Canada GDP Expands 0.7% in Q2



The Canadian economy advanced 0.7 percent on quarter in the second quarter of 2018, following an upwardly revised 0.4 percent growth in the previous period. It is the strongest growth rate in a year amid higher household spending and exports of energy, pharmaceutical products and business jets. Expressed at an annualized rate, the GDP grew 2.9 percent, well above 1.4 percent in the first quarter but slightly below market expectations of 3 percent.

Exports rose 2.9 percent, well above 0.6 percent in the previous period and the largest gain since the second quarter of 2014. Notable increases were seen in energy products (+5.6 percent) and consumer goods (+6.3 percent), particularly pharmaceutical products. Exports of aircraft, aircraft engines and aircraft parts (+13.4 percent) increased sharply on higher shipments of business jets to both the United States and non-US countries. Exports of services edged down 0.2 percent.

Imports rose 1.6 percent, also higher than a 1 percent growth in the first quarter. Imports of goods increased 1.7 percent. Imports of refined petroleum energy products rose 45.1 percent to offset the complete shutdown of four Canadian refineries in April and May. These shutdowns typically occur once every five years. Additionally, aircraft and other transportation equipment and parts grew 9.1 percent. Imports of services (+1.1 percent) rebounded following a 0.8 percent decrease in the previous quarter.

Household expenditure increased 0.6 percent, twice the pace of the first quarter and reversing the downward trend over the previous three quarters. Growth was largely attributable to outlays on services (+0.8 percent), which outpaced outlays on goods. Housing-related expenses (housing, water, electricity, gas and other fuels), up 0.6 percent, contributed the most to the widespread growth. Spending on goods grew 0.5 percent following a flat first quarter, with rebounds in semi-durable (+1.2 percent) and non-durable (+0.2 percent) goods. Purchases of vehicles declined 0.5 percent.

Investment in housing increased 0.3 percent in the second quarter, following a 2.7 percent drop in the first quarter. Declines in ownership transfer costs (-3.4 percent) continued, while new constructions (-0.3 percent) contracted for the first time since the third quarter of 2016. However, these declines were more than offset by a sharp 2.9 percent increase in outlays on renovations.

Business gross fixed capital formation increased 0.4 percent (0.6 percent in the first quarter), the slowest pace since the first quarter of 2017, as investment growth in non-residential structures, machinery and equipment, and intellectual property products all decelerated in the second quarter.

Machinery and equipment investment rose 0.3 percent following a 3.9 percent increase in the first quarter, with aircraft and other transportation equipment (+5.8 percent), industrial machinery and equipment (+0.7 percent) and computers and computer peripheral equipment (+1.8 percent) accounting for the majority of the growth.

Businesses added CAD 13.4 billion to inventories in the second quarter, less than the CAD 16.0 billion accumulated in the previous quarter. Most of the accumulation came from wholesalers (+CAD 9.0 billion), with manufacturers (+CAD 2.8 billion) also adding to their stock.

Investment in retail inventories declined to CAD 0.5 billion, while farm inventories increased CAD 0.9 billion.

Government spending rose 0.4 percent, , below 0.6 percent in the previous period. Public investment shrank 0.5 percent, following a 1 percent jump.

Canada GDP Expands 0.7% in Q2


Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com
8/30/2018 12:51:31 PM