Catalogue no. 11-631-X ISSN 2368-6723 ISBN 978-1-100-25206-3 A presentation series from Statistics Canada about the economy, environment and society An overview of recent macroeconomic developments in Canada by Cyndi Bloskie and Guy Gellatly Release date: October 29, 2014
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Organization Objective Highlight recent macroeconomic developments, focusing on: Trends in the post-recession period (2010 to current) Key developments through the first half of 2014 Major themes (1) Economic growth and labour market conditions (2) Financial conditions in the household sector (3) International dimensions of Canada s economy 2 Statistics Canada Statistique Canada
Developments in the Canadian economy, post-recession (1) Pace and composition of GDP growth (2010-11 vs. 2012-13) Consumer-led growth and household sector leverage Business investment spending (2010-11 vs. 2012-14) Rebalancing of growth from domestic demand to trade (2) Pace of employment creation (2010-12 vs. 2013-14) (3) Lower inflation (2013) and stable borrowing costs; impact on household sector and real estate market (4) Exchange rate movements (2013-14) 3 Statistics Canada Statistique Canada
Key developments through the second quarter of 2014 (1) Changes in the pace and composition of economic growth Real GDP accelerates (3.1% annualized) on broad-based gains in Q2 Drivers: exports, household spending, residential investment Contributions to growth widespread across major industrial sectors Steady gains through the spring across many of the major output indicators (merchandise trade, manufacturing sales, wholesale and retail sales, building permits, housing starts) (2) Employment growth remains subdued during the first half of 2014 Little growth in the private sector; two-thirds of total employment growth in the six months to June (+53,000) in self-employed Decline in employment rates during the first half of 2014 4 Statistics Canada Statistique Canada
Key developments through the second quarter of 2014 (cont d) (3) Consumer prices accelerate through the second quarter but remain in Bank of Canada s target range Drivers: food, shelter and transportation Annual inflation moderates during the summer months (4) Exchange rate movements Canadian dollar depreciates during Q1, rebounds through Q2 but remains significantly weaker than pre/post recession Non-energy exports advance steadily during the first half of 2014 Auto exports advance on higher volumes, led export growth in Q2 5 Statistics Canada Statistique Canada
Topic 1 Economic growth and labour market conditions 6 Statistics Canada Statistique Canada
Canada s economic growth in a comparative context Question: How does economic growth in Canada compare with growth in other major economies? Real gross domestic product (GDP) index (Q1 2000=100) 170 150 130 110 90 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Australia Canada Japan United States European Union Brazil Sources: Statistics Canada CANSIM table 380-0064, OECD. 7 Statistics Canada Statistique Canada
Real GDP, annual growth rate Question: How rapidly has the economy expanded in the post-2000 period, and subsequent to the 2008-09 recession? GDP, average annual growth % 6 5 4 3 2 1 0-1 -2-3 Average annual growth from 2000 to 2007 = 2.8% Average annual growth from 2010 to 2013 = 2.4% -4 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Statistics Canada, CANSIM table 380-0064. 8 Statistics Canada Statistique Canada
Real GDP, expenditure components Question: What types of final expenditures have supported economic growth in Canada? And how have the pace and composition of growth changed more recently? GDP, selected aggregates index (Q1 2007=100) 120 115 110 105 100 95 90 85 80 75 2007 2008 2009 2010 2011 2012 2013 2014 Household expenditure Government current expenditure Non-residential business investment Exports Housing Source: Statistics Canada, CANSIM table 380-0064. 9 Statistics Canada Statistique Canada
Real GDP, by industry Question: How have different industrial sectors fared during the recession and the recovery? And how broad based were gains during the spring of 2014? GDP, by selected industries index (January 2007=100) 130 120 110 100 90 80 2007 2008 2009 2010 2011 2012 2013 2014 Mining, oil and gas Manufacturing Construction Retail Source: Statistics Canada, CANSIM table 379-0031. 10 Statistics Canada Statistique Canada
Real GDP growth, by province Question: How has the economy expanded in different regions of the country? Average annual growth of real GDP by province, 2010 to 2013 Canada N.L. P.E.I. N.S. N.B. Que. Ont. Man. Sask. Alta. B.C. 0 1 2 3 4 5 6 % Sources: Statistics Canada CANSIM tables 379-0030, 379-0031. 11 Statistics Canada Statistique Canada
Real GDP and employment Question: How does employment growth compare with economic growth in the post-recession period? GDP and employment year-over-year percent change 5 4 3 2 1 0-1 2010 2011 2012 2013 2014 Employment GDP Sources: Statistics Canada, CANSIM tables 282-0087, 379-0031. 12 Statistics Canada Statistique Canada
Net employment growth Question: How does the composition of employment growth in recent years compare with employment gains in the early to mid 2000s? Net employment growth thousands of persons % 400 300 200 100 0-100 -200-300 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 4 3 2 1 0-1 -2 Part-time Full-time Total annual growth rate Source: Statistics Canada, CANSIM table 282-0087. 13 Statistics Canada Statistique Canada
Net employment growth Question: How does employment growth in goods industries compare to service industries? Employment in goods and services year-over-year percent change 6 4 2 0-2 -4-6 -8-10 2007 2008 2009 2010 2011 2012 2013 2014 Goods Services Source: Statistics Canada, CANSIM table 282-0088. 14 Statistics Canada Statistique Canada
Net employment growth Question: To what extent has the pace of private sector job creation slowed during 2014? Employment growth, class of worker index (January 2010=100) 110 108 106 104 102 100 98 96 94 92 2010 2011 2012 2013 2014 Total employed, all classes of workers Public sector employees Private sector employees Self-employed Source: Statistics Canada, CANSIM table 282-0089. 15 Statistics Canada Statistique Canada
Net employment growth Question: To what extent has employment growth slowed among core-age workers? Employment growth, age of worker index (January 2010=100) 130 125 120 115 110 105 100 95 90 2010 2011 2012 2013 2014 Source: Statistics Canada, CANSIM table 282-0087. Total 15 to 24 years 25 to 54 years 55 years and over 16 Statistics Canada Statistique Canada
Labour market conditions Question: How have Canada s employment rate and unemployment rate adjusted in the post-recession period? Employment and unemployment rates ratio % 64 9 63 8 7 62 6 61 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 5 Employment ratio Unemployment rate Source: Statistics Canada CANSIM table 282-0087. 17 Statistics Canada Statistique Canada
Unemployment rate by province Question: How does unemployment vary across Canada? Unemployment rate by province, August 2008 Canada N.L. P.E.I. N.S. N.B. Que. Ont. Man. Sask. Alta. B.C. 0 2 4 6 8 10 12 14 16 % Source: Statistics Canada, CANSIM table 282-0087. Unemployment rate by province, August 2014 Canada N.L. P.E.I. N.S. N.B. Que. Ont. Man. Sask. Alta. B.C. 0 2 4 6 8 10 12 14 16 % Source: Statistics Canada, CANSIM table 282-0087. 18 Statistics Canada Statistique Canada
Topic 2 Financial conditions in the household sector 19 Statistics Canada Statistique Canada
Inflation in the Canadian economy Question: How has the consumer price index evolved? Consumer price index year-over-year percent change 5 4 3 2 1 0-1 2000 2002 2004 2006 2008 2010 2012 2014 All items Excluding food and energy Source: Statistics Canada, CANSIM table 326-0020. 20 Statistics Canada Statistique Canada
Lending and borrowing in the Canadian economy Question: How have the net lending and borrowing positions of different sectors of the economy changed in the post-recession period? Net lending by sector $ billions 100 75 50 25 0-25 -50-75 -100-125 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Households Government Business Non-residents Sources: Statistics Canada, CANSIM tables 380-0072, 380-0079, 380-0076, 380-0082. 21 Statistics Canada Statistique Canada
Household sector leverage and debt service costs Question: How much debt are consumers carrying as a proportion of their disposable income? How has the pace of leveraging changed in the postrecession period? Household leverage and debt service ratios Debt service (%) 14 13 12 11 10 9 8 7 Leverage (%) 175 155 135 115 95 6 1990 1994 1998 2002 2006 2010 2014 75 Debt service ratio Credit market debt to disposable income ratio Sources: Statistics Canada, CANSIM tables 378-0123, 380-0073. 22 Statistics Canada Statistique Canada
Household sector assets and liabilities Question: How has the net worth of households changed subsequent to the 2008-09 recession? Household assets and liabilities, market value $ billions 12,000 10,000 8,000 6,000 4,000 2,000 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total assets Financial assets Non-financial assets Financial liabilities Net worth Source: Statistics Canada, CANSIM table 378-0121. 23 Statistics Canada Statistique Canada
Household sector worth Question: How have financial and non-financial assets contributed to the increase in net worth after the recession? Household sector net worth changes, by component $ billions 400 300 200 100 0-100 -200-300 -400 2007 2008 2009 2010 2011 2012 2013 2014 Source: Statistics Canada, CANSIM table 378-0121. Non-financial assets Financial assets Liabilities Net worth 24 Statistics Canada Statistique Canada
Topic 3 International dimensions of Canada s economy 25 Statistics Canada Statistique Canada
Canada s exchange rate Question: How has Canada s exchange rate changed in recent years? Exchange rate CAN$/US$ 1.06 1.04 1.02 1.00 0.98 0.96 0.94 0.92 0.90 0.88 2011 2012 2013 2014 Exchange rate CERI excluding US$ index 124 122 120 118 116 114 112 110 Note: CERI: Canadian dollar effective exchange rate index. Source: Statistics Canada, CANSIM table 176-0064, and Bank of Canada, CERI. 26 Statistics Canada Statistique Canada
Canada s merchandise trade Question: How have exports, imports, and the balance of trade changed in the post-recession period? Merchandise trade $ billions 50 45 40 35 30 25 20 15 10 5 0-5 2000 2002 2004 2006 2008 2010 2012 2014 Exports Imports Balance Source: Statistics Canada, CANSIM table 228-0059. 27 Statistics Canada Statistique Canada
Commodity trade balances, major sectors Question: What accounts for the decline in Canada s trade surplus? Merchandise trade balances $ billions 10 8 6 4 2 0-2 -4-6 2000 2002 2004 2006 2008 2010 2012 2014 Energy Forestry and building materials Machinery and equipment Autos Consumer goods Source: Statistics Canada, CANSIM table 228-0059. 28 Statistics Canada Statistique Canada
Canada s current account Question: How have recent changes in the merchandise trade balance affected Canada s current account balance? Current account $ billions 25 20 15 10 5 0-5 -10-15 -20-25 2000 2002 2004 2006 2008 2010 2012 2014 Goods Other current account Total Source: Statistics Canada, CANSIM table 376-0105. 29 Statistics Canada Statistique Canada
Key developments (1) More broad-based economic growth during recent months reflecting increases in: Household spending, residential investment and non-energy trade Steady gains across many goods and services industries (2) The gap between economic and employment growth has widened Little job creation among core-age and private sector workers Declining employment rate during the first half of 2014 (3) Household net worth continued to expand on strength in equities and real estate markets, as leverage rates remain stable and borrowing conditions remain favourable (4) Higher annual inflation during the spring moderates through the summer 30 Statistics Canada Statistique Canada