The real GDP was almost flat in August, after a modest 0.1% increase in July. The services sector saw a 0.1% increase during the month, supported by a strong rebound in finance and insurance and public administration. However, goods-producing industries recorded a 0.4% decline, the lowest since December 2021, due to declines in manufacturing and utilities. Overall, 12 of the 20 sectors expanded in August.
The manufacturing sector was the most prominent drag on growth, falling by 1.2% due to a decline in the manufacturing of durable and non-durable goods. Non-durable goods manufacturing saw a notable decline of 1.4%, its largest decline since March 2024. Chemical manufacturing, down 5.0%, was the main driver of the decline, with pharmaceutical and medical industries particularly affected, falling by 10.3%, partially offsetting the gains recorded in the previous two months. The decline in durable goods manufacturing that began in the summer of 2023 continued, declining 1.0% in August 2024, bringing activity to its lowest level since September 2021.
Transportation equipment manufacturing, which declined 0.9%, was among the main drivers of the decline, declining 12.5% from its previous levels since July 2023. Retooling and maintenance activities at several automotive plants contributed to the downward trend. The decline continued into August 2024, with motor vehicle and parts manufacturing declining 1.9% as a result of the prolonged maintenance shutdown in Ontario’s automotive industry. Other industries such as machinery manufacturing (-2.9%) and furniture and related products (-7.3%) were also major contributors to the significant decline in overall durable goods manufacturing.
GDP: Rail Shutdowns Impact Canada’s Transportation and Warehousing Sector
The rail shutdowns had a significant negative impact on the transportation and warehousing sector, which contracted for the second straight month, declining 0.3% in August. Rail transport was the main contributor to the decline, falling 7.7% as a result of disruptions to operations at Canada’s two major rail companies. These disruptions affected the loading of cars for goods including meat, pharmaceuticals and hazardous chemicals.
In addition, the sector faced other challenges such as a bridge collapse in Fort Frances, Ontario, which hampered the ability of railcars to transport grain to the port of Thunder Bay. It is worth noting that this decline in August followed an earlier decline of 4.0% in July, which was partly affected by the Jasper wildfires, which disrupted freight traffic between major ports in British Columbia.
Utilities sector retreats after a period of growth
The utilities sector contracted 1.9% in August, ending three consecutive months of growth. Electricity generation, transmission and distribution fell 2.6 per cent, the first decline in four months, with declines seen in most provinces. After a surge in electricity demand in July due to high temperatures, demand fell in August, although a 1.4 per cent increase in natural gas distribution helped to offset the overall decline.
Wholesale trade falls for third time in four months
Wholesale trade fell 0.6 per cent in August, marking the third decline in four months and outpacing the increase recorded in the previous month. Miscellaneous wholesalers were the biggest contributors to the decline, recording a 4.9 per cent decline. Machinery and equipment wholesalers continued to decline, recording a 1.0 per cent decline for the fifth consecutive month, also contributing to the overall sector decline. These challenges require intensified efforts to stabilize Canada’s transportation, utilities and trade sectors.
Finance and insurance growth due to financial market volatility and its impact on GDP
The finance and insurance sector recorded growth of 0.5% for the third consecutive month in August, with financial investment services, funds and other financial vehicles the main driver of this growth, up 2.6%. The high trading activity in the equity and fixed income markets contributed to this trend, as global financial markets witnessed bouts of activity, especially at the beginning of the month with a large sell-off in stocks. This volatility, in addition to strong foreign investment in Canadian bonds, caused a significant increase in trading activity in Canadian markets during August.
Public sector growth (GDP) continues
The public sector, which includes education services, health care and social assistance and public administration, continued to grow for the eighth consecutive month, recording an increase of 0.2% in August. Public administration contributed 0.5% to this growth, with local, municipal and regional administration the main driver, with an increase of 0.6%. Health care and social assistance services also grew by 0.2%, while the education sector remained stable. Retail trade rebounds on auto parts dealers
Retail trade rose 0.6% in August, posting its second straight monthly increase. Auto parts dealers were the biggest contributor to the growth, with sales up 4.1% on stronger new vehicle sales.
Mining, oil and gas extraction growth (GDP) in August
Mining, quarrying, oil and gas extraction increased 0.6% in August, helped by a 1.5% increase in oil and gas extraction, which offset most of the decline in July. Oil and gas extraction, excluding oil sands, was the biggest contributor to growth, with natural gas exports from Alberta and British Columbia increasing.
Mining and quarrying (excluding oil and gas) also rose 0.7%, posting its fifth straight month of growth. Ore mining was the standout, up 1.7%, helped by the resumption of iron ore mines after wildfire closures in July.
