MRO Magazine

Gross domestic product by industry advanced in July

Ottawa, ON -- The Canadian economy advanced 0.2% in July following a 0.3% increase in June, Statistics Canada repor...


Industry

October 3, 2005
By MRO Magazine
MRO Magazine

Ottawa, ON — The Canadian economy advanced 0.2% in July following a 0.3% increase in June, Statistics Canada reports. Growth in July was concentrated in mining, oil and gas extraction and exploration, retail trade, and transportation industries. The oil and gas industry was spurred by a further increase in already high oil prices. However, economic activity was hampered by declines in manufacturing, wholesale trade and utilities.

Industrial production (the output of mines, utilities and factories) increased 0.3% in July. Declines in manufacturing (-0.3%) and utilities (-2.5%) were more than offset by a 3.6% surge in the mining, oil and gas extraction sector, where high crude oil prices coupled with the end of a labour dispute helped push the growth.

Electricity generation contracted 3.1% following a 4.1% increase in June, boosted by a heat wave in Central Canada. In the United States, the index of industrial production increased 0.1% on the strength of manufacturing and utilities, while output of mining receded.

Output of the mining, oil and gas extraction sector increased on the strength of oil and gas extraction and exploration, and the resolution of a labour dispute in the iron ore mines. Oil and gas exploration bounced back 20% from a 14% drop in June caused by unfavourable weather conditions. Light crude oil prices rose a further 3.2% in July, after increasing 12% in June.

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Oil and gas extraction advanced 1.0% despite a drop in the tar sands area attributable to maintenance work. On the East Coast, despite persistent problems with the gas compression systems over the last six months, the output of conventional oil gained much of the ground lost in June. Overall, there were increases in the production of both conventional oil and natural gas.

Mining excluding oil and gas extraction gained 3.7% on the strength of iron ore production. The end of a labour dispute in June helped propel iron ore extraction to a level not seen since the last quarter of 2000. Output of non-metallic minerals (which include diamonds and potash) decreased 2.1%.

With the special incentive programs by auto makers extended through the summer, new motor vehicle dealers enjoyed a second consecutive month of brisk sales. The retail trade sector gained 1.2% largely on that strength, as retailing activities excluding motor vehicles edged up 0.4% with the largest gain recorded by supermarkets.

Wholesale trade activity declined 1.4% in July, dragged down by reduced sales of computers and other electronic equipment, lumber and millwork, personal and household products and oil products. The largest gain was recorded by wholesalers of motor vehicles.

Construction activity eased back 0.1% in July. Residential construction declined 0.6%. Housing starts remained strong, however, with much of the growth in multi-units residential buildings in urban areas, mainly in Quebec and British Columbia, while losing some ground in Ontario.

Non-residential building construction advanced 0.3% with increasing activity on institutional and commercial buildings, but industrial building edging down.

MANUFACTURING DECLINES FOR A SECOND CONSECUTIVE MONTH

Manufacturing output declined 0.3% in July, with 14 of the 21 major groups, accounting for 60% of this sector’s output, recording decreases. The largest declines were recorded by manufacturers of fabricated metal products (-2.4%) and of plastic and rubber products (-2.6%). The largest gains were posted by manufacturers of transportation equipment (+0.7%), chemical products (+1.4%) and beverage and tobacco products (+3.8%).

Transportation and warehousing gained 0.4%. Water transportation dropped markedly (-7.8%) as a result of strike activities on the west coast, but was overshadowed by growth in rail and truck transportation industries. Air transportation decreased 0.3% as the number of international travellers for one or more nights by plane to Canada, as well as the number of Canadians travelling abroad for more than one night, both declined by 2.0% from June.