Manufacturing GDP Analysis – July 2016


Resource-base manufacturing contributes to a second straight month of solid GDP growth in Canada

The Canadian economy posted a solid performance in July as energy production returned to normal in northeastern Alberta. GDP was up by 0.48 per cent, building on a 0.62 per cent increase in June. While those would be strong growth numbers in most contexts, here they represent an economy snapping back to its trend growth rate after the devastating forest fires swept through the Ft. McMurray area in May.

snap-back effect continues

The good news in June was that energy sector output had not yet returned to normal, meaning that growth was at least partially driven by activity in other sectors. For the most part, that was not the case in July. GDP in mining and energy extraction was up 3.9 per cent over June, returning value-added output back to about March levels. Meanwhile, the Canadian economy outside of energy extraction grew by a comparatively modest 0.19 per cent.

GDP by industry

Though modest, that growth was well-distributed across the economic base. Of the fifteen major economic sectors, all but two were in positive territory in July. The only exceptions were construction, which was driven lower by a decline in residential housing activity, and the public service.

Outside of energy, the most significant growth came in three sectors: agriculture and forestry; tourism industries; and transportation and warehousing. Each posted monthly gains of 1 per cent or higher.

GDP Growth by sector

For its part, manufacturing had a relatively strong month in July, posting monthly gains of about 0.4 per cent. That growth builds on a massive 1.5 per cent increase in June and was fuelled in large part by a recovery in petroleum refining - once again linked to the energy supply disruption in Ft. McMurray. Petroleum refining GDP was up nearly 8.0 per cent in July - almost enough to return value-added activity back to pre-disaster levels.

Manufacturing GDP by Major Industry      
  Jun-16 Jul-16 June-July July 2015 - July 2016
  ($billions) ($billions) % growth % growth
Total Manufacturing 175.3 176.0 0.4 0.9
  Durables 100.4 98.9 -1.4 -2.5
  Non-durables 74.9 76.8 2.5 4.9
Major Industries        
  Food 23.7 24.2 2.1 4.7
  Motor vehicles and parts 18.6 18.2 -2.2 1.4
  Chemicals 14.6 15.4 5.4 10.9
  Primary metals 14.1 13.9 -1.8 8.4
  Machinery 12.8 12.8 -0.1 -7.5
  Fabricated metals 11.8 11.6 -1.4 -9.1
  Wood products 10.2 10.0 -1.6 7.5
  Plastics and rubber prods. 10.2 10.1 -0.4 4.1
  Paper products 7.5 7.6 1.8 1.3
  Aerospace 6.7 6.7 -0.8 -4.5
  Petroleum and coal prods. 6.4 6.9 8.0 12.5

Outside of petroleum refining, GDP in manufacturing was largely flat, growing by just under 0.1 per cent in July. That growth was driven by strength in a range of non-durable goods industries, notably food processing, paper and chemicals production. Chemicals producers led the way with 5.4 per cent growth in July, as both petrochemicals and pharmaceuticals industries recovered from weak performances in June. Broad-based growth helped food processing industries add 2.1 per cent to their monthly GDP levels, while a 1.8 per cent increase in paper production returned GDP in that industry to April's levels.

monthly GDP growth by sector

On the down side, there was considerable weakness once again on the durable goods side. All major durable goods industries, from primary metals to motor vehicles to aerospace, posted negative growth in July. Only smaller industries emerged unscathed. Computer and electronics manufacturing GDP was up 2.5 per cent, while electrical equipment manufacturing was up 0.3 per cent.


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