With the 2015-2016 Ontario budget being released, the Ontario finance ministry got around to releasing the fourth quarter of 2014 GDP data on their quarterly accounts site.
The fourth quarter GDP growth number was 0.6% or 2.5% annualized. 2.5% is a relatively strong number given Ontario's GDP numbers since the Mike Harris hay days, although it was down sharply from the second and third quarter numbers which were 3.2% and 4.0% respectively annualized. Note that Canada's fourth quarter GDP number was 2.4% annualized, which is almost the same as Ontario's. The US GDP number was slightly less at 2.2%.
However first quarter growth was only 0.6% annualized, which dragged down the full 2014 Ontario GDP number reported in the quarterly accounts which was only 2.2%. The accounts page helpfully points out this is the strongest annual growth since 2010 (in 2013 GDP growth was only 1.3%) . I'll point out that the most recent provincial population growth rate was 0.9% annually, so for 2.2% a big portion of that was from population growth rather than productivity growth.
Some noteworthy tidbits from the quarterly accounts report and my comments:
"Capital spending on machinery and equipment rose 0.7% in 2014, after declining in the previous two years" - well that's obviously better than negative, but isn't great news for Ontario's productivity.
"Investment in intellectual property products was down 2.1% in 2014, following a 3.4% decrease in 2013." - this isn't particularly good for productivity either.
"Household disposable income rose 3.2%, after increasing 2.7% in 2013. Ontario’s household savings rate declined to 3.2% from 4.6% in 2013." - that's pretty good growth for disposable income, but the fact that Ontario's savings rate went down from last year to truly sad levels I think is a testament to the low growth housing bubble Ontario finds itself in.
"Businesses added $5.4 billion ($2007) to non-farm inventories in the
fourth quarter of 2014, after accumulating $1.7 billion worth of stocks
in the third quarter." - that doesn't bode well for first quarter GDP growth if there's a lot of inventories to draw down on.
"Exports rose 0.4% in the fourth quarter, following a strong 3.0% advance in the third quarter. Imports expanded 1.5%, after increasing 1.0% in the third quarter." - one would think with the low dollar that exports will be more impressive. If car manufacturing in Ontario is lower in the first quarter of 2015 due to retooling and shutdowns, that isn't going to be good for exports and GDP.
The Ontario first quarter GDP number should be interesting. The US number looks to be weak, similar to the first quarter of 2014 (when Ontario's was also weak). I think there's a pretty good assumption that the first quarter of Ontario will have weak numbers, but now the main question is if the second quarter is going to be weak too.
Showing posts with label first quarter. Show all posts
Showing posts with label first quarter. Show all posts
Tuesday, April 28, 2015
Wednesday, April 15, 2015
Canada GDP Growth Estimates Cut, What About Ontario
The IMF has cut Canada's growth estimates:
"Canada’s output is expected to increase by 2.2 per cent this year and 2.0 per cent in 2016, the Washington-based IMF said in its spring World Economic Outlook released Tuesday.
In January, the global lending body predicted growth of 2.3 per cent in 2015 and 2.1 per cent next year."
That's not a big cut, but I think that's optimistic for 2015. It is interesting that 2016 is only 2.0 considering the poor first quarter 2015 number.
Now the Bank of Canada has cut as well:
"The bank now says the Canadian economy will grow 1.9 per cent this year, down from the 2.1-per-cent pace it forecast in January, according to its latest quarterly forecast, released Wednesday.
The projection is based on no growth in the first quarter, and annualized rates of 1.8 per cent, 2.8 per cent and 2.5 per cent over the following three quarters as exports, business investment and job creation rebound."
A prediction of 1.9% seems reasonable to me. The quarterly numbers are certainly interesting as the BoC assumes a snapback from zero percent growth in the first quarter to 1.8% in the second (which isn't in itself impressive). I think the big question mark for everyone is what growth in the second quartet going to be like. Is the first quarter zero growth a weather related anomaly (some predictions in the US like the Atlanta Fed are also low) or will it continue in the second quarter?
For Ontario, with a federal GDP prediction of zero, even with Alberta doing poorly, Ontario by virtue of its massive size can not have that high a number. Probably even more important for Ontario is what the US does in the second quarter. RBC had a March prediction of 3.3% GDP growth for Ontario which I don't think is going to be made now. Bizarrely Toronto still had year over year house price increases of over 10% in March. Ontario's economy is doing some strange things and the second quarter is going to be key.
"Canada’s output is expected to increase by 2.2 per cent this year and 2.0 per cent in 2016, the Washington-based IMF said in its spring World Economic Outlook released Tuesday.
In January, the global lending body predicted growth of 2.3 per cent in 2015 and 2.1 per cent next year."
That's not a big cut, but I think that's optimistic for 2015. It is interesting that 2016 is only 2.0 considering the poor first quarter 2015 number.
Now the Bank of Canada has cut as well:
"The bank now says the Canadian economy will grow 1.9 per cent this year, down from the 2.1-per-cent pace it forecast in January, according to its latest quarterly forecast, released Wednesday.
The projection is based on no growth in the first quarter, and annualized rates of 1.8 per cent, 2.8 per cent and 2.5 per cent over the following three quarters as exports, business investment and job creation rebound."
A prediction of 1.9% seems reasonable to me. The quarterly numbers are certainly interesting as the BoC assumes a snapback from zero percent growth in the first quarter to 1.8% in the second (which isn't in itself impressive). I think the big question mark for everyone is what growth in the second quartet going to be like. Is the first quarter zero growth a weather related anomaly (some predictions in the US like the Atlanta Fed are also low) or will it continue in the second quarter?
For Ontario, with a federal GDP prediction of zero, even with Alberta doing poorly, Ontario by virtue of its massive size can not have that high a number. Probably even more important for Ontario is what the US does in the second quarter. RBC had a March prediction of 3.3% GDP growth for Ontario which I don't think is going to be made now. Bizarrely Toronto still had year over year house price increases of over 10% in March. Ontario's economy is doing some strange things and the second quarter is going to be key.
Friday, February 20, 2015
Will Ontario's Cold Winter Weather Affect 2015 First Quarter GDP?
At the risk of sounding like Zerohedge.com and their fascination with winter weather and US GDP, I'm wondering about the effects of the record cold this winter in Ontario will have on first quarter GDP. Last year we had a similarly cold winter and ended up with a weak first quarter GDP number of 0.6% (annualized). Ontario's population growth has been around 1.1% lately so that means that per capita GDP actually declined.
GDP in 2014 did bounce back considerably to 4.0% in Q2 and 3.2% in Q3 (again annualized) which is excellent by Ontario standards in the past ten years. US GDP growth in the first quarter of 2014 was weak at -2.1% which no doubt affected the Ontario economy, although maybe the weather did too.
This year January was probably worse than average weather wise and February has certainly been colder than average and with the Great Lakes mostly frozen over, March could be colder than average too. Is that enough to have an effect on Ontario's GDP number? Less people will be going out with the cold and that could effect bars and restaurants, although that's not that big a part of the economy.
US growth is obviously a more important factor. The latest prediction of US first quarter growth is 2.7%, which is considerably more than the -2.1% of last year, so that should have a positive effect on Ontario growth (although the US prediction has declined somewhat of late). Ontario's January employment numbers were just meh with only a few thousand jobs created so the quarter isn't starting out with a band. Could the cold affect the February numbers? Hiring decisions could be pushed back by the cold.
RBC has predicted in this PDF, that Ontario's GDP growth would be a healthy 3.1% in 2015. I'm skeptical and a weak first quarter could make that number hard to achieve.
GDP in 2014 did bounce back considerably to 4.0% in Q2 and 3.2% in Q3 (again annualized) which is excellent by Ontario standards in the past ten years. US GDP growth in the first quarter of 2014 was weak at -2.1% which no doubt affected the Ontario economy, although maybe the weather did too.
This year January was probably worse than average weather wise and February has certainly been colder than average and with the Great Lakes mostly frozen over, March could be colder than average too. Is that enough to have an effect on Ontario's GDP number? Less people will be going out with the cold and that could effect bars and restaurants, although that's not that big a part of the economy.
US growth is obviously a more important factor. The latest prediction of US first quarter growth is 2.7%, which is considerably more than the -2.1% of last year, so that should have a positive effect on Ontario growth (although the US prediction has declined somewhat of late). Ontario's January employment numbers were just meh with only a few thousand jobs created so the quarter isn't starting out with a band. Could the cold affect the February numbers? Hiring decisions could be pushed back by the cold.
RBC has predicted in this PDF, that Ontario's GDP growth would be a healthy 3.1% in 2015. I'm skeptical and a weak first quarter could make that number hard to achieve.
Monday, February 2, 2015
2014 Ontario GDP Growth, Second and Third Quarters
I've been meaning to blog about Ontario's second and third quarter GDP growth. The third quarter 2014 numbers were released in January at the Ontario's Finance ministry's site here.
Third quarter GDP was actually quite good:
"Ontario’s real Gross Domestic Product (GDP) increased 1.0% (4.0% annualized) in the third quarter of 2014, following a 0.8% (3.2% annualized) advance in the second quarter. The strong third-quarter gain was led by higher household and business spending, along with robust export growth."
Note that the first quarter number was considerably less:
"Real GDP grew by 0.1 per cent (0.6 per cent annualized) in the first quarter of 2014."
So with the three together, that's approximately 2.6% which is impressive by recent Ontario standards of GDP growth. So with any decent growth in the fourth quarter the 2014 GDP number should be over 2%. That's not particularly impressive, but compared to the string of 2% GDP growth numbers the province has been posting the past couple of years, that's something.
However the fourth quarter numbers don't look like they are shaping up that great as made clear in this Financial Post article titled "Canada’s slumping GDP reveals troubles in just about every sector"
From the article it isn't just oil:
"Friday’s GDP report made crystal clear how grimly Canada’s economy — one that contracted 0.2% in November – had been quietly tanking, which contributed to the Bank of Canada’s surprise move last week when it cut its prime setting rate.
While the bleak oil picture was fully developing, the thinking was that Canadians shouldn’t worry about the economy, manufacturing would carry the standard. However, manufacturing output, which accounts for 10.5% of GDP, fell even further than the energy sector, declining 1.9%, even though the Canadian dollar had already begun sliding, according to Statistics Canada."
So if manufacturing is tanking even more than oil, that can't be good for Ontario's fourth quarter of 2014 GDP number. Other industries crucial to Ontario also aren't doing well:
"Concurrently, wholesale trade slumped 0.6% in November, a second consecutive decline following a decrease of 0.2% in October, coupled with a surprising drop in output of 0.4% in the finance and insurance sector, which had previously risen for five consecutive months."
Certainly the Canadian dollar tanking versus the US dollar can help manufacturing, but it takes time to adjust. The fourth quarter GDP number should be interesting to Ontario and considering that a small number of jobs were actually lost in November and December in Ontario, there's not a lot of good signs. Could the fourth quarter numbers even be negative?
The first quarter number for 2015 isn't looking great either. We'll know more when the January employment numbers come out.
Third quarter GDP was actually quite good:
"Ontario’s real Gross Domestic Product (GDP) increased 1.0% (4.0% annualized) in the third quarter of 2014, following a 0.8% (3.2% annualized) advance in the second quarter. The strong third-quarter gain was led by higher household and business spending, along with robust export growth."
Note that the first quarter number was considerably less:
"Real GDP grew by 0.1 per cent (0.6 per cent annualized) in the first quarter of 2014."
So with the three together, that's approximately 2.6% which is impressive by recent Ontario standards of GDP growth. So with any decent growth in the fourth quarter the 2014 GDP number should be over 2%. That's not particularly impressive, but compared to the string of 2% GDP growth numbers the province has been posting the past couple of years, that's something.
However the fourth quarter numbers don't look like they are shaping up that great as made clear in this Financial Post article titled "Canada’s slumping GDP reveals troubles in just about every sector"
From the article it isn't just oil:
"Friday’s GDP report made crystal clear how grimly Canada’s economy — one that contracted 0.2% in November – had been quietly tanking, which contributed to the Bank of Canada’s surprise move last week when it cut its prime setting rate.
While the bleak oil picture was fully developing, the thinking was that Canadians shouldn’t worry about the economy, manufacturing would carry the standard. However, manufacturing output, which accounts for 10.5% of GDP, fell even further than the energy sector, declining 1.9%, even though the Canadian dollar had already begun sliding, according to Statistics Canada."
So if manufacturing is tanking even more than oil, that can't be good for Ontario's fourth quarter of 2014 GDP number. Other industries crucial to Ontario also aren't doing well:
"Concurrently, wholesale trade slumped 0.6% in November, a second consecutive decline following a decrease of 0.2% in October, coupled with a surprising drop in output of 0.4% in the finance and insurance sector, which had previously risen for five consecutive months."
Certainly the Canadian dollar tanking versus the US dollar can help manufacturing, but it takes time to adjust. The fourth quarter GDP number should be interesting to Ontario and considering that a small number of jobs were actually lost in November and December in Ontario, there's not a lot of good signs. Could the fourth quarter numbers even be negative?
The first quarter number for 2015 isn't looking great either. We'll know more when the January employment numbers come out.
Tuesday, August 12, 2014
Where's the Ontario Finance Ministry First Quarter of 2014 GDP Numbers?
Last year on this date, the Ontario Finance Ministry released their financial update which included the first quarter of 2013 GDP growth numbers. I checked today and nothing yet. The first quarter numbers should be quite interesting and should shed some light on whether the province will make it's prediction for overall 2014 GDP growth of 2.1%.
Wednesday, July 30, 2014
A Closer Look at Ontario's June 2014 Employment Numbers
A blogged briefly about the poor Ontario jobs numbers for June, but I said I would take a closer look so I am.
Total employment in June from Statscan was 6,900,800. That was down -0.5% from June and up 0.1% from the previous year. Considering that population growth was around 0.9% for Ontario currently, that's quite poor performance and problematic for tax revenues and GDP growth.
Here's the population numbers for the last six months:
December 11,267,600
January, 11,278,400
February 11,287,300
March 11,298,600
April11,313,900
May 11,323,300
June 11,336,000
Employment
December 6,876,800
January 6,882,800
February 6,888,900
March 6,902,300
April 6,919,900
May 6,934,700
June 6,900,800
Full-Time Employment
December 5,577,500
January 5,600,600
February 5,605,900
March 5,599,400
April 5,625,200
May 5,594,800
June 5,575,900
Part-Time Employment
December 1,299,200
January 1,282,200
February 1,283,000
March 1,302,900
April 1,294,000
May 1,339,900
June 1,324,900
Looking over the past six months, the numbers aren't great. Population is up 0.61% compared to overall employment up 0.35%. Considerably more disturbing is that full-time employment over the past six months is actually down 0.03%. That's not good for Ontario's GDP growth over the first half nor is good for provincial tax revenues, as Ontario's income taxes are highly reliant on surtaxes targeted towards those earning above the median.
Part-time was at least up 1.98%, although that indicates the jobs Ontario is creating are low paying part-time jobs that as mentioned earlier, don't pay a lot in provincial income taxes.
Total employment in June from Statscan was 6,900,800. That was down -0.5% from June and up 0.1% from the previous year. Considering that population growth was around 0.9% for Ontario currently, that's quite poor performance and problematic for tax revenues and GDP growth.
Here's the population numbers for the last six months:
December 11,267,600
January, 11,278,400
February 11,287,300
March 11,298,600
April11,313,900
May 11,323,300
June 11,336,000
Employment
December 6,876,800
January 6,882,800
February 6,888,900
March 6,902,300
April 6,919,900
May 6,934,700
June 6,900,800
Full-Time Employment
December 5,577,500
January 5,600,600
February 5,605,900
March 5,599,400
April 5,625,200
May 5,594,800
June 5,575,900
Part-Time Employment
December 1,299,200
January 1,282,200
February 1,283,000
March 1,302,900
April 1,294,000
May 1,339,900
June 1,324,900
Looking over the past six months, the numbers aren't great. Population is up 0.61% compared to overall employment up 0.35%. Considerably more disturbing is that full-time employment over the past six months is actually down 0.03%. That's not good for Ontario's GDP growth over the first half nor is good for provincial tax revenues, as Ontario's income taxes are highly reliant on surtaxes targeted towards those earning above the median.
Part-time was at least up 1.98%, although that indicates the jobs Ontario is creating are low paying part-time jobs that as mentioned earlier, don't pay a lot in provincial income taxes.
Friday, May 31, 2013
Better GDP Performance for Canada in Q1 2013?
Here's a Star article about the Bank of Canada expecting performance in Q1:
"And, as Carney noted Wednesday, economic expansion in Canada appears to have been stronger than expected in the first three months of 2013. Growth in the first quarter of the year is expected to have been between 2.3 per cent and 2.5 per cent. Statistics Canada will release the latest growth number on Friday."
That's better than I was expecting, especially considering the Q1 employment numbers were quite mediocre. Part of this growth might be from higher prices for oilsand oil, where prices have converged to West Texas Intermediate prices from Q4 2012. If that's the case, I would expect Ontario's growth to be weaker and Alberta's stronger. We won't know the Ontario breakdown today when the feds release their number, but we might be able to infer some information from all the federal numbers.
"And, as Carney noted Wednesday, economic expansion in Canada appears to have been stronger than expected in the first three months of 2013. Growth in the first quarter of the year is expected to have been between 2.3 per cent and 2.5 per cent. Statistics Canada will release the latest growth number on Friday."
That's better than I was expecting, especially considering the Q1 employment numbers were quite mediocre. Part of this growth might be from higher prices for oilsand oil, where prices have converged to West Texas Intermediate prices from Q4 2012. If that's the case, I would expect Ontario's growth to be weaker and Alberta's stronger. We won't know the Ontario breakdown today when the feds release their number, but we might be able to infer some information from all the federal numbers.
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