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Is the Canadian economy in recession?

Published by Brad Fougere on June 30, 2015

Manufacturing GDP notes – April 2015

The release of GDP figures for April suggest that a recession may be inevitable in 2015. Even though the Canadian economy shrank by a relatively modest 0.1 per cent compared to March, April also marked the fifth decline in economic output in the past six months. Barring any significant revisions to April’s figures, the Canadian economy will have to grow at a rate of 0.3 per cent in both May and June, just to avoid a recession – defined as two consecutive quarters of negative growth.

The silver lining, if one can call it that, is that the economic contraction in April was largely due to a series of wildfires across Alberta, causing significant supply disruptions in the oil patch and driving the Canadian economy into negative territory. GDP in the mining, oil and gas sector fell by 2.6 per cent in April – by far the largest decrease of any major economic sector. Were it not for that decrease in energy output, the Canadian economy would have grown by 0.2 per cent in April. Unfortunately, the threat has not abated since April as hot, dry weather, thunderstorms and relatively little rain are contributing to one of the worst years in recent memory for wildfires across western Canada.

On the positive side, Canada’s tourism industries provided the economy with a shot in the arm in April. GDP in accommodation and food services industries up 1.2 per cent over March, ending three months of decline. Wholesale trade was also up in April, as were crop production and forestry activity.

For their part, manufacturers are among those struggling so far in 2015. Manufacturing GDP fell by 0.2 per cent in April. Meanwhile, revisions to March figures wiped out a modest gain for that month and, as a result, the data now suggests that manufacturing GDP has been falling steadily since December.

However, on a year-over-year basis, manufacturing is still growing. Through the first four months of the year, manufacturing GDP is 1.7 per cent higher compared to the same period last year. However, as noted in last month’s report, these numbers are likely to fall soon as manufacturers will have to post strong gains in the coming months to keep pace with their solid performance last spring and summer.

Within the manufacturing sector, economic growth was mixed in April. Six of Canada’s eleven major manufacturing industries declined for the month, led by machinery (down 3.4 per cent compared to March) and food processing (down 2.6 per cent). Offsetting those to some degree was a recovery in primary metals production, which has struggled considerably since oil prices began to fall. GDP also grew in plastics and rubber production, along with wood products manufacturing. A number of Canada’s smaller manufacturing industries also posted significant increases in GDP in April, including those producing furniture, rail stock, and computer and electrical goods.    

Manufacturing GDP by Major Sector

  Mar-15 Apr-15 Mar-Apr Apr 2014 - Apr 2015
  ($billions) ($billions) % growth % growth
Total Manufacturing 172.7 172.7 0.0 0.8
  Durables 100.0 100.0 -0.1 -0.8
  Non-durables 72.9 72.6 -0.3 3.0
Major Industries        
  Food 23.2 22.6 -2.6 2.2
  Motor vehicles and parts 17.5 17.3 -0.8 -0.7
  Chemicals 14.0 13.9 -0.6 6.6
  Machinery 13.8 13.4 -3.4 -1.6
  Primary metals 13.6 13.8 1.6 -2.4
  Fabricated metals 12.3 12.4 0.3 -5.6
  Wood products 9.6 9.7 1.1 5.0
  Plastics and rubber prods. 9.1 9.2 1.3 3.5
  Paper products 7.4 7.3 -1.9 0.4
  Aerospace  7.0 6.9 -1.6 -5.0
  Petroleum and coal prods. 6.4 6.5 0.7 2.8


Although food processors were among those posting significant declines in April, there is an emerging split in Canadian manufacturing between producers of durable and non-durable goods. Since December, GDP in non-durable goods has been relatively flat and remains considerably higher on a year-over-year basis. By contrast, GDP in durables has fallen significantly and is below last year’s levels. The decline has been particularly acute in the fabricated metals and aerospace sectors.

Found in: StatsCan

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