: Ontario Economic Accounts - First Quarter of 2015

July 2015
First Quarter of 2015
(January, February, March)
Ontario Ministry of Finance

Table of Contents

First 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:Q1

First QUARTER (JANUARY-MARCH) 2015 SUMMARY

Ontario Real GDP  Growth Edges Down in First Quarter
  • Ontario’s real Gross Domestic Product (GDP) edged down 0.1% (-0.2% annualized) in the first quarter of 2015, following a 0.6% (2.3% annualized) gain in the fourth quarter of 2014.  Unusually harsh winter weather dampened economic activity in Ontario and other parts of North America in the quarter.
  • Household spending rose 0.4%, following a 0.7% gain in the fourth quarter of 2014.  Spending on non-durable goods (+1.2%) and services (+0.4%) led the gain in consumer expenditures.
  • Investment in residential construction increased 1.3%, after remaining unchanged in the fourth quarter of 2014.  New housing construction led the gain, while renovation activity and home ownership transfer costs declined.
  • Capital spending on machinery and equipment declined 1.2% and investment in non-residential construction decreased 5.5%.
  • Businesses increased inventories by $8.1 billion ($2007), after accumulating $5.8 billion worth of stocks in the fourth quarter of 2014.
  • Exports declined 2.0%, while imports edged down 0.2%.
  • Current dollar GDP increased 0.3%, accelerating from a 0.1% pace in the previous quarter.  Economy-wide prices, as measured by the GDP implicit price index, advanced 0.4%.
  • Economic production, measured on an industry basis, declined by 0.1%.  Production by goods-producing industries declined 0.7%, while output by service-producing industries edged up 0.1%.
ONTARIO ECONOMIC ACCOUNTS: HIGHLIGHTS
(% change from previous period)
  2013 2014 2014q2 2014q3 2014q4 2015q1
Real GDP (Chained $2007) 1.3 2.2 0.8 1.1 0.6 -0.1
(annualized rate)     3.1 4.3 2.3 -0.2
Household spending 2.1 2.6 1.1 0.9 0.7 0.4
Government current spending 0.6 0.6 0.7 -0.4 0.2 -0.2
Residential construction -2.3 0.6 4.7 2.1 0.0 1.3
Non-residential construction -5.2 -1.8 0.5 0.2 0.2 -5.5
Machinery & equipment -8.2 0.9 4.3 3.0 -0.1 -1.2
Intellectual property products -3.4 -3.3 -3.2 -0.3 0.3 -2.3
Final Domestic Demand 0.4 1.4 1.1 0.7 0.5 0.2
Exports 1.8 3.4 2.3 3.1 0.2 -2.0
Imports 0.1 2.2 2.5 0.9 1.4 -0.2
Change in Business inventories ($2007 billions) 3.7 4.7 4.1 2.1 5.8 8.1
Nominal GDP ($ Current) 2.4 3.6 0.9 1.5 0.1 0.3
Compensation of employees 2.7 3.0 0.7 1.0 0.3 1.8
Net operating surplus for corporations 0.0 7.5 2.4 2.8 -3.3 -4.2
Primary household income 2.9 3.5 0.9 0.9 0.6 1.7
Household disposable income 2.7 3.3 0.6 0.9 0.5 2.1
Implicit price index, GDP 1.1 1.4 0.1 0.5 -0.5 0.4

FIRST QUARTER REAL EXPENDITURE DETAILS

Household Spending Up In First Quarter

Real Household Spending Up in First Quarter

Household spending increased 0.4%, following a 0.7% gain in the fourth quarter of 2014.

Spending on durable goods declined 1.2%, following a 1.2% gain in the previous quarter. 
Unusually harsh winter weather contributed to fewer purchases on items such as automobiles and furniture in the quarter.

Expenditures on semi-durable goods increased 1.2%, the fourth consecutive quarterly advance. 

Spending on non-durables also increased 1.2%, led by stronger sales of gasoline, natural gas and other fuels. The strong increase in natural gas sales was likely due to additional heating requirements resulting from the unusually cold weather in the quarter.

Household spending on services rose 0.4%, matching the increase in the previous quarter.

Residential Construction Higher In First Quarter

Real Residential Construction Higher in First Quarter

Residential construction investment increased 1.3%.  New home construction led the gain, while renovation activity and home ownership transfer costs both declined in the first quarter.

Business Investment in Machinery and Equipment
Declines

Real Machinery and Equipment Investment Lower

Capital spending by Ontario businesses on machinery and equipment decreased 1.2% in the first quarter, following a 0.1% decline in the previous quarter.  Investment in non-residential construction declined 5.5%, the first decrease in the past five quarters.

Business Inventory Accumulation Continues

Change in Business Inventories

Businesses increased inventories by $8.1 billion in the first quarter, after accumulating $5.8 billion in the fourth quarter of 2014.  The accumulation of inventory stocks was widespread across manufacturers and wholesalers in the first quarter.

Exports and Imports Down

Exports and Imports Lower in First Quarter

Exports of goods and services decreased 2.0%, after edging up 0.2% in the fourth quarter of 2014.  Imports declined 0.2%, following a 1.4% gain in the previous quarter. 

International merchandise exports decreased 3.8%.  Exports of automotive products and consumer goods were lower in the quarter, while exports of industrial machinery and equipment and electronics were higher. 

International merchandise imports declined 0.5%, following a 2.2% increase in the previous quarter.  Imports of automotive and metal and non-metallic mineral products were lower in the quarter.

FIRST QUARTER INCOME DETAILS

Nominal GDP Growth Accelerates

Nominal GDP Continues to Rise in First Quarter

Gross Domestic Product measured in current dollars increased 0.3% in the first quarter, accelerating from a 0.1% pace in the fourth quarter of 2014. 

Compensation of employees advanced a strong 1.8%, partly due to a special payment by the federal government to fund its employees’ pension plans.

The net operating surplus of corporations declined 4.2%, following a 3.3% decrease in the previous quarter.

Household disposable income rose 2.1%, following a 0.5% increase in the fourth quarter.  Ontario’s household saving rate* (the ratio of savings to household disposable income) rose to 3.9% in the first quarter of 2015, from 2.4% in the previous quarter.

* 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.

Economy-wide Price DETAILS

Prices Rise in First Quarter

Economy-Wide Prices Higher in First Quarter

Economy-wide prices, as measured by the GDP implicit price index, rose 0.4% after declining 0.5% in the fourth quarter of 2014. Higher domestic prices along with increasing export prices contributed to the overall price increase.

The implicit price index for final domestic demand increased 0.5%, after advancing 0.3% in the previous quarter.

Prices for household consumer expenditures remained unchanged, following a 0.1% increase in the previous quarter.  Prices were higher for food, furniture and natural gas, but were partially offset by declines in gasoline and other fuels in the first quarter.

Machinery and equipment prices increased 3.1%, while non-residential construction (+0.4%) and residential construction (+0.8%) prices also rose in the quarter.

Both export (+1.5%) and import (+1.9%) prices increased in the first quarter.

ONTARIO PRODUCTION BY INDUSTRY DETAILS

Highlights

Ontario’s real output by industry edged down 0.1% in the first quarter of 2015, following a 0.6% gain in the fourth quarter of 2014.

Output by the goods-producing sector contracted 0.7%, driven by lower output in manufacturing (-1.4%) and construction (-0.8%). Service sector output edged up 0.1% in the first quarter, with solid gains in finance and insurance (+0.9%) and professional and administrative services (+0.7%).

ONTARIO OUTPUT BY INDUSTRY
(% change from previous period, chained $2007)
  2013 2014 2014q2 2014q3 2014q4 2015q1
Goods Sector -0.9 2.3 1.8 1.3 0.2 -0.7
Primary Industries 4.5 0.5 -1.1 3.8 -2.9 2.1
Utilities 4.4 0.9 -0.2 -2.4 3.4 1.5
Construction -3.1 0.6 2.2 1.7 0.5 -0.8
Manufacturing -1.6 3.8 2.7 1.5 0.4 -1.4
Of which: Auto Industry -4.0 5.9 4.7 2.5 3.3 -6.4
Service Sector 1.9 2.4 0.8 1.0 0.6 0.1
Wholesale Trade -0.2 4.6 3.4 2.8 1.2 -3.2
Retail Trade 2.5 4.0 2.1 2.0 1.3 0.1
Transportation and Warehousing 0.3 3.9 2.2 1.2 0.7 0.0
Information and Cultural Industries 2.1 0.4 -1.1 -1.0 -1.5 0.4
Finance and Insurance 4.2 3.9 0.1 2.0 1.2 0.9
Real Estate and Leasing 2.3 2.4 0.9 0.8 0.7 0.1
Professional and Administrative Services 1.6 1.8 1.2 1.6 0.4 0.7
Management of Companies and Enterprises 1.1 1.6 -0.4 -0.6 3.7 1.5
Education 2.6 0.5 -0.7 0.6 1.1 0.6
Health Care and Social Services 1.4 1.6 0.3 0.3 0.1 0.4
Arts, Entertainment and Recreation 2.5 0.5 0.0 0.7 0.1 4.0
Accommodation and Food 3.0 3.6 1.5 0.9 0.2 -1.3
Other Services 3.6 2.5 0.7 -0.5 -0.5 -0.1
Public Administration -0.1 0.5 -0.3 -0.6 0.7 0.3
Ontario Output at Basic Prices 1.2 2.3 1.0 1.1 0.6 -0.1

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 Lower

Manufacturing Output Down in First Quarter

Manufacturing sector output decreased 1.4% in the first quarter, following five quarters of solid growth.

Five of eleven manufacturing industries had lower production in the first quarter, with a notable decline in transportation equipment (-5.9%).

Auto Industry Output Declines in First Quarter

Within the transportation equipment industry, automotive vehicle and parts production was 6.4% lower, partially reflecting temporary plant closures for retooling. The decline follows strong gains in the previous three quarters.

Output in “other transportation equipment”, which is primarily composed of the aerospace sector, declined 3.3% in the quarter.

Chemical and Petroleum Output Up in First Quarter

The largest manufacturing gains occurred in chemical and petroleum products (+3.7%) and food, beverage and tobacco products (+2.3%).

Utilities and Primary Output Higher

Utilities Sector Output Up in First Quarter

Utilities output rose by 1.5% in the first quarter, reflecting gains in natural gas and water distribution utilities.

Output from the primary industries was also up in the quarter (+2.1%) with gains in agriculture, forestry, fishing and hunting (+4.4%) and mining (+0.7%). 

Construction Output Lower

Construction Sector Output Down in First Quarter

Construction* sector production declined 0.8% in the first quarter, following four consecutive quarterly gains. Lower output in non-residential buildings and engineering (-2.9%) were partly offset by higher output in residential building (+2.4%).

* 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.

Wholesale Trade Declines While Retail Trade
Edges Up

Wholesale Output Down and Retail Output Up in First Quarter

Wholesaling activity decreased 3.2% in the first quarter, following three quarters of gains. The decline was led by building materials and motor vehicle and parts wholesaling. 

Output in the retail trade sector edged up by 0.1%, following a 1.3% gain in the previous quarter. Lower sales in motor vehicle and parts retailing as well as electronics and appliance stores restrained gains in retailing output.

Finance, Insurance, Real Estate and Leasing Output
Higher

Finance and Insurance Output Increases in First Quarter

Output in the finance and insurance sector increased 0.9% in the first quarter, following a 1.2% increase in the fourth quarter of 2014. Higher output in investment services led the increase.

Output in the real estate and leasing sector edged up 0.1%, slowing from a 0.7% increase in the previous quarter.

Professional and Administrative Services Output Up

Professional and Administrative Services Output Rises in First Quarter

Professional and administrative services output advanced 0.7%, strengthening from a 0.4% gain in the fourth quarter of 2014.

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

List of Tables

Income and Expenditure Data

Quarterly Data, 2012:1-2015:1

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, 2012:1-2015:1
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:I

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