telecommunications equipment hampered output of the ICT (Information and Communication Technologies) manufacturing sector. ICT manufacturing declined 1.5% in October, after rising 2.3% in September.

Motor vehicle manufacturing output was flat in October after a significant decline in September. Low consumer confidence levels in the US translated into slower new motor vehicle sales south of the border. Canadian motor vehicle manufacturers curtailed production to deal with this flagging demand and higher inventory levels. Manufacturing of heavy trucks declined for the second consecutive month although output levels are significantly higher than year-ago levels.

Sawmill producers ramped up production 4.1% in October after two months of decline. However, sawmill output is still 3.1% below the peak reached in April of this year. Low-cost sawmill producers increased production in the wake of the imposition of higher tariffs by the US in an attempt to reduce unit costs and improve profitability. The largest increases in output were registered by those firms with the lowest tariff rates. Lumber exports advanced 7.1% in October, after declining 2.1% in September.

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Date Modified: 2003-01-08 Important Notices