: Ontario Economic Accounts

Third Quarter of 2017
(July, August, September)
Ontario Ministry of Finance

Table of Contents

ECONOMIC ACCOUNTS

RECENT ECONOMIC DEVELOPMENTS

Highlights

Ontario’s Economy Continues to Grow

  • Ontario’s real gross domestic product (GDP) increased 0.3% in the third quarter (July, August, September) of 2017, following a 0.8% increase in the second quarter.
  • Third quarter growth was led by solid consumer spending and gains in business investment in non-residential structures and machinery and equipment. A decline in exports moderated overall GDP growth, as the auto sector was impacted by extended seasonal shutdowns for retooling at assembly plants.
  • Nominal GDP increased 0.3%, following a 0.7% gain in the second quarter. Compensation of employees rose by 1.2%, while the net operating surplus of corporations declined by 0.4%.
  • Economic production, measured on an industry basis, increased 0.4%. Service sector output advanced by 0.6%, while output in goods-producing industries edged down 0.1%.

Expenditure Details

Consumer Spending Boosts Real GDP

Ontario’s real GDP rose by 0.3% in the third quarter of 2017, following strong gains in the first quarter (+1.1%) and second quarter (+0.8%).

Ontario’s household consumption spending increased 1.0%, following a 1.3% gain in the second quarter. Consumer spending on durables advanced 0.6%, led by motor vehicles. Spending on non-durables (+1.0%), semi-durables (+0.6%) and services (+1.2%) also increased.

Business investment decreased 1.0%, following a 2.5% decline in the second quarter. The decline was due to lower residential construction investment (-3.1%), reflecting a slowdown in home resale activity. Business investment in non-residential structures (+1.3%), machinery and equipment (+1.4%) and intellectual property products (+1.0%) increased.

Government spending increased by 1.2%, following a 0.9% rise in the second quarter.

Exports decreased 2.3% in the third quarter. International exports declined 4.5%, while interprovincial exports rose 2.2%. Imports edged down 0.1% in the quarter, following a 0.2% gain. Trade in the quarter was impacted by extended seasonal shutdowns for retooling at auto assembly plants.

Businesses accumulated $8.3 billion of inventories, following a $5.0 billion build up in the second quarter.

Final domestic demand, which excludes trade and inventories, advanced by 0.7% in the third quarter.

Income Details

Nominal GDP Continues to Rise

GDP in current dollars advanced 0.3%, following a 0.7% increase in the second quarter.

Compensation of employees, which includes both wages and salaries, and supplementary labour income, increased 1.2%, after a 0.4% gain in the second quarter. Net mixed income, which is comprised of farm, non-farm and rental income, rose 0.8%, following a similar increase in the previous quarter.

Business sector profits, measured by the net operating surplus of corporations, decreased 0.4%, the second consecutive quarterly decline.

Household disposable income increased 0.7%, after rising 1.1% in the previous quarter.

Household disposable income advanced at a slower pace than consumption expenditure. As a result, the household savings rate decreased 0.4 percentage points to 0.6%.

Price Details

Economy-Wide Prices Unchanged

Economy-wide prices, as measured by the implicit price index for GDP, were unchanged in the third quarter, following a 0.2% decline in the second quarter.

Prices for household consumption expenditures were unchanged in the third quarter.

Business investment prices decreased 1.0%, with declines in residential construction (-0.7%) and machinery and equipment (-4.1%). Non-residential construction (+0.6%) and intellectual property products (+0.5%) prices increased in the quarter.

Prices were lower for both exports (-3.0%) and imports (-3.5%). During this period the Canadian dollar appreciated by 7.4% against the U.S. dollar.

Industry Details

Service Industries Lead Growth

Based on production by industry, Ontario real GDP expanded 0.4%, after increasing 0.8% in the second quarter. Service-producing industries advanced by 0.6%, which was partially offset by a 0.1% decline in the goods-producing sector.

Growth in the services-producing industries was driven by gains in wholesale trade (+2.2%), professional and administrative services (+0.9%) and accommodation and food services (+1.5%). Public sector output also contributed to third quarter growth, with gains in public administration (+1.6%), education (+1.0%) and health care and social assistance (+0.4%). Information and cultural industries posted the largest decline (-1.2%), following two consecutive quarterly increases.

Within the goods-producing sector, manufacturing output decreased 1.8%, driven by lower output in transportation equipment (-7.1%), as the auto sector was impacted by extended seasonal shutdowns for retooling at assembly plants. Partially offsetting this were gains in machinery manufacturing (+4.4%), which rose for the third consecutive quarter.

Construction advanced 2.2% in the third quarter, with gains in both residential (+1.4%) and non-residential engineering (+2.9%) buildings. Primary industry output expanded 1.7%, led by higher output in mining (+2.5%), including copper, nickel, lead and zinc ore mining. Utilities (+2.4%) output also increased in the quarter.

Jurisdictional Comparisons

Ontario Growth in a G7 Context

Across the G7 countries, real GDP growth averaged 0.7%, matching the second quarter average.

Canadian real GDP advanced 0.4%, after rising 1.0% in the preceding quarter, led by household consumption and business investment. Quebec’s real GDP rose 1.1% in the third quarter, following a 0.8% gain.

In the U.S., real GDP advanced 0.8% for the second consecutive quarter. Inventory accumulation, business investment and household consumption contributed to real GDP growth in the quarter. Net trade also supported the gain as exports increased 0.5%, while imports declined 0.2%.

Germany posted a 0.8% gain in real GDP, while Japan’s output grew by 0.6%. Output in France rose 0.6% for the third consecutive quarter. Both the United Kingdom and Italy posted 0.4% gains in real GDP, up from 0.3% increases in the previous quarter.

Employment

Strength in Ontario’s Labour Market Continues

Employment growth in Ontario accelerated in 2017, posting the strongest annual gain since 2003. Employment increased by 128,000 in 2017, following gains of 45,000 in 2015 and 76,000 in 2016.

Ontario’s unemployment rate has also improved considerably. As of December 2017, Ontario’s unemployment rate was 5.5%, below the Canadian rate for the 33rd consecutive month. On an annual basis, the unemployment rate declined to 6.0% in 2017, the lowest since 2000.

As of December 2017, employment was 8.6% (+573,000 jobs) above the pre-recession peak and 13.3% (+845,000 jobs) above the recessionary low.

Since the recessionary low, the majority of jobs created were full-time positions (+765,000), while part-time employment (+80,000) also increased. Most of these net new jobs were in the private sector (+615,000) and in industries paying above–average wages (+579,000).

Trade

Retail and Wholesale Trade Continue to Rise

Retail sales advanced 7.0% over the first ten months of 2017, compared to the same period a year ago, led by sales at motor vehicle and parts dealers, gas stations and building materials stores.

Wholesale trade continues to post solid gains, rising 9.1% on a year-to-date basis. Gains have been widespread across most subsectors, led by motor vehicles and parts, personal and household goods and machinery and equipment.

Manufacturing sales rose 1.8% over the first ten months of 2017 compared to the same period a year ago, led by petroleum and coal, machinery and food manufacturing.

Ontario’s international merchandise exports declined 3.0% in the first eleven months of 2017 compared to the same period in 2016. Exports to Ontario’s top market, the United States, declined (-3.7%), while exports to the United Kingdom (+5.8%) and China (+10.7%) rose.

Housing

Housing Market Moderation

Housing market activity in Ontario has moderated following strong gains in early 2017.

Sales of existing homes were 8.8% lower in November 2017 compared to a year earlier. Overall, for the first eleven months of the year, home resales were 9.6% lower than a year ago. The decline has primarily been concentrated in the Greater Toronto Area (GTA).

Ontario average home resale prices have also moderated. In November, the average home resale price was $566,000, down 11.9% from the March peak of $642,000. Compared to a year earlier, the average resale price was 1.5% lower.

Housing starts increased 5.4% in 2017. Multiple-family starts (+9.2%) rose, while single-detached starts (-3.2%) declined on an annual basis.

Global Economic Developments

Global Economy Remains Strong in Q3

The pickup in global economic activity that began in 2016 gathered momentum in 2017, reflecting stronger domestic demand in advanced economies and improved performance in large emerging market economies. Alongside improved economic growth in the U.S., the Euro zone and Japan saw a broad-based acceleration in real GDP growth in the second and third quarters of 2017. Global economic indicators show continued strong momentum in November and December 2017.

U.S. real GDP growth remained strong in the third quarter, rising 0.8%, matching the pace set in the second quarter. Personal consumption slowed, easing to 0.5% from 0.8% in the second quarter. Non-residential business investment remained solid, rising 1.1%, led by a 2.6% gain in machinery and equipment investment. Four consecutive quarters of gains in equipment investment has raised business spending above the recent peak before energy-related weakness led firms to pullback on capital expenditures. Net trade also contributed positively to GDP growth in the third quarter. Economic indicators point to slightly weaker growth in the fourth quarter as the economy has largely mitigated the negative impacts of the recent hurricanes in Florida and Texas.

U.S. payroll employment growth accelerated in the fourth quarter, adding a solid 611,000 net new jobs. Conditions in the labour market remain very tight with the unemployment rate at 4.1% in December, the lowest rate since late-2000. Tighter labour markets have not yet led to a noticeable acceleration in wage growth, with average hourly wage growth improving to 2.5% (year-over-year) in December after an increase of 2.4% in November.

Interest Rates Rising Alongside Canadian Dollar

Following two rate hikes in July and September, the Bank of Canada did not increase rates in October and December. In contrast, the Federal Reserve hiked interest rates in the U.S. by 25 basis points in December, bringing the target for the fed funds rate to between 1.25% to 1.50%.

Between late September and early December, the Canadian dollar remained within the range of 77 and 80 cents U.S. However, economic strength and rising oil prices have contributed to a recent appreciation in the Canadian dollar. Over the same period, oil prices have risen gradually, from over $51 U.S. per barrel in late September to above $60 U.S. per barrel by late-December. Stronger international oil demand and continued OPEC production restraint have contributed to higher oil prices while North American oil production continues to see gains.

Improved global economic activity and rising business and consumer confidence have buoyed global equity markets. Since late September, the S&P 500 has risen 9.6% and the TSX increased by 4.8%, the Euro Stoxx 50 edged up by 1.7% and the Nikkei 225 rose by 17%.

In Focus

A Closer Look at Business Investment

Business investment* is an important contributor to Ontario’s GDP, and also improves the economy’s potential for future economic growth.

The composition of business investment in Ontario has experienced a structural shift over time, with investment in machinery and equipment (M&E) overtaking investment in non-residential structures in the early 1990s. By 2016, investment in M&E accounted for 44% of Ontario business investment, compared to about 36% for non-residential structures. Investment in intellectual property products (IPP)** has also increased over time, and now accounts for 21% of business investment, compared to only 10% in 1981.

The changing structure of business investment in Ontario stands in contrast the trend for Canada as a whole, where non-residential structures investment has overtaken M&E spending, driven by increasing investment in resource industries.

Business investment per worker*** in Ontario has trended upward since the early 1980’s, rising from $3,530 in 1981 to $6,389 in 2008. Investment was impacted during the 2008-09 recession, but has resumed its generally upward path, reaching a record high of $6,550 per worker in 2015.

Business investment declined significantly during the 2008-09 recession, with M&E investment declining by an average of 11.1% per year. Investment recovered substantially, over the 2010-16 period, with non-residential structures growing an average of 5.3% per year and M&E rising 2.3% per year.

* Business investment is defined here as spending on non-residential structures, machinery and equipment and intellectual property products.

** Intellectual property products are the result of investments in knowledge that can be used for sale or in production. Examples include the results of research and development, mineral exploration and evaluation, computer software and databases, and entertainment, literary or artistic originals.

*** Workers are defined as the population 15 to 64 years of age.

Appendix

Structure of the Ontario Economy

How GDP is Measured

The Ontario Economic Accounts provide measurements of GDP using three different methodologies, by expenditure, income and industry.

The GDP by expenditure approach defines GDP as the aggregate of all expenditures on final consumption, gross capital formation and net trade by consumers, governments and businesses that occur within Ontario’s economy over a given time period. This measurement of GDP can also be defined as the sum of consumer spending, gross investment, government spending and net trade.

The GDP by income approach equates GDP to the total income earned through contributions to production within Ontario’s economy by labour and capital over a given time period. That is, GDP is the sum of all wages and salaries paid to employees, the gross operating surplus of businesses, gross mixed income and indirect taxes less subsidies.

The GDP by industry approach measures GDP by calculating the total output of the goods and services producing industries within Ontario’s economy and subtracting the cost of intermediate inputs used in final production. This approach can also be referred to as the value-added approach as it quantifies the additional value generated by industries through the production of final products within the economy.

For a full list of definitions used in the Ontario Economic Accounts, please see Statistics Canada’s System of Macroeconomic Accounts Glossary at http://www.statcan.gc.ca/eng/nea/gloss/gloss_a.

List of Data Tables

Income and Expenditure Data

Quarterly Data, 2014:Q1–2017:Q3

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, 2013-2016

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, 2014:Q1-2017:Q3
Table 16: Annual Data, 2013-2016

Historical tables, both annual and quarterly available from 1981.
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Graphic Descriptions

Highlights: Ontario GDP, Third Quarter 2017

The chart indicates the per cent change in real and nominal GDP in the third quarter of 2017. Both real GDP and nominal GDP increased 0.3% in the quarter.

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Expenditure Details: Real GDP Growth

The bar chart illustrates Ontario’s quarterly per cent change in real GDP growth from the first quarter of 2014 to the third quarter of 2017. Ontario has experienced real GDP growth over the entire period. Real GDP rose 0.3% in the third quarter of 2017, following a 0.8% increase in the second quarter of 2017. The third quarter of 2014, third quarter of 2015 and the first quarter of 2017 recorded the strongest gain at 1.1%.

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Expenditure Details: Real GDP Change by Expenditure Component

The horizontal bar chart depicts the per cent change in Ontario’s real GDP and its components for the third quarter of 2017. Real GDP rose 0.3% in the quarter, with increases in household consumption (+1.0%) and government spending (+1.2%) and a decline in business investment (-1.0%). Exports (-2.3%) and imports (-0.1%) both declined.

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Expenditure Details: Real Export and Import Growth

The bar chart shows the quarterly per cent change in real exports and imports from the first quarter of 2015 to the third quarter of 2017. Exports declined 2.3% in the third quarter of 2017, while imports declined -0.1%.

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Income Details: Nominal GDP Growth

The bar chart illustrates Ontario’s quarterly per cent change in nominal GDP growth from the first quarter of 2014 to the third quarter of 2017. Ontario has experienced nominal GDP growth over the entire period. Nominal GDP rose 0.3% in the third quarter of 2017, following a 0.7% increase in the second quarter of 2017. The first quarter of 2017 recorded the strongest gain at 2.1%.

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Income Details: Nominal GDP Change by Income Component

The horizontal bar chart depicts the per cent change in nominal GDP and its components for the third quarter of 2017. Nominal GDP rose 0.3%, with increases in compensation of employees (+1.2%) and net mixed income (+0.8%). Indirect taxes less subsidies (-0.3%) and net operating surplus (-0.4%) declined in the third quarter.

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Income Details: Compensation of Employees Growth

The bar chart shows Ontario’s quarterly growth of employee compensation in per cent from the first quarter of 2014 to the third quarter of 2017. Compensation of employees rose 1.2% in the third quarter of 2017, following a 0.4% increase in the second quarter of 2017. The first quarter of 2015 recorded the strongest gain of 1.7%.

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Price Details: Economy-Wide Price Growth

The bar chart illustrates Ontario’s quarterly growth of economy-wide prices in per cent from the first quarter of 2014 to the third quarter of 2017. Economy-wide prices were unchanged in the third quarter of 2017, following a 0.2% decline in the previous quarter. Since the first quarter of 2014, the strongest growth in prices was recorded in the first quarter of 2014 (+1.1%), while the largest decline was posted in the fourth quarter of 2014 (-0.3%).

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Price Details: Price Change by Expenditure Component

The horizontal bar chart shows the per cent change in prices by expenditure component for the third quarter of 2017. The overall GDP deflator was unchanged in the third quarter, with prices lower for business investment (-1.0%), government spending (-0.3%), exports (-3.0%) and imports (-3.5%). Prices for household consumption expenditures were unchanged in the quarter.

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Price Details: Export and Import Price Growth

The bar chart illustrates Ontario’s quarterly growth of export and import prices in per cent from the first quarter of 2015 to the third quarter of 2017. In the third quarter of 2017, prices were lower for both imports (-3.5%) and exports (-3.0%). Since 2015, there are only four quarters where export and import prices both recorded declines.

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Industry Details: Real GDP Growth by Industry

The bar chart depicts Ontario’s quarterly growth of real GDP by industry in per cent from the first quarter of 2014 to the third quarter of 2017. Ontario real GDP advanced 0.4% in the third quarter of 2017, following a 0.8% gain in the second quarter of 2017. Over the entire period, real GDP by industry has grown consistently, with the strongest gain of 1.3% recorded in the first quarter of 2017.

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Industry Details: Real GDP Change by Industry

The horizontal bar chart illustrates the per cent change in real GDP by industry category for the third quarter of 2017. The output of all industries grew 0.4% in the quarter, with output rising 0.6% in the service industries and edging down 0.1% in goods-producing industries. The change in output of each industry is as follows: wholesale trade (+2.2%), health, education and public administration (+1.0%), professional and administrative services (+0.9%), retail trade (+0.2%), real estate, rental and leasing (+0.1%), finance and insurance (+0.1%), other services (-0.1%), utilities (+2.4%), construction (+2.2%), primary industries (+1.7%) and manufacturing (-1.8%).

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Industry Details: Real GDP Change by Manufacturing Industry

The horizontal bar chart shows the per cent change in real GDP by manufacturing industry for the third quarter of 2017. In total, output by manufacturing industries declined 1.8% in the quarter. The change in output of each manufacturing industry is as follows: machinery (+4.4%), paper and printing (+1.9%), electrical and electronic (+0.3%), food, beverage and tobacco (-0.2%), plastic and rubber (-0.6%), textile, clothing and leather (-1.5%), chemical and petroleum (-2.0%), wood and furniture (-3.3%), primary and fabricated metal (-3.5%) and transportation equipment (-7.1%).

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Jurisdictional Comparisons: Real GDP Growth, G7 and Ontario

The bar chart shows the quarterly per cent change in real GDP for all G7 countries, Ontario and the G7 average for the third quarter of 2017. The change in real GDP for each jurisdiction is as follows: United States (+0.8%), Germany (+0.8%), G7 Average (+0.7%), Japan (+0.6%), France (+0.6%), Canada (+0.4%), Italy (+0.4%), United Kingdom (+0.4%) and Ontario (+0.3%).

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Jurisdictional Comparisons: Canadian Real GDP Growth

The bar chart shows the quarterly per cent change in real GDP in Canada from the first quarter of 2014 to the third quarter of 2017. Canadian GDP rose 0.4% in the third quarter of 2017, following a 1.0% increase in the second quarter of 2017. Over the entire period, the strongest gain of 1.2% was posted in the second quarter of 2017.

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Jurisdictional Comparisons: U.S. Real GDP Growth

The bar chart illustrates U.S. quarterly real GDP growth from the first quarter of 2014 to the third quarter of 2017. U.S. real GDP rose 0.8% in the third quarter of 2017, matching the growth in the second quarter. Over the entire period, U.S. real GDP has grown consistently, with the exception of a 0.2% decline in the first quarter of 2014. The third quarter of 2014 recorded the strongest gain of 1.3%.

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Employment: Ontario’s Labour Force

The chart indicates the change in Ontario’s employment in 2017 and unemployment rate in December 2017. Ontario’s employment rose by 128,000 net new jobs in 2017, while the unemployment rate was 5.5% in December 2017.

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Employment: Ontario Labour Market Strengthening

The bar chart shows Ontario’s annual employment change from 2010 to 2017. Ontario has experienced an increase in employment over the entire period. Employment in Ontario increased by 128,000 in 2017, recording the strongest gain over the entire period.

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Employment: Employment Gains Concentrated in Full-Time, Private Sector, Above Average Wage Jobs

The bar chart shows different characteristics of Ontario employment gains since June 2009. Total employment increased by 845,000 since June 2009, with full-time employment up by 765,000, while part-time employment rose by 80,000. Private-sector employment increased by 615,000, while public-sector employment rose by 113,000 and self-employment was up by 118,000. Employment in above-average wage industries rose by 579,000 compared to a 266,000 employment increase in below-average wage industries.

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Trade: Retail Sales

The line chart shows Ontario’s retail sales in billions of dollars from January 2014 to October 2017. Ontario’s retail sales have steadily trended upwards since January 2014. On a year-to-date basis, Ontario’s retail sales advanced 7.0% over the first ten months of 2017, compared to the same period in 2016.

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Trade: Wholesale Trade

The line chart shows Ontario’s wholesale trade in billions of dollars from January 2014 to October 2017. Ontario’s wholesale trade has steadily trended upwards since January 2014. On a year-to-date basis, Ontario’s wholesale trade rose 9.1% over the first ten months of 2017, compared to the same period in 2016.

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Trade: Manufacturing Sales

The line chart shows Ontario’s manufacturing sales in billions of dollars from January 2014 to October 2017. Ontario’s manufacturing sales have trended upwards in 2014 and 2015, with most of the growth occurring at the end of 2015. Following the strong start to 2016, manufacturing sales declined before resuming an upward trend into 2017, until declining in June and July 2017. On a year-to-date basis, Ontario’s manufacturing sales rose 1.8% over the first ten months of 2017, compared to the same period in 2016.

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Housing: Home Resales

The line chart shows Ontario’s home resales in units from January 2014 to November 2017. Ontario’s home resales grew from about 15,000 in January 2014 to over 22,000 in March 2017. Home resales declined to about 15,300 in July 2017, and have recovered to about 18,400 in November 2017. On a year-to-date basis, Ontario’s home resales have declined 9.6% over the first eleven months of 2017, compared to the same period in 2016.

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Housing: Home Resale Prices

The line chart shows Ontario’s average home resale prices in dollars from January 2014 to November 2017. Ontario’s home resale price increased from $421,000 in January 2014 to a peak of $642,000 in March 2017. Average resales prices declined to $539,000 in June 2017 and have since increased to $566,000 in November 2017. On a year-to-date basis, Ontario’s home resale prices rose 9.2% over the first eleven months of 2017, compared to the same period one year ago.

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Housing: Housing Starts

The line chart shows Ontario’s housing starts in thousands of units (seasonally adjusted at annual rates) from January 2014 to December 2017. Ontario’s housing starts reached a peak of over 100,000 units in January 2017 and a low of roughly 42,000 in March 2014. Ontario’s housing starts increased 5.4% in 2017, after increasing 6.8% in 2016.

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Global Economic Developments: Real GDP Growth

This bar and line chart shows the annual per cent change in real GDP for the Euro zone, United States and Japan from the first quarter of 2014 to the third quarter of 2017. Real GDP growth has accelerated over the last year across all three jurisdictions. In the third quarter of 2017, real GDP grew by 2.3% from a year ago in both the U.S. and the Eurozone and grew by 2.1% in Japan. This compares to the third quarter of 2016 when real GDP grew by 1.5% from a year ago in the U.S., by 1.6% in the Eurozone and by 0.9% in Japan.

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Global Economic Developments: U.S. Real GDP Growth

The bar chart illustrates the quarterly per cent change in real GDP in the U.S. from the first quarter of 2014 to the third quarter of 2017. U.S. real GDP rose 0.8% in the third quarter of 2017, matching a 0.8% gain in the second quarter. Over the entire period, U.S. real GDP has grown consistently, with the exception of a 0.2% decline in the first quarter of 2014. The third quarter of 2014 recorded the strongest gain of 1.3%.

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Global Economic Developments: U.S. Labour Market

This bar and line chart shows the U.S. unemployment rate (line chart) and employment (bar chart) from January 2016 to December 2017. Over this period, the unemployment rate has trended downwards and employment has increased in every month.

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Global Economic Developments: Government Bond Yields

The line chart shows the daily rates of the three-month treasuries yield for the U.S government and the Government of Canada from January 2016 to December 2017. Between mid-September and early December the yield on Canadian three month treasuries eased from 1.0% to 0.9% while the yield on U.S. three-month treasuries gradually rose from 1.0% to 1.3%. Over the last month, the yield on Canadian three-month treasuries has risen from 0.9% to 1.1%, while the yield on U.S. thee-month treasuries has risen from 1.3% to 1.4%.

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Global Economic Developments: Oil Prices and the Canadian Dollar

The line chart shows the daily oil prices ($US per barrel) and Canadian dollar (cents U.S.) between January 2016 and December 2017. Since its recent peak of over 82 cents U.S. in early September, the dollar eased to 80 cents U.S. by late September and since remained within the range of 77 and 80 cents U.S. Since late-December, the Canadian dollar has risen from 78 cents U.S. to over 80 cents U.S. Since mid-June, oil prices have gradually risen from under $44 U.S. per barrel to over $60 U.S. per barrel by early-January.

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Global Economic Developments: Stock Indexes

The line chart shows the daily value of the S&P 500, Nikkei, TSX and Euro Stoxx 50 stock indexes from January 2016 to December 2017. The indexes represented in the chart follow a similar upward trend, rising from their lowest values at the beginning of 2016. Since January 4st 2016 the S&P 500 has risen 37%, the Nikkei has risen 34%, the TSX has risen 26% and the Euro Stoxx 50 has risen 14%.

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In Focus: Real Business Investment

This line chart shows the level of real business investment over the period from 1981 to 2016 in non-residential structures, machinery and equipment and intellectual property products. In 1981, machinery and equipment investment was $6.6 billion, compared to $12.6 billion for non-residential structures. Machinery and equipment investment caught-up to non-residential structures investment between 1993 and 1994. By 2016, machinery and equipment investment had risen to $24.8 billion, compared to $20.1 billion for non-residential structures. Intellectual property products investment rose from $2.1 billion in 1981 to $11.7 billion in 2016.

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In Focus: Real Business Investment Per Worker

This line chart shows that real business investment per worker, i.e. the total population aged 15 to 64 years. Real business investment per worker rose from $3,530 in 1981 to $5,983 in 2016.

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In Focus: Real M&E and Non-Residential Structures Investment Growth

This bar chart shows average annual growth rates for real business investment in machinery and equipment and non-residential structures for three time periods. Over the 2003 to 2007 period, machinery and equipment and non-residential structures investment growth was 7.1% and 3.4%, respectively. Over the 2008 to 2009 period, machinery and equipment and non-residential structures investment was -11.1% and -5.6%, respectively. Over the 2010 to 2016 period, machinery and equipment and non-residential structures investment was 2.3% and 5.3%, respectively.

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Appendix: Per Cent Share of Nominal GDP, 2016

The pie chart illustrates Ontario’s shares of nominal GDP by industry in 2016. The good-producing industries accounted for 22.5% of nominal GDP, including manufacturing (11.9%), construction (6.7%), utilities (2.1%) and primary (1.8%). The service producing industries accounted for 77.5% of nominal GDP, including other services (15.5%), real estate and rental and leasing (13.1%), health and education (12.8%), wholesale and retail trade (11.6%), finance and insurance (9.5%), public administration (7.2%), transportation and warehousing (4.1%) and information and culture (3.7%).

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Appendix: GDP measurement methods

  • Expenditure Approach
    • Sum of expenditures of all sectors of the economy
    • Consumer Spending + Investment + Government Spending + Exports – Imports
  • Income Approach
    • Sum of all incomes
    • Wage and Salaries + Profits + Mixed Incomes + Indirect taxes – Subsidies
  • Production Approach (GDP by Industry)
    • Sum of value added in all industry sectors
    • Output of Goods Producing Industries + Output of Services Producing Industries – Intermediate Inputs

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