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Canadian economy posts strongest numbers since 2011 in Q2

Published by Brad Fougere on August 29, 2014

After a strong increase in May, manufacturing activity across Canada dipped slightly in June. However, momentum from earlier in the year propelled the manufacturing sector to a strong overall performance in the second quarter of 2014. Manufacturing GDP was up 0.8 per cent from April-June, and has risen in five of the last six quarters.

On a year-over-year basis, manufacturing GDP in June was 3.4 per cent higher than the same month last year, compared to 3.1 per cent for the economy as a whole.

The decline in manufacturing GDP can be attributed in large part to the motor vehicles and parts sector, which dropped by nearly 5 per cent in June. Subtracting out that effect, manufacturing GDP rose 0.3 per cent in June.

The decline in the motor vehicles sector represents an adjustment from a spike in economic activity in May. That month, motor vehicles GDP had reached its highest level in nearly two years. Even after the drop in June, economic output in the vehicles sector is still significantly above levels seen earlier in the year and up 2.9 per cent since last June. 

The largest gains in manufacturing GDP in June came from chemicals production (3.5 per cent), wood products (2.8 per cent) and petroleum and coal product manufacturing (2.3 per cent).

Second Quarter GDP

The Canadian economy posted a strong showing in the second quarter of 2014, rising by 0.8 per cent compared to the first quarter of the year. This matched the growth rate in the manufacturing sector that quarter and represents the strongest quarterly performance for the Canadian economy since the third quarter of 2011.

Exports were the main driver of growth in the second quarter, increasing by 4.2 per cent. Consumer activity Canada has remained strong as well.

There was good news to be found in the underlying numbers as well. Business investment was up, led by purchases of machinery and equipment. The motor vehicles sector posted some of the strongest gains in this area.

On top of that, business inventory accumulation fell sharply in the second quarter. In particular, manufacturing inventories declined by $709 million in the second quarter. While this represents a drag on current economic growth numbers, it also points to better times ahead. Declining inventories point to strong demand and to future production growth.

Found in: StatsCan gdp

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