Canadian economy grew in the second quarter

Second-quarter growth was mainly driven by a 2.9% increase in export volumes: StatsCan

Canadian real gross domestic product (GDP) growth accelerated to 0.7 per cent in the second quarter, following a 0.4 per cent gain in the first quarter, reported

“Growth was mainly driven by a 2.9 per cent increase in export volumes — the largest gain since the second quarter of 2014. Exports of goods, led by energy products, rose 3.6 per cent after increasing 0.3 per cent in the first quarter. Exports of services edged down 0.2 per cent, the first decline since the fourth quarter of 2015,” said the federal agency.

“Household spending rose 0.6 per cent, after increasing 0.3 per cent in the first quarter. Outlays on services (+0.8 per cent) was the largest contributor to the increase. Rebounds in semi-durable (+1.2 per cent) and non-durable (+0.2 per cent) goods and continued growth in durable goods (+0.5 per cent) also contributed to the gain.

“Businesses continued to accumulate inventories, adding $13.4 billion to their stock, following a $16.0 billion increase in the previous quarter. Both non-farm and farm inventories rose in the second quarter. Business investment in non-residential structures (+0.5 per cent), machinery and equipment (+0.3 per cent) and intellectual property products (+0.2 per cent) all decelerated in the second quarter. Housing investment grew 0.3 per cent, following a 2.7 per cent decline in the previous quarter.”

Expressed at an annualized rate, real GDP was up 2.9 per cent in the second quarter. In comparison, real GDP in the United States grew 4.2 per cent, added StatsCan.

The federal agency said increases in 12 of the 20 industrial sectors were tempered by reduced output in non-conventional oil extraction and lower activity in wholesale and retail trade. The output of goods-producing industries contracted 0.2 per cent while services-producing industries edged up 0.1 per cent as most of the sectors grew.

Following four consecutive months of growth, mining, quarrying and oil and gas extraction declined 0.9 per cent in June, it said.

“Oil and gas extraction was down 1.0 per cent as non-conventional oil extraction (-2.4 per cent) declined for the first time in five months. Output was affected by a power outage at a production facility in late June. Conventional oil and gas extraction increased 0.3 per cent as higher crude petroleum extraction more than offset lower natural gas extraction,” said Statistics Canada.

“Support activities for mining and oil and gas extraction were down 1.4 per cent on lower activity by drilling and rigging services along with support activities for mining. Mining (excluding oil and gas extraction) edged down 0.1 per cent in June. Metal ore mining was down 0.6 per cent largely due to a decline in iron ore mining. Non-metallic mineral mining was up 1.4 per cent on an export-influenced increase in potash mining. Coal mining declined 5.8 per cent.”

Mario Toneguzzi is a veteran Calgary-based journalist who worked for 35 years for the Calgary Herald, including 12 years as a senior business writer.