Analysis

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Real gross domestic product by industry declined 0.1% in October after increasing 0.1% in September.

Declines in wholesale trade, manufacturing and in the output of real estate agents and brokerscontributed the most to the October decrease. Residential construction and retail trade also retreated. Economic activity advanced in several service industries while the output of the energy sector regained some of the ground lost in the previous two months.

Wholesale trade falls

Value added in wholesale trade fell 2.7% in October. The wholesaling of automotive and personal and household products, as well as of recyclable metal products fell significantly during the month.

This decline in wholesaling activities was due in part to the lower volume of international trade, on both the exports and imports side.

Retail trade declines slightly

Value added in retail trade edged down 0.1% in October, remaining essentially at the same level since May. The decline was widespread among the sub-sectors, but more notable in beer, wine and liquor stores, home centres and hardware stores, and in furniture and home furnishing stores.

The overall decline in retail trade mirrored a decline in imports of consumer goods. New car dealers reported higher volume of activity in October despite a decrease in the number of new vehicles sold, suggesting increases in their volume of used cars sold and repair work. Used car dealers reported a substantial increase in activity in October for a third consecutive month.

Manufacturing activity retreats

Manufacturers cut back production 0.7% in October. Manufacturers of motor vehicles (-8.6%) and of paper products (-2.4%) reduced their activity again as demand on foreign markets continued to trend downward. The production of primary metal products fell for a second consecutive month after advancing rapidly during the summer months.

Activity in sawmills, as well as in the upstream forestry and logging industry, has remained relatively stable over the last three months as exports of lumber picked up somewhat after a series of declines.

Energy sector output increases

The increase in oil and gas extraction and in related support activities accounted for almost the entire 1.2% advance in the output of the energy sector. Both oil and natural gas extraction increased in October, with natural gas outpacing oil. Domestic demand for energy has been essentially flat in recent months. Foreign demand for crude oil strengthened since last August, while showing a seesaw pattern in the case of natural gas.

The increased production of oil and gas was a major factor in the strength of related support activities in October.

The output of the mining sector excluding oil and gas fell 2.2% in October. The decline in metal ore and coal mines exceeded the modest rise in non-metal mines. Prices of primary commodities on international markets have fallen sharply since the beginning of the year.

Construction activity edges down

Activity on construction sites fell 0.3% in October. The decline in residential building construction outpaced the increase elsewhere in this sector.

Housing construction decreased 1.2% during the month. A substantial drop in single-family dwellings and a decline in alterations and improvement work more than offset the increases in the other categories of residential construction. An increase in institutional buildings, particularly hospitals in Ontario and schools across the country, led the advance in the construction of non-residential buildings.

Demand for existing houses which had been weakening since the summer of 2007 fell sharply in October. The drop was widespread with none of the major markets being spared from the downturn. As a result, the real estate agents and brokers industry fell 14.3% for the month, the largest monthly decline in over a decade.

The finance and insurance sector increases

The finance and insurance sector rose 0.4% in October. As in September, the unusually high volume of trading on the stock exchanges in October partially offset another steep decline in mutual fund sales. Elsewhere in the sector, there was a notable increase in fixed-term and demand deposits.