Canadian Gross Domestic Product, Second Quarter and June 2010

Date: August 31, 2010

Canadian Gross Domestic Product, Second Quarter and June 2010

Source: Statistics Canada

Link to Release: http://www.statcan.gc.ca/daily-quotidien/100831/dq100831a-eng.htm

Summary: Canada’s Real Gross Domestic Product (GDP), the most common measure of economic growth, increased 0.5 per cent in the second quarter for an annualized growth rate of 2.0 per cent. This is well below the 5.8 per cent annualized growth rate reported for the first quarter of this year. In June, Canadian GDP rose 0.2 per cent over May for the strongest monthly gain of the second quarter. The goods producing sector led second quarter economic growth, while service sector output remained flat.

Analysis: The decline in the GDP growth rate between the first and second quarters can be traced to several sources, but the impact of housing-related sectors was quite notable. Housing investment, which drove GDP growth through much of the initial 2009 recovery, increased by only 0.3 per cent in the second quarter. Economic activity specifically related to real estate agents and brokers was down. Renovation activity also declined. Declines related to residential real estate contributed to an overall dip in consumer spending. A slowdown in the consumer-driven side of the economy was not necessarily unexpected, as second quarter interest rate increases and stricter mortgage lending guidelines came on line. With this said, the second quarter GDP result was well below the Bank of Canada’s latest published forecast of three per cent annualized growth. This coupled with less than stellar employment releases in recent months increases the odds that we could see an earlier than expected interruption in Bank of Canada interest rate hikes.

Source: Toronto Real Estate Board

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