Alberta drags national GDP lower, but the rest of Canada ain't so hot either
As expected, Canada's GDP contracted 1.6% in the second quarter, blamed squarely on the Alberta wildfires, the Fort McMurray evacuations and oil sands production cuts that ensued. This was the largest decline since the 2009 financial crisis.
Exports of crude oil and bitumen fell almost 10%, while exports of refined petroleum products fell almost 20%.
However, other sectors of the Canadian economy aren't exactly on fire.
- Exports of metal ores and non-metallic minerals were down 17.5%, the largest drop since the first quarter of 2009.
- Exports of vehicles and auto parts declined almost 6%.
- Exports of consumer goods fell 6.8%, the largest drop since 2003.
Business investment edged down slightly for the sixth consecutive quarter. However, the pace of the declines appears to be levelling off.
Statistics Canada actually didn't have a lot of good news for Canadians this week. Canada's current account deficit widened by $3.3 billion in the second quarter to $19.9 billion.
Surprisingly, exports of energy products increased $0.7 billion, as higher oil prices more than offset declines in volumes exported.
However, other sectors of the economy are not showing much signs of life. Exports of motor vehicles and parts were down $2.3 billion while exports of consumer goods declined $1.7 billion. This past quarter narrowly missed the record trade deficit of $20.2 billion in the third quarter of 2010.
However, It might not be all doom and gloom. After a dismal May, results for June were much improved. June GDP growth came in at 0.6% y/y, as bitumen production in Fort McMurray rebounded after the wildfires. Improvements were also seen in conventional mining (+2.5%), manufacturing (+1.8%) and utilities (+3.1%).
Economists all agree the third quarter should to be much better. Most economists and the Bank of Canada expect the country's GDP to expand by about 3.5%.
The reason? Higher oil prices, rebuilding in Fort McMurray and an increase in oil production. The more things change, the more they stay the same, apparently.