Manufacturing AUTOMATION

Manufacturing contributes to Canadian economic growth in September

December 2, 2013
By MA Staff with files from the Canadian Press

Real gross domestic product (GDP) expanded 0.7 per cent in the third quarter, following 0.4 per cent growth in the second quarter. On a monthly basis, real GDP grew 0.3 per cent in September, a third consecutive monthly increase, according to Statistics Canada.

A notable increase in manufacturing and gains in most major services industries were the main sources of growth. The latest numbers released by StatsCan reveal that manufacturing rose 1.1 per cent in September, after declining 0.4 per cent in August. Manufacturing of durable goods increased 1.4 per cent, owing mainly to gains in transportation equipment, machinery and primary metal manufacturing. Manufacturing of non-durable goods grew 0.7 per cent, primarily as a result of increases in food, plastic and rubber products, as well as chemical manufacturing. These gains were partly offset by declines in the manufacturing of petroleum and coal products, as well as clothing and leather products.

In the third quarter, most major industrial sectors increased production. The output of goods-producing industries rose 0.9 per cent, while the output of service industries grew 0.6 per cent.

Business investment in machinery and equipment increased 0.6 per cent in the third quarter following a flat second quarter, with outlays on industrial machinery and equipment increasing 2.2 per cent after three quarters of decline.


Though Canada’s economy surged to its fastest pace of growth in two years in the third quarter, the Canadian Press reported that the bounce was not enough to dispel fears that conditions remain fragile and susceptible to both domestic and foreign shocks.

The consensus was that markets were unimpressed, largely because several one-time and unsustainable factors played into the gain. Inventory buildup contributed 1.2 percentage points to the total, and some of the bounce reflected the natural return of activity from the Alberta floods and Quebec construction strike in June.

“There was an initial reaction in the loonie, but then it fell back,” said Jimmy Jean, a senior economic strategist for Desjardins Capital Markets. “I think when people had a better sense of what the numbers were composed of, it became clear it wasn’t as strong as the headline indicated.”

Bank of Montreal economist Doug Porter said the details in the report suggest the economy is growing at about two per cent, the central bank’s estimate of its potential at the moment. But he said there were some underlying positives in the report that point to a pickup ahead.

Consumer spending was up, as was manufacturing and business investment — all solid indicators for the economy — and net exports were a smaller drag than expected.

In a statement released by his office, Finance Minister Jim Flaherty said the economy “remains on track,” pointing out that it was the ninth consecutive positive quarter of growth.

“While this is encouraging news…we must remember that the global economy remains fragile and that slower global growth will impact Canada,” he added.

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