Analysis

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Real gross domestic product increased 0.5% in December after growing by 0.4% in November and 0.3% in October. As was the case in November, production increased in most major industrial sectors in December. Significant increases were recorded in oil and gas extraction, which accounted for nearly forty percent of the overall increase, and in wholesale trade. Manufacturing, transportation, the public sector and the finance and insurance sector also grew. However, retail trade and construction contracted.

Primarily on the strength of oil and gas extraction, the mining sector increased 2.0% in December. Natural gas production rose significantly as demand south of the border increased. Oil extraction also went up on the strength of synthetic crude petroleum production. Metal ore mining declined partly as a result of unfavourable weather conditions and a return to more normal production levels in the nickel, copper, lead and zinc mines.

Wholesale trade grew 1.3% in December, partly reflecting the strength in exports. This marked a third consecutive monthly increase in wholesale trade. The majority of the subsectors reported growth in December, with the largest contribution coming from petroleum products. Conversely, retail trade fell 0.4% as activity declined at new and used car dealers and at food and beverage stores.

Manufacturing grew 0.6% in December, after three consecutive monthly declines. The production of both durable and non-durable goods increased. Motor vehicle production rose 6.2% following a decline in November. Manufacturers of paper, beverages and tobacco, machinery and chemicals also reported gains. Fabricated metal products manufacturing was down.

Construction activities decreased 0.3% as residential construction (-1.5%) continued to retreat. The output of real estate agents and brokers rose for a fifth consecutive month, reflecting a rise in sales of existing homes.

Fourth quarter 2010

All major industrial sectors, with the exception of manufacturing, increased their output in the fourth quarter. Service-producing industries increased 0.9% while goods production increased 0.5%. The largest contributing sector was mining and oil and gas extraction. The public sector (education, health services and public administration combined), wholesale and retail trade, real estate and construction also contributed to the overall increase. Manufacturing declined following five consecutive quarterly increases.

Mining and oil and gas extraction increased 2.3%. Oil and gas extraction advanced 2.1% with both oil and gas production rising. Exports of energy-related products were particularly strong in the fourth quarter. Mining grew 5.1%, principally on the strength in copper, nickel, lead and zinc mines and in potash mines.

Wholesale trade advanced 1.7% in the fourth quarter. Except for a decline in the wholesaling of farm products, all major types of wholesaling activity rose during the quarter. Retail trade grew 1.0% on the strength of motor vehicle and parts dealers, and furniture, home furnishings and electronics stores.

Construction rose 0.8% in the fourth quarter. Increases in engineering and repair work as well as in non-residential building construction outweighed the 3.2% decline in residential building construction. The real estate market was buoyant in the fourth quarter, leading to an increase of 13.7% in the output of real estate agents and brokers, the first quarterly increase since the fourth quarter of 2009.

Manufacturing decreased 0.8% as non-durable goods production dropped 1.9% while durable goods production was up 0.2%. Food, beverage and tobacco as well as the manufacturing of pharmaceuticals and medicines, and petroleum and coal products decreased in the non-durable sub-sector. In durable goods, electronics and machinery were the largest contributors to the increase. The manufacturing of transportation equipment declined as the production of motor vehicles and associated parts decreased 7.0%.

Year 2010

Real Gross Domestic Product at basic prices grew 3.3% in 2010 after contracting 2.6% in 2009. The year 2010 not only marked a return to positive gains, but also surpassed the average growth rate for the five years preceding the 2009 downturn. The year 2010 was characterized by notable growth in the first and fourth quarters of the year and lower increases in the second and third quarters.

All major industrial sectors posted gains in 2010, with the exception of utilities. Goods-producing industries increased 4.9%, following a 9.0% decline in 2009. The production of services (+2.6%) grew at a much larger rate than in 2009 (+0.3%). Manufacturing, construction, mining and oil and gas extraction as well as wholesale trade, were the main contributors to the overall growth. Retail trade and the finance and insurance sector also showed strength. Most transportation industries benefitted from the rebound in economic activity. However, utilities edged down as the demand for electricity decreased.

Several tourism-related industries fared well, partly due to the Vancouver 2010 Olympic and Paralympic Winter Games that were held in February and March.

Manufacturing output rose 5.7% in 2010, the first annual increase since 2005. The 2010 level of production was 15% below that recorded in 2005. The 2010 gain in production was widespread, with 20 of the 21 major groups increasing. Manufacturing of motor vehicles and associated parts and of primary metal products led the way.

Construction rose 6.6%, after decreasing 8.4% in 2009. More than sixty percent of the growth in construction in 2010 came from residential buildings, which grew in the first three quarters but receded in the fourth. Engineering and repair work was up while construction of non-residential buildings was down for a second consecutive year. The output of real estate agents and brokers decreased.

Mining and oil and gas extraction increased 4.8% in 2010, after decreasing in the previous two years. Support activities (mostly drilling and rigging) were a key contributor as they increased by 33%. Excluding oil and gas extraction, mining grew 11%. Output at potash mines as well as at copper, nickel, lead and zinc mines, was particularly strong, although the latter were affected by labour disputes during the year. Overall, oil and gas extraction rose 0.6%.

Both wholesale (+5.3%) and retail trade (+3.8%) rose in 2010. The increase in the volume of wholesaling activity was primarily attributable to motor vehicle and parts, building materials, and machinery and equipment. Retailers of automotive products, food and beverages as well as clothing and accessories recorded significant increases.