: Ontario Economic Accounts - Third Quarter of 2013

January 2014
Third Quarter of 2013
(Julyl, August, September)
Ontario Ministry of Finance


Table of Contents

Third Quarter Summary
Expenditure and Income Details
Production By Industry
List of Tables
Analytical Tables and Charts 2008:1-2013:3

THIRD QUARTER (JULY-SEPTEMBER) 2013 SUMMARY

  • Ontario’s real Gross Domestic Product (GDP) increased 0.6% (2.3% annualized) in the third quarter of 2013.
  • Real consumer expenditures increased by 0.7%, following a gain of 0.8% in the second quarter.  Spending on semi-durables (+1.8%) and non-durables (+0.6%) contributed the most to the overall rise in consumption.
  • Real investment in residential construction declined 2.1%, after edging down 0.4% in the second quarter.  Spending on home ownership transfer costs increased 5.4%, while expenditures on new housing construction (-5.5%) and renovation activities (-2.5%) declined.
  • Real capital spending on machinery and equipment rose 0.4%, after increasing 0.6% in the second quarter of 2013.  Investment in real non-residential construction decreased 0.6%, the fifth consecutive quarterly decline.
  • Businesses increased inventories by $3.0 billion ($2007), after accumulating $1.1 billion worth of stocks in the second quarter of 2013.
  • Export volumes declined 1.8% in the third quarter, following a strong 2.8% advance in the previous quarter.  Imports decreased 1.2%, after a gain of 1.1% in the second quarter. 
  • In current dollars, GDP increased 0.7%, following a 0.4% advance in the second quarter of 2013.  Economy-wide prices, as measured by the GDP implicit price index, increased 0.2%.
  • Economic production on an industry basis grew by 0.6% (2.6% annualized) in the third quarter of 2013. Production by goods-producing industries declined 0.5% while output by services-producing industries increased 1.0%.
ONTARIO ECONOMIC ACCOUNTS: HIGHLIGHTS
(% change from previous period)
  2011 2012 2012q4 2013q1 2013q2 2013q3
Real GDP (Chained $ 2007) 2.2 1.3 0.1 0.2 0.7 0.6
(annualized rate)     0.2 0.7 2.9 2.3
Household spending 1.8 1.4 0.4 0.3 0.8 0.7
Government current spending 0.8 1.4 -0.4 -0.1 0.5 0.2
Residential construction 4.2 4.7 1.1 1.0 -0.4 -2.1
Non-residential construction 18.0 -1.6 -1.0 -1.3 -0.5 -0.6
Machinery & equipment 5.7 2.0 3.2 -1.1 0.6 0.4
Intellectual property products 4.2 -1.7 0.4 -0.6 -1.0 0.7
Final Domestic Demand 1.7 1.3 0.4 0.3 0.5 0.3
Exports 6.0 1.7 -2.2 0.6 2.8 -1.8
Imports 5.6 2.0 -1.0 0.1 1.1 -1.2
Change in Business inventories (Chained $2007 billions) 3.7 4.1 3.3 3.9 1.1 3.0
Nominal GDP ($ Current) 4.0 3.0 0.4 0.9 0.4 0.7
Net operating surplus for corporations 5.4 -1.0 0.1 -0.6 -3.7 3.4
Primary household income 4.3 3.4 0.7 1.3 0.4 0.5
Household disposable income 3.1 2.5 0.7 1.3 0.2 0.9
Implicit price index, GDP 1.8 1.7 0.3 0.8 -0.3 0.2

THIRD QUARTER EXPENDITURE AND INCOME DETAILS

Consumer Spending Gains Continue In Third Quarter

Real consumer spending increased 0.7%, following a similar (+0.8%) advance in the second quarter.

Spending on consumer semi-durables rose by 1.8%, with stronger clothing sales supporting the over all gain in the quarter.

Spending on non-durables (+0.6%) and services (+0.6%) also advanced in the third quarter with stronger sales for food, natural gas, gasoline and other fuels supporting the overall gains in household expenditure.

Consumer spending on durables edged up 0.1% as increased spending on motor vehicle parts and other durables was offset by weaker automobile and furniture and appliance purchases in the third quarter.

Residential Construction Lower In Third Quarter

Real residential construction investment decreased 2.1%, following a 0.4% decline in the previous quarter.  A 5.5% decline in new housing construction along with a 2.5% drop in renovation activities contributed to the third quarter easing.

Ownership transfer costs, buoyed by higher resale activity, partially moderated these declines, rising 5.4%. This followed a 9.6% gain in the second quarter.

Business Investment in Machinery and Equipment Higher in Q3

Real capital spending by Ontario businesses on machinery and equipment increased 0.4%, after advancing 0.6% in the second quarter while real investment in non-residential construction declined 0.6%, the fifth consecutive quarterly decrease.

 

 

 

 

Business Inventory Accumulation Higher in Third Quarter

Business non-farm inventories increased $3.0 billion, after rising $1.1 billion in the second quarter.  A significant part of the larger accumulation was due to increased stocks of durable goods at the retail level, particularly motor vehicle inventories.  In contrast, manufacturers reduced inventories in the quarter.  Inventories at the wholesale level were little changed in the third quarter, following large additions to stocks in the previous four quarters.

 

 

 

Exports and Imports Lower in Third Quarter

Real exports of goods and services decreased 1.8%, after rising 2.8% in the second quarter.  Real imports were also weaker, declining 1.2%, following a 1.1% increase in the previous quarter.

International merchandise exports fell 3.8%, following a 4.6% increase in the second quarter.  Export declines were widespread, with lower exports of metal and non-metallic mineral products, consumer goods, industrial machinery, electrical and electronic equipment, and automotive products.  International merchandise imports declined 0.6%, following a 2.3% increase in the second quarter.  Reduced imports of electronic and electrical equipment, automotive products, and industrial machinery contributed to the decline.

Current Dollar GDP Growth Accelerates in Third Quarter

Gross Domestic Product measured in current dollars increased 0.7% in the third quarter, up from 0.4% in the second quarter.  Compensation of employees rose 0.4%, after edging up 0.2% in the previous quarter.

Household disposable income was up 0.9%, following a 0.2% increase in the second quarter.  Ontario’s household saving rate* (the ratio of savings to household disposable income) edged lower to 4.6% from 4.9% in the second quarter of 2013.

The net operating surplus of corporations (largely corporate profits), rose 3.4%, following a 3.7% decline in the second quarter.

*Note: Household saving is calculated in the System of National Accounts as the difference between the amount households receive as current income and their outlays for taxes and personal consumption.

Prices Edge Higher in Third Quarter

Economy-wide prices, as measured by the GDP implicit price index, edged up 0.2%, after declining 0.3% in the second quarter. The implicit price index for final domestic demand increased 0.7%, after edging down 0.1% in the previous quarter.

Prices for household consumer expenditures rose 0.6%, following a 0.1% advance in the second quarter.  Prices for motor vehicles, furniture, natural gas and gasoline all advanced, partially offset by lower prices for clothing and footwear.

Machinery and equipment prices rose 1.5% while non-residential construction (+0.7%) and residential construction (+1.2%) prices were also higher in the quarter.

Both export (+0.5%) and import (+1.2%) prices were higher in the third quarter, as the Canadian dollar depreciated 1.5% relative to the U.S. dollar.

ONTARIO PRODUCTION BY INDUSTRY

Highlights

Real output by industry advanced 0.6% in the third quarter of 2013, matching second quarter growth. Service sector output (+1.0%) drove the third quarter gain, while production in goods-producing industries (-0.5%) declined.

The finance and insurance (+1.9%), information and culture (+2.9%), wholesale (+1.5%) and retail (+1.4%) trade and real estate (+0.7%) sectors drove third quarter growth. Growth was moderated by lower output in the construction (-1.5%) and mining (-2.0%) sectors.

ONTARIO OUTPUT BY INDUSTRY
(% change from previous period, chained $2007)
  2011 2012 2012q4 2013q1 2013q2 2013q3
Goods Sector 3.2 1.6 -0.7 0.3 0.3 -0.5
Primary Industries 13.4 -2.2 1.2 4.8 0.5 -1.1
Utilities -0.2 -0.6 5.8 -1.0 1.9 0.0
Construction 1.4 2.2 1.5 0.3 -1.6 -1.5
Manufacturing 3.2 2.3 -2.5 -0.3 0.9 0.0
Of which: Auto Industry 3.4 18.5 -2.9 -6.0 2.0 0.2
Service Sector 1.9 1.4 0.2 0.2 0.7 1.0
Wholesale Trade 3.6 0.2 -0.2 -1.0 1.0 1.5
Retail Trade 2.0 0.9 0.1 -0.5 1.5 1.4
Transportation and Warehousing 2.1 2.2 0.8 -0.8 0.8 0.5
Information and Cultural Industries 1.9 1.7 -1.2 0.0 0.7 2.9
Finance and Insurance 1.2 2.0 1.0 0.7 1.5 1.9
Real Estate and Leasing 3.2 2.3 1.0 0.0 0.7 0.7
Professional and Administrative Services 2.0 1.3 0.4 0.6 0.6 0.8
Management of Companies and Enterprises 2.1 -0.7 -0.3 2.4 -0.1 -0.5
Education 0.3 1.3 -0.4 0.9 0.3 0.7
Health Care and Social Services 1.7 1.6 -0.1 -0.2 0.4 0.5
Arts, Entertainment and Recreation -1.2 -0.9 -6.6 4.9 2.2 1.6
Accommodation and Food 1.0 3.0 1.0 0.4 1.2 0.8
Other Services 1.2 0.9 0.3 1.0 1.1 0.6
Public Administration 1.1 -0.1 -0.2 0.0 -0.4 0.1
Ontario Output at Basic Prices 2.2 1.4 0.0 0.2 0.6 0.6

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 Output Steady

Manufacturing sector output was flat in the third quarter, following a 0.9% gain in the second quarter.

Eight of eleven manufacturing industries increased production in the third quarter, led by the primary and fabricated metal (+2.3%) and plastic and rubber (+2.9%) product industries. Increases were also reported in wood products and furniture (+1.8%), chemical and petroleum (+0.4%) and machinery (+0.5%) manufacturing.

 

 

Production in the transportation equipment industry was unchanged in the third quarter. Automotive output edged up by 0.2%, offset by a 1.8% decline in “other transportation equipment”, which is primarily composed of the aerospace sector.

 

 

 

 

 

Output in the electrical and electronic manufacturing industry (-6.8%) was down sharply in the third quarter. Miscellaneous manufacturing, which includes non-metallic mineral product, medical equipment, jewellery, sporting goods, toys and office supplies manufacturing, was also lower (-3.3%).

Wholesale and Retail Trade Up Strongly

Wholesaling activity advanced by 1.5% in the third quarter, adding to a 1.0% gain in the previous quarter. Gains in personal and household goods and food and beverages were moderated by a decline in sales by machinery and equipment wholesalers.

 

Production in the retail trade sector was up 1.4%, following a 1.5% gain in the second quarter. The gain was supported by higher sales at clothing stores, sporting goods, hobby, book and music stores and motor vehicle and parts dealers.




Utilities, Construction and Natural Resources

Utilities output was unchanged in the third quarter, following a 1.9% gain in the second quarter. Both electric power (0.0%) and natural gas and water distribution (-0.1%) utilities were little changed in the quarter.









Construction sector output fell by 1.5%, following a 1.6% decline in the second quarter. Residential construction dropped 4.8% as both new and renovation construction were down. Non-residential and engineering construction (+0.7%) rose in the third quarter, following two quarterly declines.

Mining output was down by 2.0% in the third quarter. This followed a solid 7.2% gain in the first quarter and a 1.6% decline in the second quarter.  Third quarter output was lower at copper, nickel, lead and zinc mines, which was partially offset by gains in gold and silver ore mining.

 

*Note: 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.

Finance, Insurance, Real Estate and Leasing Output Increase in Third Quarter

Output in the finance and insurance sector advanced 1.9%, the eighth gain in the past nine quarters. Higher output in the insurance, banking and investment services industries all contributed to the gain.

Production in the real estate and leasing sector rose 0.7% in the third quarter, matching the gain in the previous quarter.  

Other Service Sector Industries

Information and cultural services output was up by a solid 2.9% in the third quarter, following a 0.7% increase in the second quarter.

 

Third quarter output was also higher in the professional and administrative (+0.8%), education (+0.7%) and health care and social assistance (+0.5%) services sectors.

 

 

Text Box: Structure of the Ontario Economy, 2012  Per Cent Share of Nominal GDP     Sources: Statistics Canada and Ontario Ministry of Finance
  

Income and Expenditure Data

Quarterly Data, 2010:1-2013:3

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 Deflators

Annual Data, 2009-2012

Table 7: Ontario Gross Domestic Product (Income-Based)
Table 8: Ontario Gross Domestic Product (Expenditure-Based)
Table 9: Ontario Gross Domestic Product at Chained 2007 Prices
Table 10: Sources and Disposition of Ontario Household Income
Table 11: Ontario Trade
Table 12: Ontario Deflators

Ontario Production by Industry at 2007 Prices

Table 13: Quarterly Data, 2010:1-2013:3
Table 14: Annual Data, 2009-2012

Historical tables, both annual and quarterly available from 2007.
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Analytical Tables and Charts 2008:I-2013:III

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