Wednesday, June 4, 2014

2013 Ontario Fourth Quarter GDP Growth Increases 1.9%

I've been speculating in other posts about Ontario possibly having a poor first quarter of 2014 GDP growth figure. However the Ontario Finance Ministry has finally gotten around to releasing the fourth quarter of 2013 numbers and the also the 2013 as a whole.

Fourth quarter growth was 0.5% (1.9% annualized) which is actually better than what I was expecting. However considering population growth is around 1% per year for Ontario currently, GDP growth per captia was again weak. The full year for 2013 number was 1.3%, which is apparently the same as 2012. There's a graph showing GDP growth per quarter which strangely seems to make 2012 growth look worse than 2013, but I digress. Regarding the full year GDP growth number of 1.3%, with population growth in Ontario of around 1% (according to Statscan for 2011 via Wikipedia), that means that GDP growth per capita was close to zero for 2013. As an aside, that means raises for public sector workers should have been around whatever Ontario's inflation rate was (the Ontario consumer price index change for Ontario for 2013 was 1.0% according to Stats Canada).

How does this compare with Canada's growth rate in 2013 overall? Well Canada's GDP grew by 2.0% in 2013 so at 1.3%, Ontario was dragging down the rest of the country. For the fourth quarter, Canada's GDP growth rate was 2.9% so again Ontario at 1.9% dragged down Canada.

Considering Canada only grew by 1.0% in the first quarter, and the US decreased by 1.0%, there's a good chance Ontario's GDP growth will be negative. The finance ministry released the fourth quarter numbers in May, so we're probably waiting until August for the fourth quarter numbers, well after the election, probably to Kathleen Wynne's benefit and the Ontario Liberals.

Here's some of the data regarding posted on the Finance Ministry's website for the fourth quarter in case it disappears down the memory hole:


  • Ontario’s real Gross Domestic Product (GDP) increased 0.5% (1.9% annualized) in the fourth quarter of 2013, matching the third quarter increase.
  • Real consumer expenditures rose 0.3%, following a 0.7% gain in the third quarter.  Clothing and electricity purchases increased while spending on most other categories of goods declined in the quarter. Spending on services rose 0.4%, after increasing 0.6% in the third quarter.
  • Real investment in residential construction declined 0.6% in the fourth quarter, the third consecutive quarterly decrease.  A 3.5% decline in home ownership transfer costs and a 0.6% drop in new housing construction was partially offset by a 1.1% advance in renovation activities.
  • Real business investment in plant and equipment declined 3.3%, following a 1.8% drop in the third quarter.  Investment in non-residential construction (-3.1%) and machinery and equipment (-3.4%) were both lower in the quarter.
  • Businesses increased inventories by $6.9 billion ($2007), after accumulating $2.9 billion worth of stocks in the third quarter.
  • Real exports increased 0.8%, following a 1.1% decline in the third quarter.  Imports increased 0.7%, following a 1.2% drop in the third quarter.
  • Current dollar GDP rose 0.7% in the fourth quarter, increasing from a 0.6% pace in the third quarter.  Economy-wide prices, as measured by the GDP implicit price index, rose 0.2%.
  • Economic production, measured on an industry basis, also grew 0.5% in the fourth quarter of 2013. Production by goods-producing industries advanced 0.6%, while output by services-producing industries rose 0.5%. 
And the full 2013 year facts:

  • Ontario’s real GDP increased 1.3% in 2013, matching growth in 2012.
  • Final domestic demand* rose 0.4% in 2013, slowing from growth of 1.3% in 2012.
  • Real consumer spending grew 1.8% in 2013, accelerating from a 1.4% increase in 2012.  Personal spending on semi-durables (+3.2%) and durables (+2.5%) led growth while spending on non-durables (+1.6%) and services (+1.6%) also advanced.  Consumer purchases of food and beverages, clothing and footwear, natural gas and electricity all increased in 2013, while spending on furniture and appliances and gasoline declined.  Consumer spending on motor vehicles rose modestly in 2013.
  • Capital spending on machinery and equipment declined 3.8% in 2013, after rising 2.0% in 2012.  Investment spending on non-residential construction decreased 8.0%, following a 1.6% decline in 2012.
  • Investment in residential construction fell 2.2% in 2013, the first annual decline since 2009.  The decline was driven in large part by a 6.4% drop in new housing construction.  Home owner transfer costs also decreased, falling by 1.0% in 2013 while renovations activity rose 1.7%.
  • Exports grew by 1.1%, while imports declined 0.6% in 2013.  As a result, net trade made a significant contribution to overall growth.
  • Current dollar GDP increased 2.7% in 2013, following a 3.0% advance in 2012.
  • Employee compensation increased 2.7%, with wages and salaries rising 2.6%.  Wages and salaries in the services-producing industries rose 2.8%, and were up by 2.0% in goods-producing industries in 2013.
  • Inflation, as measured by the implicit price index for GDP, slowed from 1.7% in 2012 to 1.3% in 2013.  Consumer prices rose by 1.1%, easing from a 1.3% advance in 2012.  Both export prices (+0.9%) and import prices (+1.6%) increased in 2013.
  • Household disposable income rose 2.6%, after increasing 2.5% in 2012.  Ontario’s personal savings rate declined to 4.7% from 5.0% in 2012, as current dollar final consumption (+3.0%) grew at a faster pace than household disposable income in 2013.
  • The net operating surplus of corporations decreased by 1.3% in 2013, after falling 1.0% in 2012.
  • Real output measured on an industry basis rose 1.4% in 2013, matching the 2012 gain.

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