This presentation provides analysis of GDP (Gross Domestic Product) for Canada. The presentation will highlight areas like consumer spending, exports, government spending and other areas.

1. CANADA GDP – AUGUST
2016
BY: PAUL YOUNG, CPA, CGA
DATE: NOVEMBER 1, 2016

2. AGENDA
• GDP by Sector
• Analysis
• Comments

3. GDP BY SECTOR
http://www.statcan.gc.ca/daily-quotidien/161101/dq161101a-
eng.htm

4. ANALYSIS
• Real gross domestic product rose 0.2% in August, following a 0.4% increase in July. The output of goods-producing
industries rose while service-producing industries were essentially unchanged.
• The output of goods-producing industries grew 0.7% in August, with the main contribution coming from mining,
quarrying and oil and gas extraction and utilities. Manufacturing and construction were also up, while the
agriculture and forestry sector was down.
• Automotive has struggle for the past few months. It appears food manufacturing led to most of the gain in manufacturing
• There was essentially no change in the output of service-producing industries in August. Wholesale trade,
transportation and warehousing services, accommodation and food services as well as the public sector
(education, health and public administration combined) increased. Declines were posted in the finance and
insurance sector and retail trade.
• Retail sales measures consumer spending.
http://www.statcan.gc.ca/daily-quotidien/161101/dq161101a-
eng.htm

5. GDP COMMENTS
• Canada's economy expanded by 0.2 per cent in August, a slight cooldown from the much hotter expansion in the previous
two summer months. Statistics Canada reported Tuesday that the country's gross domestic product grew as the mining,
quarrying, oil and gas extraction, utilities, manufacturing and construction sectors all expanded. Source -
http://www.cbc.ca/news/business/august-gdp-economy-1.3830604
• D Bank economist Brian DePratto said the Canadian economy appears to be getting “back to normal” after several months of
uneven growth related to wildfires in northern Alberta earlier this year. He said August could be a preview for the modest
pace of expansion that is likely in store for Canada over the longer term. ”Perhaps unexciting, this would be a welcome
change from the slow and fairly uneven pace of growth that has been typical of the past 18 months,” Mr. DePratto said in a
note. Source: http://www.wsj.com/articles/canada-gdp-expands-0-2-in-august-1478004650
• One negative in today's StatsCan report was a 0.2-per-cent decline in the retail sector. This part of Canada's economy hasn't
grown at all this year, with the numbers for August roughly in line with the numbers for January. At the same time, Canadian
household debt has hit record highs, and Canadians now lead the G7 countries on this measure. Some observers fear
consumers could come under pressure, and even face a potential debt crisis, as borrowing grows. CIBC economy Avery
Shenfeld noted that, even though August looked strong, the economy has underperformed over the past year "Let's not
forget that this came after a drop in [the second quarter] that still leaves the year tracking at a mediocre 1.3 per cent 12-
month pace," he wrote in a client note. Source - http://www.huffingtonpost.ca/2016/11/01/gdp-canada-economy-august-
2016_n_12747160.html

6. SCOTIA BANK / GDP
• Excluding a 1.5% rise in the mining and energy sector, GDP would have risen by about 0.1%
and the risk was a dip. This sector’s output has climbed by 9.6% at a non-annualized but
seasonally adjusted rate since May as the wildfire effects have reversed. A 10% non-
annualized gain over a period of just three months — or a 45% annualized gain — is
probably not sustainable such that this driver of GDP growth of late faces a doubtful near-
term future. Given soft breadth, if this sector loses growth momentum then it may come
to expose underlying weaknesses elsewhere in the economy.
• Q3 growth is tracking 3.2% q/q at a seasonally adjusted and annualized pace. This is
derived by assuming a flat September in order to focus upon the effects of what we know
about Q3 so far and the Q2 hand-off. Q3 growth is tracking bang on top of the BoC’s
October forecast that was revised down from 3.5% to 3.2%. The fact that growth is tracking
on the BoC’s forecast means no likely risk to maintaining a generally dovish bias.
• By sector, gainers were led by the goods side of the economy that was up 0.7% as service
sector output was flat on net.
• Within goods producing sectors, utilities were up 2.4% m/m as ACs were running full
blast this summer,
• mining/energy was up 1.4%,
• construction grew by 0.5% and manufacturing was up 0.3% while
agriculture/forestry/fishing was down 0.5%.
• Within services, gainers included wholesale (+0.5%), transportation and
warehousing (+0.4%), information and culture (+0.3%), accommodation and food
services (+0.4%), health care and social assistance (+0.1%) and public administration
(+0.1%).
• All other service sectors were down including arts and recreation (-0.6%), finance
and insurance (-0.2%), admin support and waste mgmt (-0.3%), retail (-0.2%),
professional scientific and technical (-0.1%), education (-0.1%), management (-0.0%
rounded), and ‘other’ services (-0.1%).
Source: Scotia Bank

7. BMO/GDP
Source – BMO Economics
• For a change, all of the growth in August was in the goods-
producing sectors, while services stalled. The big swing
factor in recent months has been the mining and oil & gas
group, and it jumped another 1.4% in August for a third
consecutive gain.
• A 14% rebound in potash production was the big driver
here, but oil & gas also posted a third straight gain after
the severe weakness in the spring. After plunging by more
than 12% in the four months from January to May, oil &
gas output fully reversed those losses over the summer to
stand almost precisely unchanged since the start of the
year.
• For the record, oil & gas output is now up 0.5% from a year
ago, although the broader mining category is down 2.8%
y/y due to weakness in metals and drilling.
• Utilities were also strong at +2.4% (and a hefty +7.0% y/y)
due to the sizzling weather (see the attached table for
more details).
• Construction (+0.5%) and manufacturing (+0.3%) chipped
in with moderate gains as well --- but these two sectors
have gone separate ways in the past year, with
construction the weakest single industry at -3.4% y/y (even
with solid home building).

8. TD / GDP
• Canadian GDP expanded by 0.2% in August, marking the third straight month of output growth.
• It was the goods-producing side of the economy that led the way, up 0.7% month-on-month, bringing the
level of output within a hair's breadth of where it began the year. Activity expanded in 4 of the 5 major goods-
producing sectors. Leading the way was utilities output (+2.4%), followed by mining, quarrying, and oil and gas
extraction (+1.4%) which was helped along by a resurgence of potash mining (+13.8%).
• The service side of the economy was effectively flat as gains in wholesale trade (+0.5%), transportation
(+0.4%), and accommodation and food services (+0.4%) were offset by pullbacks elsewhere. Notable declines
were seen in arts, entertainment, and recreation (-0.6%), as well as the administrative and support, waste
management and remediation services group (-0.3%).
• Source – TD Bank

9. SUMMARY
• Liberal party introduced measures to help the economy like changes to Family benefits as well as lowering
taxes for the middle class. It appears based on the GDP numbers that those aforementioned measures
have done little to spark retail sales. Retail sales have been sluggish since February 2016
• Oil and Gas sector rebounded due to return of oil production after the fires in Alberta. The oil and gas
sector accounts for 1/3 of the exports.
• Utility sector experience growth due to increase usage during the summer.
• The economy is still growing very slowly.
• The economy does not reflect the new carbon tax/pricing being introduced in both Ontario and Alberta.