A surge in exports helped boost real gross domestic product (GDP) growth a solid 1.1% in the second quarter, Statistics Canada report.
After a slow start in April, the economy picked up steam in May and June, up 0.3% in both months.
Exports of goods and services advanced 5.0% in the second quarter, the strongest gain in over seven years. Automotive products, machinery and equipment and industrial goods and materials, the three largest components of goods exports, were up strongly. Energy products picked up steam, while exports of agricultural and fish products rebounded. Forestry products exports posted the strongest gain (+5.5%) in nearly eight years, stimulated by the US housing boom.
Exports of services edged up 0.4% in the second quarter, as transportation services slowed markedly and commercial services exports fell.
Imports of goods and services advanced 3.2% in the second quarter, with widespread gains among all the major goods categories. Imports of services declined 2.2%.
The surge in exports spurred a 1.6% increase in manufacturing in the second quarter. The gains were widespread as 17 of the 21 major manufacturing groups reported higher output.
The transportation equipment group recorded a 4.4% increase in motor vehicle production, after a 5.4% surge in the first quarter. Fabrication of auto parts was up 2.2%. Output of the aerospace industry advanced 4.1%, after six straight declines.
Increased fabrication of machinery was concentrated in construction, mining and oil and gas machinery. Production of fabricated metal products was up a robust 3.4%, with strong export demand for most types of products. Manufacturing of wood products and logging operations were sharply higher
Final domestic demand made a lacklustre 0.4% showing in the second quarter, as consumer spending slowed to 0.3%. The housing boom continued, albeit at a slower pace, while business investment in plant and equipment advanced 1.0%. Both labour income and corporate profits made solid gains.
The Canadian dollar lost ground against the US dollar, depreciating 3.1% for the quarter. Merchandise exports were up strongly across the board. Imports of goods also showed renewed strength.
Industrial production (the output of Canada’s factories, mines and utilities) advanced 1.5%. Exports boosted output in the manufacturing sector, while diamonds propelled the mining industry. Lower output in the utilities industry had a dampening effect. In the United States, the index of industrial production increased 1.2%, as higher manufacturing output offset declines in mining and utilities.
Economy-wide prices, as measured by the chain price index for GDP, were up 1.4%, the fastest pace in five quarters. Overall, the Canadian economy grew at an annualized 4.3% in the second quarter of 2004, compared with an annualized 2.8% for the US economy.