Issue 16-38: Gross Domestic Product (GDP)

March 4, 2016

Quarterly GDP Growth

Canadian economic growth slowed in the fourth quarter of 2015, with real GDP increasing 0.2% (seasonally adjusted) after posting a third-quarter gain of 0.6%.

Final domestic demand (household, business and government spending on goods and services) was weak, slipping 0.2% in the fourth quarter after stalling earlier in the year. Business investment in residential structures inched ahead (+0.4%), but spending on non-residential structures, machinery and equipment (-3.3%) and intellectual property products (-1.2%) continued to slump. Overall, business spending on gross fixed capital formation was down 1.7%, marking a fourth straight quarterly decline. Government investment fell (-1.3%) for a second straight quarter. Household spending inched up 0.2%, while government final consumption expenditures increased 0.4% from third quarter levels.

Exports of goods and services dropped 0.6%, while imports slipped 2.3% in the fourth quarter. Inventories held by producers declined (-$5.1 billion) for a third straight quarter, suggesting that producers were filling orders from their stock of inventories rather than new production.

Annual GDP Growth

During 2015, the Canadian economy expanded 1.2%, posting the lowest annual increase in real GDP since 2009 (when the economy shrank 2.9%). Final domestic demand (household, business and government spending) rose a modest 0.5%, as business investment in fixed capital fell (-4.8%) for the first time since 2009. Household (+1.9%) and government (+1.4%) spending on goods and services, together with rising exports (+3.0%) provided a boost to overall economic growth. The value of imports was only marginally higher (+0.1%) than in 2014.

GDP By Industry

In December, Canada’s real gross domestic product (GDP by industry, measured at basic prices) rose 0.2% (seasonally adjusted) after posting a 0.3% increase in the previous month. Overall, the goods-producing industries expanded 0.2% as manufacturing (+1.1%) and construction (+0.6%) posted gains, which partly offset a 0.7% decline in mining, quarrying and oil and gas extraction.

In the service sector (+0.3%), most industries expanded in December, with arts, entertainment and recreation (+2.1%) and wholesale trade (+1.8%) seeing the strongest growth. Retail trade (-1.8%), which lost ground after posting a 1.5% increase in the previous month, was the only service industry to see a decline in real GDP in December.