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August 31, 2021CANADIAN ECONOMIC ACCOUNTS Q2 2021 
Canada’s Real Gross Domestic Product (GDP) decreased 1.1% (all figures seasonally adjusted at annual rates) in the second quarter of 2021. This followed growth of 5.5% in Q1 and 9.3% in Q2 2020. Real GDP was 12.7% higher than for the same quarter of 2020. Compared to pre-pandemic Q4 2019, the Canadian economy was 2.0% smaller in Q2 2021.
Statistics Canada notes that the substantial declines in home resale activities and exports pushed down GDP in the quarter. Business investment, inventories, and government final consumption grew in the quarter. Microchip and other input shortages limited exports, household consumption, and business investment in motor vehicles in Q2. Motor vehicle inventories had another quarter of drawdown as production supply was constrained. Final domestic demand was up 0.7% for the quarter.
Household spending was flat in the quarter with goods consumption declining 7.0% and services rising 7.3%. Goods spending was lower in 32 of 48 categories with outlays on durables (-6.8%) falling as higher prices constrained demand. With easing of restrictions, the services expansion was led by food and beverage services.
Residential structures declined 12.4% after significant growth the previous three quarters. Spending on new houses and home renovation continued to grow with a decline in home resale activity driving the lower spending.
Business investment in machinery and equipment rose 24.9% with investment in aircraft, other transportation equipment, and industrial machinery and equipment. Non-residential structures (+5.1%) and intellectual property products (+3.3%) had modest increases.
Export volumes were down 15.0% in Q2 with shipments of goods declining (-18.3%) and exports of services (+4.6%) increasing. Imports were mostly unchanged (-0.1%) with a fall in goods imports (-2.4%) and a 13.0% increase in service imports.
Inventories increased $8.3 billion in Q2 after four quarters of drawdowns. Inventory accumulation was the major contributor to GDP change in the quarter and was led by durable retail goods.
The terms-of-trade (ratio of price of exports to price of imports) increased 4.2% with export prices rising for crude oil and crude bitumen (+17.7%). The overall GDP deflator was up 9.2% on annualized basis.
Nominal GDP increased 7.9% in Q2. Annualized compensation of employees rose 5.9%. The household savings rate rose from 13.0% in Q1 to 14.2% in Q2 2021.
The modest rise in household spending was outpaced by growth in disposable income, leading to increased household net savings. Household incomes rose with the increasing compensation of employees and government transfers that were partially offset by an increase in personal income taxes. Household savings rate was 14.2% in Q2 2021, the fifth consecutive quarter in double digits. Statistics Canada noted that pandemic-related restrictions and uncertainty continued to limit the scope of consumption.
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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