: Ontario Economic Accounts - First Quarter of 2014

July 2014
First Quarter of 2014
(January, February, March)
Ontario Ministry of Finance

Table of Contents

First Quarter Summary
Expenditure and Income Details
Production By Industry
List of Tables
Analytical Tables and Charts 2009:I-2014:I

First QUARTER (JANUARY-MARCH) 2014 SUMMARY

Ontario Real GDP Slows in First Quarter
  • Ontario’s real Gross Domestic Product (GDP) edged up 0.1% (0.6% annualized) in the first quarter of 2014, down from a 0.5% (1.9% annualized) gain in the fourth quarter of 2013.  Unusually harsh winter weather slowed Ontario’s economy and that of other parts of North America.  In the first quarter,  U.S. real GDP fell by 0.7% (-2.9% annualized).
  • Household spending rose 0.2%, following a 0.3% gain in the fourth quarter of 2013.  Spending on non-durable goods (+0.9%) and services (+0.3%) contributed to the overall rise in consumer expenditures.
  • Investment in residential construction declined 1.1%, after falling 1.3% in the fourth quarter of 2013.  Both new housing construction and home ownership transfer costs declined, while an increase in renovation activities moderated the overall decline.
  • Capital spending on machinery and equipment advanced 1.1%, while investment in non-residential construction edged up 0.3%.
  • Businesses increased inventories by $7.1 billion ($2007), after accumulating $6.6 billion worth of stocks in the final quarter of 2013.
  • Exports declined 1.4%, following a 1.0% advance in the previous quarter while imports also fell by 1.4%, after a gain of 0.8% in the fourth quarter of 2013.
  • Current dollar GDP rose 1.1% in the first quarter, accelerating from a 0.7% pace in the previous quarter.  Economy-wide prices, as measured by the GDP implicit price index, advanced 0.9%, boosted by rising export prices (+2.3%) in the quarter.
  • Economic production, measured on an industry basis, also grew 0.1% in the first quarter of 2014.  Production by goods-producing industries advanced 0.1%, while output by services-producing industries rose 0.2%.
ONTARIO ECONOMIC ACCOUNTS: HIGHLIGHTS
(% change from previous period)
  2012 2013 2013q2 2013q3 2013q4 2014q1
Real GDP (Chained $ 2007) 1.3 1.3 0.7 0.5 0.5 0.1
(annualized rate)     2.9 1.8 1.9 0.6
Household spending 1.4 1.8 0.9 0.6 0.3 0.2
Government current spending 1.4 0.0 0.4 0.1 -0.1 -0.2
Residential construction 4.7 -3.0 0.0 -2.6 -1.3 -1.1
Non-residential construction -1.6 -7.7 -1.4 -1.3 -1.9 0.3
Machinery & equipment 2.0 -1.1 -0.8 -1.5 -3.2 1.1
Intellectual property products -1.7 -4.6 -1.4 1.1 -1.2 0.4
Final Domestic Demand 1.3 0.4 0.3 0.1 -0.2 0.0
Exports 1.7 0.9 3.1 -1.2 1 -1.4
Imports 2.0 -0.7 1.1 -1.1 0.8 -1.4
Change in Business inventories (Chained $2007 billions) 4.1 3.5 0.9 2.7 6.6 7.1
Nominal GDP ($ Current) 3.0 2.7 0.4 0.6 0.7 1.1
Net operating surplus for corporations -1.0 -1.6 -2.1 1.2 0.6 2.8
Primary household income 3.4 2.9 0.3 0.4 0.9 1.4
Household disposable income 2.5 2.6 0.0 0.4 0.9 1.2
Implicit price index, GDP 1.7 1.4 -0.3 0.1 0.2 0.9

FIRST QUARTER EXPENDITURE AND INCOME DETAILS

Household Spending Edges Up in First Quarter

Real Household Spending Slows in First Quarter

Real household spending increased 0.2% in the first quarter, following a 0.3% gain in the fourth quarter of 2013.

Spending on consumer durables declined 1.2%, after falling 0.2% in the previous quarter. 
Inclement winter weather likely helped to discourage shoppers from making discretionary purchases on large items such as automobiles and furniture in the quarter.

Expenditures on semi-durable goods decreased 1.4%, after six consecutive quarterly advances.  Weaker clothing and footwear purchases contributed to the decline.

Spending on non-durables increased 0.9%, with stronger sales of food, natural gas, gasoline and other fuels.  A 20.0% jump in natural gas sales was likely due to additional heating requirements resulting from the abnormally cold weather in the quarter.

Household spending on services rose 0.3%.

Residential Construction Lower in First Quarter

Real Residential Construction Lower in First Quarter

Real residential construction investment decreased 1.1%, following a 1.3% decline in the previous quarter.  New home construction and home ownership transfer costs both fell in the first quarter.  This was partially offset by a rise in renovation activity in the quarter.

Business Investment in Machinery and Equipment Rises

Real Machinery and Equipment Investment Higher

Real capital spending by Ontario businesses on machinery and equipment increased 1.1% in the first quarter, partially rebounding from four consecutive quarterly declines.  Investment in non-residential construction was also stronger, rising 0.3% in the quarter, the first gain in the past seven quarters.

Business Inventory Accumulation Continues

Change in Business Inventories

Businesses increased inventories by $7.1 billion in the first quarter, after accumulating $6.6 billion in the fourth quarter of 2013.  This is the largest accumulation of inventories over two consecutive quarters since 2007Q4-2008Q1.  The accumulation of inventory stocks was widespread across manufacturers, retailers and wholesalers.  Retail car dealers and auto wholesalers both reported a rise in stocks.

Exports and Imports Down in First Quarter

Exports and Imports Lower in First Quarter

Real exports of goods and services decreased 1.4%, after rising 1.0% in the fourth quarter of 2013.  Real imports were also weaker, down 1.4%, following a 0.8% gain in the previous quarter.  The weather related contraction of the U.S. economy likely contributed to the setback to trade.

International merchandise exports fell 3.0%, following a 0.6% advance in the fourth quarter of 2013.  Exports of automotive products, chemicals and industrial machinery and equipment were all weaker in the quarter.  Higher exports of metal and non-metallic mineral products and consumer goods helped moderate the overall decline.

International merchandise imports declined 2.1% in the first quarter, following a 1.6% increase in the previous quarter.  Weaker imports of automotive, electronic and electrical equipment, and chemical and rubber products contributed to the decline.

Current Dollar GDP Growth Accelerates

Nominal GDP Continues to Expand in First Quarter

Gross Domestic Product measured in current dollars increased 1.1% in the first quarter, accelerating from a 0.7% pace in the final quarter of 2013.

Compensation of employees increased 1.3%, after rising 0.7% in the previous quarter.  A one-time payment by the federal government to fund its employees’ pension plan accounted for about 40% of the rise in labour income in the first quarter. 

The net operating surplus of corporations advanced a solid 2.8% in the quarter, the strongest gain since the fourth quarter of 2010.

Household disposable income rose 1.2%, following a 0.9% increase in the previous quarter.  Ontario’s household saving rate* (the ratio of savings to household disposable income) rose to 4.6% from 4.2% in the fourth quarter of 2013.

*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 Rise in First Quarter

Economy-wide Prices Higher in First Quarter

Economy-wide prices, as measured by the GDP implicit price index, rose 0.9% in the first quarter, after advancing 0.2% in the fourth quarter of 2013. Higher domestic prices along with stronger export prices contributed to the overall price gain.

The implicit price index for final domestic demand increased 1.0%, after edging up 0.2% in the previous quarter.

Prices for household consumer expenditures rose 0.7%, following a 0.2% increase in the previous quarter.  Prices were higher for clothing and footwear, furniture, electricity and gasoline in the first quarter.

Machinery and equipment prices increased 1.7%, while non-residential construction (+0.7%) and residential construction (+1.3%) prices also advanced in the quarter.

Both export (+2.3%) and import (+2.7%) prices increased strongly in the first quarter, posting the highest rates of increase in almost six years.  A 4.9% depreciation in the Canadian dollar relative to the U.S. dollar contributed to the increase in both export and import prices.  

ONTARIO PRODUCTION BY INDUSTRY

Highlights

Real output by industry edged up 0.1% in the first quarter of 2014, following a 0.5% gain in the fourth quarter of 2013. Output in both the service (+0.2%) and goods-producing (+0.1%) sectors advanced in the first quarter.

The information and culture (+2.2%), real estate (+0.6%), construction (+0.7%) and finance and insurance (+0.4%) sectors supported first quarter growth. Lower output was recorded in professional and administrative services (-0.6%), retail (-0.7%) and wholesale (-0.5%) trade.

ONTARIO OUTPUT BY INDUSTRY
(% change from previous period, chained $2007)
  2012 2013 2013q2 2013q3 2013q4 2014q1
Goods Sector 1.6 -1.5 -0.1 -1.1 0.2 0.1
Primary Industries -2.2 4.7 0.8 -0.7 -0.4 -0.8
Utilities -0.6 5.0 1.6 0.0 2.4 0.1
Construction 2.2 -4.0 -2.7 -2.2 -1.0 0.7
Manufacturing 2.3 -2.3 0.6 -1.1 0.4 0.1
Of which: Auto Industry 18.5 -6.0 0.1 0.1 1.4 -3.2
Service Sector 1.4 2.0 0.8 1.0 0.5 0.2
Wholesale Trade 0.2 0.2 0.7 1.4 0.5 -0.5
Retail Trade 0.9 2.7 2.0 1.8 0.4 -0.7
Transportation and Warehousing 2.2 0.3 -0.2 -0.8 0.4 0.1
Information and Cultural Industries 1.7 1.7 1.3 3.1 -0.4 2.2
Finance and Insurance 2.0 4.5 1.3 2.0 2.1 0.4
Real Estate and Leasing 2.3 2.4 1.0 0.5 0.2 0.6
Professional and Administrative Services 1.3 1.5 0.5 0.4 -0.1 -0.6
Management of Companies and Enterprises -0.7 1.4 0.1 -0.7 0.2 2.5
Education 1.3 2.5 0.5 1.2 1.1 -0.2
Health Care and Social Services 1.6 1.6 0.8 0.8 0.5 0.5
Arts, Entertainment and Recreation -0.9 3.1 2.6 2.6 2.5 -3.3
Accommodation and Food 3.0 3.0 1.2 0.5 0.6 0.5
Other Services 0.9 3.4 1.4 0.7 1.2 1.1
Public Administration -0.1 0.3 -0.1 0.7 0.1 -0.1
Ontario Output at Basic Prices 1.4 1.2 0.6 0.5 0.5 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 Edges Higher

Manufacturing Output Steady

Manufacturing sector output edged higher by 0.1%, following a 0.4% gain in the fourth quarter of 2013.

Five of eleven manufacturing industries increased production in the first quarter, led by the food and beverage industry (+3.2%). Machinery (+2.8%) and paper and printing (+3.0%) also contributed to the gain.

Auto Industry Output Down in First Quarter

Output in the transportation equipment industry fell by 1.9%, the sixth decline in the past seven quarters. Production in the automotive industry was down 3.2%, partially offset by a 5.7% increase in “other transportation equipment”.

Chemical and Petroleum Down in First Quarter

Output of the chemical and petroleum manufacturing industry fell 2.3% due to a decline in chemical production.

Lower plastic and rubber product output (-1.5%) also moderated first quarter growth in the manufacturing sector.

Wholesale and Retail Trade Decline

Wholesale and Retail Output Decline in First Quarter

Wholesaling activity declined by 0.5% in the quarter, following a 0.5% gain in the fourth quarter. Declines were posted in machinery and equipment, and motor vehicle and parts wholesaling. 

Production in the retail trade sector fell 0.7%, following six consecutive quarterly gains. Clothing, building materials and motor vehicle and parts retailers all contributed to the decline.

Utilities, Construction and Natural Resources

Utilities Sector Output Up in First Quarter

Utilities output edged up 0.1% in the first quarter, after a 2.4% gain in the final quarter of 2013. A strong increase in natural gas and water distribution (+8.2%) was moderated by a decline in electric power utilities (-3.0%).

Construction sector output advanced 0.7%, following four consecutive quarterly declines. A gain in residential construction (+2.2%) was partially offset by a decline in non-residential building and engineering construction (-0.2%).

Mining output rose by 1.4% following a 1.1% increase in the fourth quarter.  First quarter output was supported by gains in gold and silver ore mining.

Construction Sector Output Advances in First Quarter

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 Higher

Finance and Insurance Output Continues Steady Increase in First Quarter

Output in the finance and insurance sector increased 0.4%, following a 2.1% gain in the previous quarter. Higher output in investment services led the gain, while banking industry output also rose in the quarter. Output by the finance and insurance sector has increased 11.0% since the second quarter of 2011.

Production in the real estate and leasing sector rose 0.6%, following a gain of 0.2% in the previous quarter.

 

 

 

Other Service Sector Industries

Information and Culture Output Advances in First Quarter

Information and culture output advanced by 2.2% in the first quarter, the fourth gain in the past five quarters.

Output in the arts, entertainment and recreation sector fell by 3.3% in the first quarter, in part due to the National Hockey League taking a hiatus while players took part in the Sochi Winter Olympics.

 

 

 

 

Structure of the Ontario Economy, 2013  Per Cent Share of Nominal GDP

List of Tables

Income and Expenditure Data

Quarterly Data, 2011:1-2014:1

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 Deflators

Annual Data, 2010-2013

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, 2011:1-2014:1
Table 14: Annual Data, 2010-2013

Historical tables, both annual and quarterly available from 1981.
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Analytical Tables and Charts 2009:I-2014:I

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