: Ontario Economic Accounts - Fourth Quarter of 2015

April 2016
Fourth Quarter of 2015
(October, November, December)
Ontario Ministry of Finance

Table of Contents

Fourth Quarter 2015 Summary
2015 Annual Review
Real Expenditure Details
Income Details
Economy-Wide Price Details
Production By Industry Details
List of Tables
Analytical Tables and Charts 2001:Q1-2015:Q4

Fourth QUARTER (OCTOBER-DECEMBER) 2015 SUMMARY

  • Ontario’s real gross domestic product (GDP) advanced 0.8% (3.1% annualized) in the fourth quarter of 2015, after rising 0.9% (3.7% annualized) in the third quarter.
  • Household spending increased 1.2%, driven by solid advances in durable and non-durable goods spending.   
  • Investment in residential construction rose 2.7%, following a 0.4% increase in the third quarter. 
  • Capital spending on machinery and equipment decreased 3.6%, while investment in non-residential construction declined 3.8%.
  • Businesses decreased inventories by $1.5 billion, after accumulating $1.0 billion worth of stock in the third quarter.
  • Exports increased 0.7%, the third consecutive quarterly advance, while imports edged down 0.2% in the quarter.  
  • Current dollar GDP increased 0.9% in the fourth quarter, following a 1.5% increase in the third quarter. Compensation of employees rose 1.3%, while the net operating surplus of corporations declined 1.0% in the quarter.
  • Economy-wide prices edged up 0.1%, after rising 0.6% in the third quarter.
  • Economic production, measured on an industry basis, advanced 0.9% in the fourth quarter.  Output in the goods sector rose 0.2%, while service sector activity grew by 1.2%.

2015 Annual Review

  • Ontario real GDP increased 2.6% in 2015, following a 2.7% advance in 2014.
  • Final domestic demand rose 3.1% in 2015, the strongest growth since 2010.
  • Household spending advanced 3.2% in 2015, following a 2.5% increase in 2014.  Growth in consumer purchases were broad-based, with solid gains in motor vehicles and parts, furniture and appliances, and services.
  • Capital spending on machinery and equipment rose 6.9% in 2015, matching the increase in 2014.  Investment spending on non-residential construction increased 3.7%, following a 1.6% advance in 2014. 
  • Investment in residential construction increased 8.7% in 2015, driven by new construction activity. Spending on renovations, as well as home ownership transfer costs also increased in the year.
  • Exports rose by 1.2%, while imports increased 1.6% in 2015.
  • Current dollar GDP rose 3.6% in 2015, following a 4.1% increase in 2014.
  • Compensation of employees advanced 3.7% in 2015, after a 3.3% rise in 2014.  The net operating surplus of corporations increased 3.1% in 2015, slowing from a 12.7% rise in 2014.
  • Economy-wide prices, as measured by the implicit price index for GDP, increased 1.0% in 2015, following a 1.4% rise in 2014.
  • Real output measured on an industry basis advanced 2.5% in 2015, matching the gain in 2014.  Production by services-producing industries rose 2.9%, while output by goods-producing industries grew by 1.2% in 2015.
ONTARIO ECONOMIC ACCOUNTS: HIGHLIGHTS
(% change from previous period)
  2014 2015 2015q1 2015q2 2015q3 2015q4
Real GDP (Chained $ 2007) 2.7 2.6 0.2 0.4 0.9 0.8
(annualized rate)     0.6 1.8 3.7 3.1
Household spending 2.5 3.2 0.7 0.8 0.8 1.2
Government current spending 0.7 1.5 0.9 0.5 0.0 0.3
Residential construction 0.4 8.7 2.9 3.7 0.4 2.7
Non-residential construction 1.6 3.7 0.4 2.2 -0.1 -3.8
Machinery & equipment 6.9 6.9 -0.4 -4.6 -1.8 -3.6
Intellectual property products -2.8 -7.3 -5.1 -1.0 -1.6 -0.9
Final Domestic Demand 1.9 3.1 0.7 0.8 0.4 0.7
Exports 1.9 1.2 -2.1 0.4 3.4 0.7
Imports 1.1 1.6 -0.2 0.3 0.0 -0.2
Business inventories change ($2007 billions) 4.9 3.4 8.3 5.9 1.0 -1.5
Nominal GDP ($ Current) 4.1 3.6 0.5 0.7 1.5 0.9
Compensation of employees 3.3 3.7 1.5 0.8 0.7 1.3
Net operating surplus for corporations 12.7 3.1 -1.9 0.0 0.6 -1.0
Primary household income 3.5 3.6 1.0 1.4 0.7 1.1
Household disposable income 2.5 4.0 0.6 2.5 1.3 1.1
Implicit price index, GDP 1.4 1.0 0.3 0.3 0.6 0.1

FOURTH QUARTER REAL EXPENDITURE DETAILS

Household Spending Continues to
Rise in FOURTH Quarter

Household spending increased 1.2%, after rising 0.8% in the third quarter. 

Spending on consumer durables rose 2.4%, following a 2.9% increase in the third quarter. The fourth-quarter gain was largely led by new motor vehicle purchases. 

Higher purchases of semi-durable (+3.2%) and non-durable (+1.4%) goods, as well as services (+0.6%) also contributed to the fourth-quarter gain.

Residential Construction Up

Residential construction investment increased 2.7%, after rising 0.4% in the third quarter.

The overall increase was driven by strong renovation activity, as well as higher home ownership transfer spending. These gains were partially offset by lower investment in new housing construction.

Investment in Non-Residential
Construction Declines

Investment in non-residential construction decreased 3.8%, after edging down 0.1% in the previous quarter.

Investment in machinery and equipment declined 3.6%,  following a 1.8% decrease in the third quarter.

BUSINESS INVENTORIES DECLINE

Non-farm inventories were reduced by $1.5 billion ($2007), after businesses added $1.0 billion worth of goods in the third quarter. The fourth-quarter decline largely reflected reduced inventories in manufacturing and retail sectors.  The drop in inventories in the quarter marked the first decline in three years.

Exports Rise and Imports Decline

Exports of goods and services increased 0.7%, following a 3.4% rise in the third quarter. Imports of goods and services edged down 0.2%, after no change in the previous quarter. 

International merchandise exports advanced 1.9%, following a strong 6.4% increase in the third quarter. Higher exports of metal and non-metallic minerals, automotive products, and chemical, plastic and rubber products led the fourth-quarter gain.  

International merchandise imports declined 0.7%, reflecting lower imports of electronic and electrical equipment, consumer goods, and industrial machinery and equipment.

FOURTH QUARTER INCOME DETAILS

Nominal GDP Growth Continues
in Fourth Quarter

GDP measured in current dollars increased 0.9% in the fourth quarter, following a 1.5% advance in the third quarter.

Supported by solid job gains in the fourth quarter, compensation of employees advanced 1.3%, after rising 0.7% in the third quarter.

The net operating surplus of corporations  declined 1.0%, following a 0.6% increase in the third quarter. 

 

FOURTH QUARTER ECONOMY-WIDE PRICE DETAILS

Prices Edge Up in Fourth Quarter

Economy-wide prices, as measured by the GDP implicit price index, edged up 0.1%, after rising 0.6% in the third quarter. The implicit price index for final domestic demand increased 0.4%, slowing from a 0.9% advance in the third quarter.

Prices for household expenditures increased 0.3%, after rising 0.7% in the third quarter. Prices for motor vehicles, clothing and food increased, but were partially offset by lower natural gas and gasoline prices.

Machinery and equipment prices increased 1.7%, while non-residential construction prices were unchanged in the fourth quarter.  Residential construction prices edged up 0.1%, following a 1.2% increase in the third quarter.

Import prices rose 0.7%, while export prices were unchanged in the fourth quarter.  The Canadian dollar depreciated by 1.9% relative to the U.S. dollar in the quarter.

ONTARIO PRODUCTION BY INDUSTRY DETAILS

Highlights

Ontario’s real GDP by industry rose 0.9% in the fourth quarter of 2015, driven by a solid 1.2% increase in the service sector. Higher output in finance and insurance, real estate and leasing, and wholesale trade were major contributors to the overall increase. Output in the goods-producing sector increased 0.2% led by gains in construction and primary industries.

ONTARIO OUTPUT BY INDUSTRY
(% change from previous period, chained $2007)
  2014 2015 2015q1 2015q2 2015q3 2015q4
Goods Sector 2.5 1.2 -0.3 -0.3 1.3 0.2
Primary Industries 1.2 0.0 -0.1 0.7 0.4 1.7
Utilities 0.2 -3.8 1.4 -3.8 -3.2 -1.5
Construction 1.3 4.0 1.1 0.9 0.3 0.4
Manufacturing 3.7 1.1 -1.3 -0.4 2.6 0.1
Of which: Auto Industry 5.4 0.2 -6.9 -0.1 7.6 0.5
Service Sector 2.5 2.9 0.3 0.9 0.7 1.2
Wholesale Trade 5.2 2.9 -3.2 3.7 -0.9 1.3
Retail Trade 4.0 4.8 0.7 1.4 1.2 1.4
Transportation and Warehousing 3.4 3.1 0.8 0.1 1.3 1.0
Information and Cultural Industries 0.3 0.1 0.8 1.1 0.6 0.6
Finance and Insurance 4.3 4.6 1.2 0.4 1.5 1.0
Real Estate and Leasing 2.2 4.3 0.5 1.5 1.5 2.7
Professional and Administrative Services 2.2 2.2 0.4 -0.5 0.3 0.9
Management of Companies and Enterprises 0.4 -0.7 1.9 -4.6 0.9 1.1
Education 0.5 1.7 0.8 0.0 -1.1 0.5
Health Care and Social Services 1.2 2.2 0.8 0.9 1.0 0.8
Arts, Entertainment and Recreation 0.9 9.8 3.1 6.0 1.8 1.5
Accommodation and Food 4.5 2.4 -1.4 2.0 1.3 0.5
Other Services 2.4 0.2 -0.1 -0.1 0.5 0.6
Public Administration 1.0 1.2 0.4 0.3 0.4 0.2
Ontario Output at Basic Prices 2.5 2.5 0.1 0.6 0.8 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

Manufacturing sector output rose 0.1% in the fourth quarter, following a 2.6% increase in the third quarter.

Five of the eleven manufacturing industries had higher production in the quarter.

The strongest manufacturing production gains occurred in chemical and petroleum (+4.5%) and machinery (+2.3%). Also posting higher output in the quarter were transportantion equipment (+0.7%), paper products and printing (+2.5%) and wood products and furniture (+0.2%).

Within the transportation equipment industry, automotive vehicles and parts posted a 0.5% increase, following a 7.6% gain in the third quarter. The continued gain reflects increased demand and manufacturers’ release of redesigned models of popular vehicles following temporary plant closures earlier in the year.

Output in other transportation equipment, which is primarily composed of the aerospace sector, increased 1.5% in the fourth quarter, following a 2.4% decline in the third quarter.

Primary Industries Higher
While Utilities Lower

Output in primary industries increased 1.7% in the quarter, led by gains in mining (+2.7%), most notably in metal ores.  

Utilities production declined 1.5% in the fourth quarter, reflecting lower electric power and natural gas output. In the fourth quarter, utilities demand was impacted by some unseasonably warm weather.

Construction Output Increases

Construction* sector production rose by 0.4%, the eighth consecutive quarterly gain. A solid increase in residential construction (+3.0%) was partly offset by a decline in non-residential buildings, engineering and repair 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.

Wholesale and Retail Trade Higher

Wholesale trade output increased 1.3% in the fourth quarter, following a 0.9% decline in the previous quarter. Gains in wholesaling activity were led by higher sales in motor vehicle and parts along with building materials and supplies.

The retail trade sector continues to post solid gains, rising 1.4% , the seventh consecutive quarterly gain. The largest increases were in motor vehicles and parts stores, and building material and garden equipment stores.

Real Estate and Leasing
Output Higher

Output in the real estate, rental and leasing sector rose 2.7%, following a 1.5% increase in the third quarter. Real estate sector activity continues to be supported by a robust housing market.

Finance and Insurance Output Up

Output in the finance and insurance sector increased 1.0%, the seventh consecutive quarterly advance, driven by gains in banking and other despository credit intermediation.

Other Service Sector Industries

In the fourth quarter, there were also notable gains in professional and administrative services (+0.9%), health care and social services (+0.8%) and educational services (+0.5%).

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