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June 01, 2021CANADIAN ECONOMIC ACCOUNTS Q1 2021
Canada’s Real Gross Domestic Product (GDP) increased 5.6% (all figures seasonally adjusted at annual rates) in the first quarter of 2021. This followed growth of 9.3% in Q4 and growth of 41.7% Q3 2020. Real GDP was 0.3% higher than for the same quarter of 2020.
Statistics Canada notes that the growth in the first quarter was supported by favourable mortgage rates, continued government transfers to households and businesses, and improvements in the labour market. Final domestic demand was up 6.4% in Q1 2020.
Household spending was up 2.7% in the first quarter. Durable goods consumption rose 5.9% due to increased purchases of new trucks, vans, and SUVs, information processing equipment and major tools and equipment. Consumption was also up for semi-durables and non-durables for the quarter due to pandemic-induced spending patterns reflecting more time at home and outdoors.
Service consumption increased 0.9% in Q1 2021 supported by increases in outpatient services, and insurance and financial services.
Housing investment increased 43.3% in the first quarter following gains of 16.9% in Q4 and 181.9% in Q3 of 2020. New construction was up on more detached units in Ontario and Quebec. Working from home has increased demand and scope of home renovations, as well. Ownership transfer costs were up reflecting the rise of resale activity.
Business investment in machinery and equipment was down 10.2% due to a sharp decline in investment in aircraft as a large number of used aircraft were disposed of through international export. All other categories of machinery and equipment rose for the quarter. Investment in non-residential structures rose in Q1 following three consecutive quarterly declines.
Export volumes rose 6.0% for the quarter reflecting increases exports of transportation equipment, including aircraft and ships and boats, and crude oil and crude bitumen. Import volumes rose 4.3% with notable gains in computer and computer peripherals and commercial services.
Inventories were drawn down to $1.3 billion in the first quarter.
The terms-of-trade (ratio of price of exports to price of imports) increased 6.1% with export prices rising for crude oil and crude bitumen (+25.5%). The overall GDP deflator was up 12.2% on annualized basis.
Nominal GDP increased 18.4% in Q1. Annualized compensation of employees rose 8.6%. The household savings rate rose from 11.9% in Q4 to 13.1% in Q1 2021.
A seasonally adjusted annualized rate shows what the percent change would be if the quarterly rate continued for four quarters. It is computed by compounding the quarterly rate for four quarters. Reporting annualized rates facilitates comparability between annual and quarterly growth, but can exaggerate change when series are volatile. The COVID-19 shocks do not indicate an increase of Canadian GDP by 5.6% in Q1. It would take four quarters of compounded contraction at the same pace as reported in Q1 to increase Canadian GDP by 5.6%.
Source: Statistics Canada Gross domestic product, income and expenditure, second quarter 2020
Statistics Canada. Table 36-10-0103-01 Gross domestic product, income-based, quarterly (x 1,000,000)
Statistics Canada. Table 36-10-0104-01 Gross domestic product, expenditure-based, Canada, quarterly (x 1,000,000)
Statistics Canada. Table 36-10-0111-01 Current and capital accounts - National, Canada, quarterly
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