: Ontario Economic Accounts - Second Quarter of 2014

October 2014
Second Quarter of 2014
(April, May, June)
Ontario Ministry of Finance

Table of Contents

Second Quarter Summary
Expenditure and Income Details
Production By Industry
List of Tables
Analytical Tables and Charts 2000:I-2014:II

SECOND QUARTER (APRIL-JUNE) 2014 SUMMARY

Ontario Real GDP Rebounds Strongly in Second Quarter
  • Ontario’s real Gross Domestic Product (GDP) increased 0.9% (3.5% annualized) in the second quarter of 2014, rising from a 0.1% (0.5% annualized) advance in the first quarter.  The strong second quarter gain was partially the result of a rebound in consumer and business spending following severe winter weather conditions which dampened economic activity in the first quarter of the year.
  • Household spending rose 0.8% in the second quarter, the strongest increase since the second quarter of 2013.  Spending on durable (+4.5%) and semi-durable (+1.3%) goods and services (+0.8%) contributed to the overall rise in consumer expenditures.
  • Investment in residential construction advanced a solid 4.5% in the second quarter, the strongest gain since the third quarter of 2011.  Spending on ownership transfer costs relating to home resales drove the overall advance, rising 13.7% in the quarter.
  • Business capital spending on machinery and equipment rose 3.5%, while non-residential construction edged up 0.3% in the second quarter.
  • Businesses increased inventories by $4.5 billion ($2007), after accumulating $6.8 billion worth of stocks in the first quarter.
  • Exports advanced 2.8% in the second quarter, rebounding from a 1.2% decline in the first quarter, while imports rose 2.7%.
  • Current dollar GDP rose 1.0% in the second quarter, following a 1.2% gain in the previous quarter.  Economy-wide prices, as measured by the GDP implicit price index, edged up 0.2%, after advancing 1.0% in the first quarter.
  • Real economic production, measured on an industry basis, also increased 0.9% in the second quarter of 2014.  Production by goods-producing industries advanced 1.1%, while output by service-producing industries rose 0.9%.
ONTARIO ECONOMIC ACCOUNTS: HIGHLIGHTS
(% change from previous period)
  2012 2013 2013q3 2013q4 2014q1 2014q2
Real GDP (Chained $ 2007) 1.3 1.3 0.5 0.5 0.1 0.9
(annualized rate)     1.8 1.9 0.5 3.5
Household spending 1.4 1.8 0.6 0.3 0.3 0.8
Government current spending 1.4 0.0 0.1 -0.1 -0.2 0.3
Residential construction 4.7 -3.0 -2.6 -1.3 -1.0 4.5
Non-residential construction -1.6 -7.7 -1.3 -1.9 0.3 0.3
Machinery & equipment 2.0 -1.1 -1.5 -3.2 1.5 3.5
Intellectual property products -1.7 -4.6 1.1 -1.2 -1.1 -1.0
Final Domestic Demand 1.3 0.4 0.1 -0.2 0.1 1.0
Exports 1.7 0.9 -1.2 1.0 -1.2 2.8
Imports 2.0 -0.7 -1.1 0.8 -1.0 2.7
Change in Business inventories (Chained $2007 billions) 4.1 3.5 2.7 6.6 6.8 4.5
Nominal GDP ($ Current) 3.0 2.7 0.6 0.7 1.2 1.0
Net operating surplus of corporations -1.0 -1.6 1.2 0.6 2.8 1.6
Primary household income 3.4 2.9 0.4 0.9 1.5 0.6
Household disposable income 2.5 2.6 0.4 0.9 1.5 0.5
Implicit price index, GDP 1.7 1.4 0.1 0.2 1.0 0.2

SECOND QUARTER EXPENDITURE AND INCOME DETAILS

Household Spending Accelerates in Second Quarter

Real Household Spending Accelerates in Second Quarter

Real household spending increased 0.8% in the second quarter, the strongest gain since the second quarter of 2013.

Spending on durable goods drove the second quarter gain, rebounding 4.5%, after edging down 0.3% in the first quarter when sales were dampened by inclement winter weather conditions.  In the second quarter, shoppers increased purchases of large durable items such as automobiles (+5.3%) and furniture (+11.3%).

Expenditures on semi-durable goods also rebounded in the second quarter, as purchases advanced 1.3%, following a 1.5% decline in the first quarter. 

Spending on non-durables declined 0.9%, with lower purchases of natural gas, gasoline and other fuels. 

Household spending on services rose 0.8% in the second quarter, following a 0.3% gain in the first quarter.

Residential Construction Rebounds in Second Quarter

Real Residential Construction Rebounds in Second Quarter

Real residential construction investment rebounded 4.5% in the second quarter, after declining in the previous three quarters.  This was the strongest gain in three years and was led by a 13.7% jump in spending on home ownership transfer costs.  Spending on home renovations (+3.9%) and new housing construction (+0.5%) were also higher in the second quarter.

The unusually harsh winter conditions which depressed residential investment in the first quarter contributed to the second quarter rebound.

Business Investment in Machinery and Equipment Rises

Real Machinery and Equipment Investment Continues to Advance

Real capital spending by Ontario businesses on machinery and equipment increased 3.5% in the second quarter, following a 1.5% advance in the first quarter.  Investment in non-residential construction also increased in the quarter, rising by 0.3% for the second consecutive quarter.

Business Inventory Accumulation Slows in Second Quarter

Change in Business Inventories

Businesses increased inventories by $4.5 billion ($2007) in the second quarter, slowing from an accumulation of $6.8 billion in the first quarter.  Ontario wholesalers continued to accumulate inventories in the second quarter, while retailers and manufacturers reported a decline in stocks in the quarter.

Exports and Imports Higher in Second Quarter

Exports and Imports Rebound in Second Quarter

Real exports of goods and services increased 2.8% in the second quarter, rebounding from a 1.2% decline in the first quarter.  Real imports were also stronger, up 2.7%, following a 1.0% decline in the first quarter.

The second quarter rebound in exports and imports was partially the result of harsh winter weather and the contraction of the U.S. economy in the first quarter.

International merchandise exports rebounded 3.4% in the second quarter, following a 2.2% decline in the first quarter.  Exports of automotive products, electronic equipment and consumer goods were all stronger in the second quarter.

International merchandise imports also advanced strongly in the second quarter, rising 4.3% after declining 1.7% in the first quarter.  Higher imports of automotive products, electronic equipment, and chemical and rubber products contributed to the second-quarter advance.

Current Dollar GDP Growth Continues in Second Quarter

Nominal GDP Continues to Expand in Second Quarter

Gross Domestic Product measured in current dollars increased 1.0% in the second quarter, after advancing 1.2% in the first quarter.  Both employee compensation and the corporate net operating surplus rose in the second quarter.

Employee compensation increased 0.7% in the second quarter, slowing from a 1.3% rise in the first quarter.  The strong first-quarter growth reflected special one-time payments by the federal government to fund its employees’ pension plans. 

The net operating surplus of corporations rose 1.6%, following a 2.8% gain in the first quarter.

Household disposable income increased 0.5% in the second quarter, following a 1.5% advance in the previous quarter.  Ontario’s household saving rate* (the ratio of savings to household disposable income) decreased from 4.6% in the first quarter to 3.4% in the second quarter, as current dollar household consumption (+1.8%) increased at a faster pace than household disposable income (+0.5%).

*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 Up in Second Quarter

Inflation Moderates in Second Quarter

Economy-wide prices, as measured by the GDP implicit price index, edged up 0.2% in the second quarter, slowing from a 1.0% increase in the first quarter.

The implicit price index for final domestic demand increased 0.6% in the second quarter, following a 1.1% rise in the first quarter.

Prices for household consumer expenditures rose 1.0% in the second quarter, following a 0.7% increase in the previous quarter.  Prices were higher for food, clothing and footwear, natural gas and gasoline in the second quarter.

Machinery and equipment prices edged down 0.1%, while non-residential (+0.8%) and residential (+0.6%) construction prices advanced in the second quarter.

Export prices declined 0.3%, after rising 2.5% in the first quarter, while import prices were 0.3% higher in the second quarter, following a 2.6% rise in the first quarter.  The Canadian dollar appreciated 1.2% relative to the U.S. dollar in the second quarter.  

ONTARIO PRODUCTION BY INDUSTRY

Highlights

Real or volume output by industry advanced 0.9% in the second quarter of 2014, after edging up by 0.1% in the first quarter. Output in both the goods (+1.1%) and service (+0.9%) sectors advanced in the second quarter.

The wholesale trade (+3.6%), manufacturing (+1.6%) and real estate (+1.3%) sectors led second-quarter growth.

ONTARIO OUTPUT BY INDUSTRY
(% change from previous period, chained $2007)
  2012 2013 2013q3 2013q4 2014q1 2014q2
Goods Sector 1.6 -1.5 -1.1 0.2 0.1 1.1
Primary Industries -2.2 4.7 -0.7 -0.4 -0.5 -1.1
Utilities -0.6 5.0 0.0 2.4 -0.3 -0.6
Construction 2.2 -4.0 -2.2 -1.0 0.5 1.6
Manufacturing 2.3 -2.3 -1.1 0.4 0.1 1.6
Of which: Auto Industry 18.5 -6.0 0.1 1.4 -3.2 4.3
Service Sector 1.4 2.0 1.0 0.5 0.1 0.9
Wholesale Trade 0.2 0.2 1.4 0.5 -0.3 3.6
Retail Trade 0.9 2.7 1.8 0.4 -0.6 1.2
Transportation and Warehousing 2.2 0.3 -0.8 0.4 0.2 1.5
Information and Cultural Industries 1.7 1.7 3.1 -0.4 1.8 -0.2
Finance and Insurance 2.0 4.5 2.0 2.1 0.0 0.4
Real Estate and Leasing 2.3 2.4 0.5 0.2 0.4 1.3
Professional and Administrative Services 1.3 1.5 0.4 -0.1 -0.4 0.9
Management of Companies and Enterprises -0.7 1.4 -0.7 0.2 2.7 0.2
Education 1.3 2.5 1.2 1.1 -0.3 0.3
Health Care and Social Services 1.6 1.6 0.8 0.5 0.3 0.5
Arts, Entertainment and Recreation -0.9 3.1 2.6 2.5 -2.9 0.4
Accommodation and Food 3.0 3.0 0.5 0.6 0.7 1.1
Other Services 0.9 3.4 0.7 1.2 1.0 1.4
Public Administration -0.1 0.3 0.7 0.1 -0.2 -0.8
Ontario Output at Basic Prices 1.4 1.2 0.5 0.5 0.1 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 Output Rises

Manufacturing Output Advances in Second Quarter

Manufacturing sector output advanced 1.6% in the second quarter, after edging up 0.1% in the first quarter.

Seven of eleven manufacturing industries increased production in the second quarter, with the majority of the gain concentrated in the transportation equipment industry (+4.6%).

Auto Industry Output Rebounds in Second Quarter

Within the transportation equipment industry, automotive production increased by 4.3%, rebounding from a 3.2% decline in the first quarter. Output in “other transportation equipment” (+6.3%) also rose in the second quarter.

Output was also higher in the food and beverage (+1.5%), chemical and petroleum (+2.0%) and wood products and furniture (+4.3%) industries.

Primary and Fabricated Metal Output Down in Second Quarter

Output in the primary and fabricated metal sector was lower in the second quarter (-1.1%).

Wholesale and Retail Trade Increase

Wholesale and Retail Output Increase in Second Quarter

Wholesaling activity was up by a solid 3.6% in the second quarter, after edging down by 0.3% in the first quarter. Gains were led by machinery and equipment, building materials and motor vehicle and parts wholesaling. 

Production in the retail trade sector rose by 1.2% in the second quarter, following a decline of 0.6% in the previous quarter. Motor vehicle and parts and furniture retailers contributed to the increase.

Utilities, Construction and Natural Resources

Utilities Sector Output Down in Second Quarter

Utilities output declined by 0.6% in the second quarter, the second consecutive quarterly decline. An increase in electric power utilities (+0.5%) was more than offset by a decline in natural gas and water distribution (-3.1%).

Construction Sector Output Advances in Second Quarter

Construction sector output advanced 1.6% in the second quarter, following a 0.5% increase in the first quarter. Both residential (+2.3%) and non-residential building and engineering (+1.1%) construction rose in the second quarter.

Mining output rose by 0.9% in the second quarter, following a 1.9% increase in the first quarter.  Output by copper, nickel, lead and zinc and gold and silver ore mines as well as mining support activities contributed to the second quarter gain.

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 Second Quarter

Output in the finance and insurance sector increased 0.4% in the second quarter. Higher output in investment services led the gain, while banking industry output also rose in the quarter.

Production in the real estate and leasing sector rose 1.3% in the second quarter, following a gain of 0.4% in the first quarter.

 

 

 

Other Service Sector Industries

Professional and Administrative Services Output Up in Second Quarter

Professional and administrative services advanced by 0.9% in the second quarter, following two consecutive quarterly declines.

Health care and social services output rose 0.5%, while public administration output fell by 0.8% in the second quarter.

 

 

 

 

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

List of Tables

Income and Expenditure Data

Quarterly Data, 2011:1-2014:2

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, 2010-2013

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, 2011:1-2014:2
Table 16: Annual Data, 2010-2013

Historical tables, both annual and quarterly available from 1981.
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Analytical Tables and Charts 2000:I-2014:II

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