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Canadian Economic Output Bumps Up in January
April 17, 2008
Source: Statistics Canada
Canadian output in January rebounded smartly from a sharp drop in December, reflecting a widespread increase in demand. This was consistent with employment, which picked up steadily through the first quarter.
The bounce in output in January reflected the transitory nature of the factors that depressed gross domestic product in December. Just over half of this decline originated in a sharp slowdown in auto assemblies, the majority of which were related to model changeovers at several factories. Auto output in January recouped about half of these losses, and will continue to strengthen in February as more retooling is completed and cuts to control inventories moderate.
As well, the sharp recovery of transportation and housing starts and a surge in auto sales in January points to heavy snow in December and the impending cut in the Goods and Services Tax rate as factors that shifted a significant amount of activity from December to January.
Every province will benefit from higher business investment in 2008, according to the survey of investment intentions. The pervasiveness of the increase reflects the boom in energy investment in the Western Canada and Newfoundland and Labrador, a surge for mining in Quebec and British Columbia, and a rebound in manufacturing in Central Canada.
Firms in Alberta plan the largest dollar increase in business outlays, up $2.5 billion. The continuing boom in the oil sands and pipelines related to their development drove this increase. Pipelines also played a major role in investment growth of over 20% in Manitoba and Saskatchewan, supplemented by gains in mining and hydro development.
Firms in British Columbia intend to raise capital spending for a sixth straight year, the longest string of unbroken gains in Canada. Its oil and gas industry plans the largest hike of any province this year, after it slowed in 2007. The mining industry also intends to nearly double investment to $1.2 billion. Increased spending downstream in smelting and refining helped offset declines for manufacturers of forestry products.
Manufacturers in both Quebec and Ontario intend to invest more, after cutbacks in 2007. Refiners of oil and metals led the turnaround in Quebec. Further upstream, mining operations in Quebec also plan a large increase to $1.9 billion, the most in Canada, reflecting Quebec's diverse metals base of gold, copper and iron ore. Ontario's manufacturing investment increase was smaller but more broadly based than Quebec. As well, gains in finance and transportation offset a drop in mining.
Newfoundland and Labrador led investment plans in the Atlantic region thanks to its offshore oil development. All the maritime provinces posted modest gains in intentions for 2008. New Brunswick has the smallest projected increase of any province, as work slowed in transportation.