MRO Magazine

Industry sectors have strong effect on latest GDP results

Ottawa, ON -- Jan. 2, 2002 -- Canada's gross domestic product advanced 0.3% in October 2001, after plunging 0.8% in...


Ottawa, ON — Jan. 2, 2002 — Canada’s gross domestic product advanced 0.3% in October 2001, after plunging 0.8% in September, according to the latest figures from Statistics Canada. The events of Sept. 11 hit the transportation, accommodation and several other industries quite hard. Although economic activity recovered somewhat in October, remaining at mid-2000 levels, the underlying weakness in the economy persisted.

Gross domestic product of an industry is the value added by labour and capital in transforming inputs purchased from other industries into outputs. The estimates presented here are seasonally adjusted at annual rates and are valued at 1997 prices.

The manufacturing sector edged up 0.2% in October 2001, although production had plummeted 4.1% over the June-to-September period. Increased factory output of paper products, motor vehicles and chemicals was responsible for much of the rise.

Ten of the 21 major groups advanced, accounting for 62% of production. This growth was partly offset by lower production in telecommunications equipment, wood products, clothing and iron and steel products.

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Paper products surged 4.2% in October 2001, reaching levels not seen since the beginning of the year. Pulp mills boosted their output 10.2%, mirroring the increase in pulp exports. A number of pulp producers returned to normal output levels after several months of cutbacks, and paper production increased 4.3%. Newsprint output also increased in October. However, production levels were down 11.2% from October 2000.

Production of motor vehicles expanded 2.8% in October, partly recovering from the parts shortages caused by border delays in September. This was the first increase in motor vehicle assembly after four successive months of declines. Sales of new motor vehicles in the United States rose more than 30% in October, setting a new sales record as North American automakers expanded financial incentive programs.

<b>Effect of maintenance shutdowns</b>

Chemical manufacturers rebounded 1.9%, after a 3.2% decline in September 2001. The pharmaceutical industry continued on its upward trend with output now 30.6% higher than in October 2000. Petrochemical producers surged 9.3%, after three months of drastic reductions in output, as major producers came back on line after their scheduled maintenance shutdowns.

Output in the computer and electronics industry fell 2.7%, the 14th consecutive monthly decline. Production declined 47% from its August 2000 peak. Makers of communications equipment continued to suffer, their production dropping a further 9.3% in October. A prolonged worldwide slump in telecommunications investment continued to take its toll on this industry. Computers and peripheral equipment manufacturing managed a partial rebound, rising 6.8% after a 14.8% drop in September.

The wood products industry lost ground in October after two consecutive monthly increases. Sawmill output declined 2.7%, the seventh decline in 12 months. Deteriorating conditions in the lumber market — falling prices, reduced demand and uncertainty over impending dumping charges in the United States — caused extensive layoffs in this industry.

Output in the mining industry declined for the second month, and stood at 8.7% in October, off its April peak. Lower prices for oil and gas continued to discourage demand for exploration. Drilling and rigging services output declined 11.6% in October, the fifth decline in six months. The increase in oil production reflected a resumption of activity by a major producer. The deteriorating steel market caused several iron mines to temporarily shut down operations, resulting in a steep drop in this industry. Record low metal prices resulted in shutdowns in the metal mining industry and a corresponding drop in output. These declines were partly offset by increased output from gold and diamond mines.

Electric utilities output rose 2.1% in October, recovering a portion of the 3.3% drop in September. A significant increase in existing home sales, the result of low mortgage rates, was mirrored in the output of the real estate agency industry. The public administration industry benefited from the resolution of labour disputes.

Wholesaling activity fell 0.5% in October, after declining a significant 1.8% in September. Wholesaling of automotive products and computer equipment was responsible for a large part of October’s decline. Wholesaling of grains also fell substantially, reflecting lower crop yields. These declines were partly offset by increased wholesaling of food, beverages, lumber and machinery.