: Ontario Economic Accounts - Third Quarter of 2015

January 2016
Third Quarter of 2015
(July, August, September)
Ontario Ministry of Finance

Table of Contents

Third Quarter 2015 Summary
Real Expenditure Details
Income Details
Economy-Wide Price Details
Production By Industry Details
List of Tables
Analytical Tables and Charts 2001:Q1-2015:Q3

THIRD QUARTER (JULY-SEPTEMBER) 2015 SUMMARY

Ontario Real GDP Rises in Third Quarter
  • Ontario’s real Gross Domestic Product (GDP) advanced 0.9% (3.5% annualized) in the third quarter of 2015, after rising 0.4% (1.7% annualized) in the second quarter.
  • Household spending increased 0.7%, driven by a solid rise in durable goods spending, mainly automobile purchases.
  • Investment in residential construction rose 0.7%, following a 1.3% advance in the second quarter.
  • Capital spending on machinery and equipment decreased 0.6%, the third consecutive quarterly decline, while investment in non-residential construction rose 1.5%, following a 4.2% gain in the second quarter.
  • Businesses increased inventories by $1.4 billion, after accumulating $5.5 billion in the second quarter.
  • Exports advanced 3.0%, the strongest quarterly gain since 2013.  Imports edged down 0.1% in the quarter.  
  • Current dollar GDP grew by 1.3% in the third quarter, after rising 0.7% in the second quarter.  Compensation of employees rose 0.7%, while the net operating surplus of corporations declined 0.8% in the quarter. Economy-wide prices increased 0.5%, after rising 0.3% in the second quarter.
  • Economic production, measured on an industry basis, advanced 0.9% in the third quarter. Output in the goods sector rose 1.6%, while service sector activity grew by 0.7%.
ONTARIO ECONOMIC ACCOUNTS: HIGHLIGHTS
(% change from previous period)
  2013 2014 2014q4 2015q1 2015q2 2015q3
Real GDP (Chained $ 2007) 1.3 2.7 0.8 0.2 0.4 0.9
(annualized rate)   3.3 0.8 1.7 3.5
Household spending 2.0 2.5 0.7 0.6 0.9 0.7
Government current spending 0.0 0.7 0.2 1.1 0.4 -0.3
Residential construction -1.7 0.4 -0.3 2.3 1.3 0.7
Non-residential construction -5.6 1.6 1.7 1.5 4.2 1.5
Machinery & equipment -22.2 6.9 6.9 -0.6 -4.7 -0.6
Intellectual property products -4.7 -2.8 0.4 -4.4 -0.3 -1.7
Final Domestic Demand -0.3 1.9 0.8 0.7 0.7 0.4
Exports 2.0 1.9 -0.6 -2.0 0.2 3.0
Imports -1.0 1.1 1.1 -0.4 0.1 -0.1
Business inventories change ($2007 billions) 3.1 4.9 5.7 8.4 5.5 1.4
Nominal GDP ($ Current) 1.9 4.1 0.4 0.6 0.7 1.3
Compensation of employees 3.3 3.3 0.3 1.4 0.7 0.7
Net operating surplus for corporations -5.8 12.7 0.6 -3.6 1.2 -0.8
Primary household income 3.2 3.5 0.5 0.9 1.2 0.6
Household disposable income 3.7 2.5 0.0 0.5 1.8 1.3
Implicit price index, GDP 0.6 1.4 -0.4 0.4 0.3 0.5

THIRD QUARTER REAL EXPENDITURE DETAILS

Household Spending Continues to
Rise in Third Quarter

Real Household Spending Up in Third Quarter

Household spending increased 0.7%, after rising 0.9% in the second quarter. 

Spending on consumer durables rose 2.6%, following a 3.2% increase in the second quarter.  The overall third-quarter gain was largely driven by a 4.5% increase in motor vehicle purchases. 

Spending on non-durables (+0.9%) and services (+0.3%) also contributed to the overall rise in consumer expenditures in the quarter.

Residential Construction Up in
Third Quarter

Real Residential Construction Up in Third Quarter

Residential construction investment increased 0.7%, after rising 1.3% in the second quarter.

Spending on new housing construction increased strongly, but was partially offset by lower renovation spending and ownership transfer costs in the quarter.

Business Investment in Machinery and
and Equipment Declines

Real Machinery and Equipment Investment Lower in Third Quarter

Investment in machinery and equipment declined 0.6%, following a 4.7% decrease in the second quarter. 

Investment in non-residential construction rose 1.5%, the seventh consecutive quarterly increase.

Inventory Accumulation Slows

Change in Business Inventories

Non-farm inventory accumulation slowed as businesses added $1.4 billion ($2007) worth of goods to inventories, down from $5.5 billion in the second quarter.  The third quarter inventory buildup occurred in the manufacturing and retail sectors, while wholesale inventories declined.

Exports Rise and Imports Decline
in Third Quarter

Exports Rise and Imports Decline in Third Quarter

Exports of goods and services advanced 3.0%, rising from a 0.2% second-quarter gain. Imports of goods and services edged down 0.1%, following a 0.1% increase in the previous quarter.

International merchandise exports rose a strong 5.8%, following a 0.7% increase in the second quarter.  Export gains were broadly-based with strong increases in automotive products, industrial machinery and equipment, and consumer goods.

International merchandise imports declined 0.1%, driven by lower imports of motor vehicles, consumer goods, and metal and non-metallic mineral products.

THIRD QUARTER INCOME DETAILS

Nominal GDP Growth Accelerates
in Third Quarter

Nominal GDP Continues to Rise in Third Quarter

Gross Domestic Product measured in current dollars increased 1.3% in the third quarter, following a 0.7% advance in the second quarter.

Compensation of employees rose 0.7%, matching the second quarter gain.

The net operating surplus of corporations (largely corporate profits) declined 0.8%, following a 1.2% second-quarter advance.

 

THIRD QUARTER ECONOMY-WIDE PRICE DETAILS

Prices Rise in Third Quarter

Economy-Wide Prices Higher in Third Quarter

Economy-wide prices, as measured by the GDP implicit price index, increased 0.5%, after rising 0.3% in the second quarter. The implicit price index for final domestic demand rose 0.8%, the largest gain since the first quarter of 2014.

Prices for household expenditures increased 0.6%, after advancing 0.4% in the second quarter.  Prices for furniture, clothing and natural gas all increased in the third quarter, but were partially offset by lower gasoline prices.

Machinery and equipment prices increased 4.2%, while non-residential construction prices declined 0.5% in the third quarter. Residential construction prices rose 1.2%, the ninth consecutive quarterly increase.

Rising import prices (+2.8%) outpaced higher export prices (+2.0%) in the third quarter.  The Canadian dollar depreciated by 6.1% relative to the U.S. dollar in the quarter.

ONTARIO PRODUCTION BY INDUSTRY DETAILS

Highlights

Ontario’s real output by industry rose 0.9% in the third quarter of 2015. Output by the goods-producing sector increased 1.6%, led by a strong increase in manufacturing production. Service sector output increased 0.7% with solid contributions from finance and insurance, real estate and leasing and retail trade.

ONTARIO OUTPUT BY INDUSTRY
(% change from previous period, chained $2007)
  2013 2014 2014q4 2015q1 2015q2 2015q3
Goods Sector -0.6 2.5 0.1 0.4 -0.6 1.6
Primary Industries 4.0 1.2 -3.2 1.3 -0.7 0.2
Utilities 5.4 0.2 2.4 1.7 -4.0 -2.7
Construction -2.6 1.3 0.6 1.1 0.1 1.0
Manufacturing -1.2 3.7 0.3 -0.8 -0.3 2.8
Of which: Auto Industry -3.6 5.4 2.6 -5.8 -0.4 7.0
Service Sector 1.7 2.5 0.7 0.3 0.9 0.7
Wholesale Trade 0.1 5.2 1.5 -3.8 3.4 -1.3
Retail Trade 3.0 4.0 1.0 0.5 1.6 1.2
Transportation and Warehousing 0.6 3.4 0.5 0.0 0.0 1.0
Information and Cultural Industries 1.5 0.3 -1.5 0.6 1.3 0.3
Finance and Insurance 4.3 4.3 1.2 1.2 0.3 1.2
Real Estate and Leasing 2.3 2.2 0.7 0.5 1.5 1.5
Professional and Administrative Services 1.7 2.2 0.7 0.3 -0.4 0.5
Management of Companies and Enterprises 3.6 0.4 2.4 1.9 -4.5 1.1
Education 1.1 0.5 1.4 0.6 -0.1 -1.0
Health Care and Social Services 1.2 1.2 -0.1 0.8 0.9 1.0
Arts, Entertainment and Recreation 2.4 0.9 0.2 3.8 6.9 2.8
Accommodation and Food 2.5 4.5 0.6 -1.7 1.7 0.7
Other Services 3.6 2.4 -0.3 -0.2 -0.6 0.8
Public Administration -0.7 1.0 0.8 0.4 0.4 0.6
Ontario Output at Basic Prices 1.2 2.5 0.6 0.3 0.5 0.9

Note: Output by industry is defined as real gross domestic product (GDP) at basic prices in chained 2007 dollars.
GDP at basic prices includes taxes net of subsidies on labour and capital inputs, but not taxes on final products.

Manufacturing Production Up,
Led By Auto Sector

Manufacturing Output Up in Third Quarter

Manufacturing sector output increased 2.8% in the third quarter, following a 0.3% decline in the second quarter.

Ten of the eleven manufacturing industries had higher production in the quarter.  Electrical and electronic products (-1.9%) posted the only decline, following two quarterly increases.

Wood Products and Furniture Up in Third Quarter

The strongest manufacturing production gains occurred in wood products and furniture (+6.1%) and transportation equipment (+5.6%).  Also posting higher output in the quarter were food, beverage and tobacco products (+1.4%) and plastic and rubber products (+3.5%).

Transportation Equipment Output Increases in Third Quarter

Within the transportation equipment industry, a strong 7.0% rebound in automotive vehicle and parts production led the gain in the quarter, following temporary plant closures for retooling in the first half of the year.

Output in other transportation equipment, which is primarily composed of the aerospace sector, decreased 1.4% in the third quarter.

Primary Industries Higher
While Utilities Lower

Utilities Sector Output Down in Third Quarter

Output in primary industries edged up 0.2% in the quarter, gains in mining (+1.3%) were partly offset by lower production in agriculture, forestry, fishing and hunting (-1.3%).

Utilities production declined 2.7% in the third quarter, reflecting lower output from electric power.

Construction Output Increases

Construction Sector Output Up in Third Quarter

Construction* sector production rose by 1.0%, the seventh consecutive quarterly gain. Output rose in non-residential buildings and engineering (+0.7%) and residential building construction (+1.4%).

*Construction industry output is measured by the value added of the industry. Construction investment, as reported in the expenditure-based GDP accounts, measures the spending on new construction projects.

Retail Trade Higher
While Wholesale Trade Declines

Wholesale  and Retail Output Up in Third Quarter

Output in the retail trade sector rose by 1.2%, the sixth consecutive quarterly gain. Higher sales in motor vehicles and parts along with food and beverage stores led gains in the retail sector.

Wholesale trade output declined by 1.3%, following a 3.4% increase in the second quarter. Wholesaling activity in food and beverage along with farm products was  lower in the quarter.

Real Estate and Leasing
Output Higher

Real Estate and Leasing Output Rises in Third Quarter

Output in the real estate and leasing sector rose 1.5%, following a 1.5% increase in the second quarter. Real estate sector output continues to be supported by a strong housing market.

Finance and Insurance Output Up

Finance and Insurance Output Increases in Third Quarter

Output in the finance and insurance sector increased 1.2%, the sixth consecutive quarterly advance, supported by gains in banking and insurance.

Other Service Sector Industries

Arts, Entertainment and Recreation Increases in Third Quarter

In the third quarter, there were also notable gains in health care and social services (+1.0%), transportation and warehousing (+1.0%) and arts, entertainment and recreation (+2.8%).

Structure of the Ontario Economy, 2014  Per Cent Share of Nominal GDP

List of Tables

Income and Expenditure Data

Quarterly Data, 2012:1–2015:3

Table 1: Ontario Gross Domestic Product (Income-Based)
Table 2: Ontario Gross Domestic Product (Expenditure-Based)
Table 3: Ontario Gross Domestic Product at Chained 2007 Prices
Table 4: Sources and Disposition of Ontario Household Income
Table 5: Ontario Trade
Table 6: Ontario Trade (Chained 2007 Prices)
Table 7: Ontario Deflators

Annual Data, 2011-2014

Table 8: Ontario Gross Domestic Product (Income-Based)
Table 9: Ontario Gross Domestic Product (Expenditure-Based)
Table 10: Ontario Gross Domestic Product at Chained 2007 Prices
Table 11: Sources and Disposition of Ontario Household Income
Table 12: Ontario Trade
Table 13: Ontario Trade (Chained 2007 Prices)
Table 14: Ontario Deflators

Ontario Production by Industry at 2007 Prices

Table 15: Quarterly Data, 2012:1-2015:3
Table 16: Annual Data, 2011-2014

Historical tables, both annual and quarterly available from 1981.
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Analytical Tables and Charts 2001:I-2015:III

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