Canada’s monthly gross domestic product (GDP) reflects the change in the total value of all goods and services produced across all sectors of the economy in Canada, in the current month compared to the previous month. Canada’s GDP is calculated using buyers’ prices and represents the sum of gross value added created by all manufacturer’s resident in Canada. The GDP calculation includes any product taxes. Support to the enterprise, which is not included in the cost of production, is excluded from the calculation.
GDP is based on monetary appreciation of the value of goods and therefore requires adjustment for inflation. Depending on whether the adjustment is applied, GDP can be real and nominal. Nominal GDP ignores inflation and deflation, which is why it is difficult to measure the change in the index based on the nominal value. Real GDP takes into account the impact of inflation and enables smooth comparison of economic activity over long periods (for example by showing the change in GDP with respect to the previous year or quarter as a percentage). For this purpose, the GDP deflator is included in the calculation formula.
The GDP calculation includes data on 192 industries (to ensure adequate data specifications) and GDP is typically used as an indicator of the state of the national economy and standard of living. Its growth is interpreted as a strengthening of the economy, while its decline shows weakness. Therefore, GDP growth can positively impact Canadian dollar prices.
Markets saw GDP growth of 1.7% q/q in the first quarter, which was half a point weaker than consensus and 1.1 percentage points weaker than the Bank of Canada’s April forecast, as well as a downward revision to 0.1% from 1% q/q. quarterly in the fourth quarter
Construction fell in April due to residential building construction contracts
The construction sector fell 0.4% in April, after recording in March its largest growth rate since October 2022. Residential building construction was the main source of the sector’s decline, as it contracted 2.3% in April 2024, its largest decline since May. 2023. The decrease in April 2024 reflects decreased activity in the construction of new single-family and multi-unit homes and in home modifications and improvements. The level of sub-sector activity in April was close to 24% below its peak recorded in April 2021.
Advance Estimate of Real GDP by Industry for May 2024 Preliminary information suggests that real GDP rose 0.1% in May. Increases in manufacturing, real estate, leasing, finance and insurance were partially offset by declines in retail and wholesale trade. Due to its preliminary nature, this estimate will be updated on 31 July 2024, with the release of official GDP data by industry for May.
Manufacturing Sector Rises in April After contracting for two straight months, the manufacturing sector expanded by 0.4% in April. After four consecutive monthly declines, total durable goods manufacturing (+0.6%) contributed the most to growth, with transportation equipment manufacturing (+1.9%) leading the gains. Despite ongoing retooling activities, the automobile and spare parts industry increased production during the month.
Nondurable goods manufacturing rose 0.2% in April after two straight monthly declines. Chemicals manufacturing (+2.6%) contributed the most to growth, driven by gains in drug and pharmaceutical manufacturing which rebounded from a decline the previous month. Manufacturing of petroleum products and coal (-3.6%) moderated growth in total non-durable goods manufacturing, with petroleum refineries down 4.9% in April. A larger than usual number of facilities underwent spring restarts and maintenance during the month. This was the subsector’s biggest contraction since April 2021.
The rate of mining, quarrying and oil and gas extraction increases in April
Mining, quarrying, and oil and gas extraction activities increased by 1.8% in April, partly due to an increase in support activities for mining, oil and gas extraction (+6.9%). This rise was supported by the widespread expansion in all forms of supporting activities.
The oil and gas extraction sector recorded growth of 1.2% in April, representing an increase for the sixth time in seven months, and this growth was largely due to oil sands extraction. The sector expanded 2.1% in April, led by higher industrial crude oil production and crude bitumen extraction in Alberta. Oil and gas extraction (excluding oil sands) also contributed to the gains, rising 0.4% in April, as higher oil extraction off the coast of Newfoundland and Labrador offset lower oil extraction in western Canada.
The mining and quarrying sector (excluding oil and gas) rose 0.3% in April after contracting in March. Growth in metal ore mining (+1.6%) and coal mining (+2.4%) was partially offset by a decline in non-metallic mineral mining and quarrying (-4.0%) as temporary closures at potash and salt mines led to lower production in the month.
Wholesale trade expands with increases in most subsectors: Wholesale trade expanded 2.0% in April, more than offsetting the decline in March, as most subsectors posted increases in April. Wholesale trade of automobiles and automobile parts and accessories (+8.0%) led the growth, with its largest monthly growth rate since October 2021. The automotive industry group was the largest contributor to the sector’s growth in April 2024, and the increased activity coincided with an increase in automobile manufacturing as well as an increase in Imports of passenger cars and light trucks. Personal and household goods rose 3.5% in April, further contributing to the sector’s growth, with higher personal goods, toiletries, cosmetics and pharmaceutical wholesale leading the gains.
