July 3, 2009

Canadian non-residential activity up as GDP declines

OTTAWA

New output numbers released this week show the economy is still contracting but the recession may be abating.

Statistics Canada reports real gross domestic product fell in April by 0.1 per cent after larger declines in February and March.

Statistics Canada reports declines in manufacturing, the energy sector and retail trade were the main contributors to the April drop. However, there were increases in the activities of real estate agents and brokers and wholesale trade.

GDP of the manufacturing, energy, retail and construction industries fell, though the finance and insurance sector was essentially unchanged.

Manufacturing production fell 1 per cent in April on weak foreign demand, with 15 of the 21 major groups contracting. Particularly affected were primary metal, petroleum and coal, food, paper and wood products makers.

However, motor vehicle production and computer and electronic product manufacturing were both up.

The energy sector fell 0.5 per cent in April on significant declines in natural gas extraction, refining, coal mining and pipeline transportation.

Storage levels of natural gas in Canada and the United States remained high, while the price of natural gas declined to a level below those recorded at the end of 2007.

Support activities for oil and gas extraction rebounded significantly in April, but the industry continued operating at a low level. However, electricity generation and natural gas distribution were both up in the month.

Increases in non-residential building construction and engineering and repair work were not enough to offset a drop in residential building construction as construction activity slipped 0.1 per cent in April.

The GDP data is one of the closest watched of all economic indicators, because it is the broadest measure of how the economy is doing, combining goods production, services, jobs and consumer purchasing activity.

In April, the indicators were mixed, with retail sales taking an unexpected plunge, but the labour market adding 37,000 self-employment jobs and manufacturing posting a slight gain. The jobs gain might have been enough to push GDP into positive territory, but payroll employment fell 0.4 per cent during the month, indicating contributions from the self-employment category were weak.

Since October, Canada has shed 363,000 jobs, a 2.1 per cent loss, and that carnage is expected to continue for the rest of the year, possibly extending well into 2010.

Canadian Press

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