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The Canadian economy did indeed dip into recession in the first half of 2015, but it did so in the best way possible. GDP growth surged forward in June, rising by 0.5 percent – the strongest month-over-month gain in two years. That increase was not, however, enough to offset losses in April and May. As a result, industry-level GDP fell by 0.2 per cent overall in the second quarter of 2015 – an annualized rate of 0.9 per cent (This figure differs from expenditure-based GDP calculations which reported an annualized decline of 0.5 per cent).

June’s growth ended a streak of five consecutive months of losses for the Canadian economy. However, the real question is whether or not that growth can be maintained. June’s GDP numbers came amid a modest recovery in crude oil prices and a return to more normal oil production levels in Alberta after wildfires had caused widespread supply disruptions. As a result, GDP in mining, oil and gas grew 3.1 per cent in a single month, accounting for roughly half of overall growth in the Canadian economy in June.


The plunge in oil prices in July and August will likely produce some weak economic growth numbers through the summer, although a resurgent US economy will help to soften the blow.  

While mining and energy extraction was the driving force behind June’s strong economic showing, there were, in fact, positive numbers nearly all across the board. Thirteen of the fifteen major economic subsectors posted gains, with only construction (-0.5 per cent) and public administration (-0.2 per cent) delivering negative results. Construction activity has been especially weak since last fall, driven down by lower non-residential capital investment. Business investment in structures and machinery and equipment has been the single biggest drag on the Canadian economy so far this year.

For its part, the manufacturing sector rebounded after a disastrous performance in May, growing by a healthy 0.4 per cent in June. However, that increase was not enough to completely erase the memory of May’s 1.6 per cent decline (revised from the 1.7 per cent figure reported last month). For the second quarter as a whole, manufacturing GDP was down 1.0 per cent compared to the first three months of 2015.

Manufacturing GDP by Major Sector      
  May-15 Jun-15 May-June June 2014 - June 2015
  ($billions) ($billions) % growth % growth
Total Manufacturing 170.9 171.6 0.4 -1.7
  Durables 98.8 98.8 0.0 -3.1
  Non-durables 72.3 72.9 0.9 0.2
         
Major Industries        
  Food 22.4 22.7 1.7 0.2
  Motor vehicles and parts 17.6 17.7 0.1 -1.9
  Chemicals 14.0 14.5 3.3 4.6
  Machinery 13.1 12.8 -2.7 -6.6
  Primary metals 13.7 13.6 -1.2 -6.6
  Fabricated metals 12.4 12.0 -2.9 -10.8
  Wood products 9.2 9.5 2.3 3.1
  Plastics and rubber prods. 9.3 9.1 -2.1 0.8
  Paper products 7.3 7.3 -0.1 2.2
  Aerospace  7.0 6.9 -0.9 -6.1
  Petroleum and coal prods. 6.4 6.2 -2.9 -8.2

June’s positive GDP numbers in manufacturing were largely concentrated in the non-durable goods sector. While petroleum refining and plastics production were down, there were solid gains in most other industries. Leading the way was chemicals production, up 3.3 per cent in June on the strength of higher fertilizer and pharmaceuticals output. GDP in wood products was up 2.3 per cent and food processing rebounded from three consecutive losses to grow by 1.7 per cent.  


By contrast, economic numbers in durable goods industries remain flat. While the non-durable goods sector as a whole expanded by 0.9 in June, durable goods production was essentially unchanged from May. GDP numbers were especially weak in industries with ties to the energy sector. Primary metals were down 1.2 per cent, while losses in fabricated metals were even steeper, at 2.9 per cent. Value-added output in machinery was also 2.7 per cent lower, driven down by softer demand for agricultural, mining and construction machinery.


Not all durable goods industries posted losses in June, however. GDP was up strongly in computers and electronics, as well as electrical equipment and appliances.


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MEQ est une division de Manufacturiers et exportateurs du Canada (MEC), la plus importante association commerciale et industrielle au pays fondée en 1871.

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