Canada GDP Contracts 0.4% QoQ in Q2

The Canadian economy shrank 0.4 percent on quarter in the three months to June of 2016, following a 0.6 percent rise in the previous period. It is the first contraction in four quarters and the biggest since 2009 caused by a decline in crude petroleum output due to continued weakness in the energy sector and the wildfire in Alberta.
Statistics Canada | Joana Taborda | 8/31/2016 3:19:57 PM
Exports of goods and services largely contributed to the decline in real GDP, down 4.5 percent, following a 1.9 percent increase in the first quarter. Sales of motor vehicles and parts were down 5.8 percent, mostly because of lower exports of passenger cars and light trucks (-6.6 percent). Exports of consumer goods (-6.8 percent) decreased across the board, resulting in the largest drop since the second quarter of 2003. Lower shipments of crude oil and crude bitumen (-9.6 percent) and refined petroleum energy products (-19.6 percent) pushed down exports of energy products (-7.5 percent). Exports of metal ores and non-metallic minerals were down 17.5 percent, the largest drop since the first quarter of 2009. The only major offset to the decline in exports was aircraft and other transportation equipment and parts, which rebounded 5.6 percent following two quarters of decrease. Imports rose 0.3 percent in the second quarter, following a 0.4 percent gain in the first quarter. 

Business gross fixed capital formation edged down 0.1 percent, following a similar decline in the previous quarter, led by lower investment in non-residential structures (-1.1 percent), which was partially offset by higher investment in housing (+0.3 percent) and machinery and equipment (+0.5 percent). Businesses drew down inventories by $307 million to compensate for lower production and imports, following a withdrawal of $8.5 billion in the previous quarter. Non-farm inventories were reduced by $1.6 billion.

Household expenditure continued to rise, up 0.5 percent, virtually matching the pace in the previous four quarters. Growth in the second quarter was mostly attributable to increased outlays on services (+0.8 percent), while household spending on goods was up 0.2 percent.

Government consumption rose 1.0 percent, partly as a result of government spending related to the wildfire in Fort McMurray. This was the sixth consecutive quarterly increase in government final consumption expenditure.

Excluding the impact of the large decline in crude petroleum output, the economy advanced 0.1 percent.

Expressed at an annualized rate, real GDP fell 1.6 percent, worse than market expectations of a 1.5 percent decline. 

Canada GDP Contracts 0.4% QoQ in Q2