Real gross domestic product (GDP) increased 0.5% in the second quarter after rising 0.4% in the first quarter. Higher government final consumption expenditures, business investment in engineering structures and machinery and equipment, and household spending on services in the second quarter were moderated by declines in exports, residential construction and household spending on goods.
On a per capita basis, GDP fell 0.1% in the second quarter – the fifth consecutive quarterly decline.
Chart 1
Real gross domestic product and final domestic demand
Chart 2
Contributions to percentage change in real gross domestic product, second quarter of 2024
Government spending rises on higher wages
Government expenditures rose 1.5% in the second quarter, as there were increases in compensation of employees, which is an expense for governments, and hours worked across all levels of government. Purchases of goods and services in the federal as well as in provincial and territorial governments also rebounded in the second quarter from a decline in the first quarter.
Higher business investment in machinery and equipment and engineering structures
Business spending on machinery and equipment increased 6.5% in the second quarter, led by higher spending on aircraft and other transportation equipment and parts. This coincided with increased imports of aircraft and ships.
Business investment in non-residential structures increased 0.5% in the second quarter due to higher spending on engineering structures, primarily in the oil and gas sector. Business investment in non-residential building construction fell 1.2%, as investment in commercial and industrial structures declined.
Business spending on intellectual property products edged up 0.3% in the second quarter, mainly due to increased spending on mineral exploration and evaluation (+4.5%).
Household spending slows in second quarter
Growth in household spending slowed to 0.2% in the second quarter after rising 0.9% in the first quarter. Higher expenditures for rental fees for housing, food and electricity led the increase in the second quarter. Meanwhile, fewer purchases of new trucks, vans and sport utility vehicles as well as reduced expenditures by Canadians abroad tempered overall growth.
Population growth outpaced the increase in household spending in the second quarter, and, as a result, per capita household expenditures fell 0.4% after rising 0.3% in the first quarter.
Chart 3
Change in total and per capita real household final consumption expenditure
Weakening net trade, as exports decline more than imports
Exports of goods and services fell 0.4% in the second quarter after rising 0.5% in the first quarter. In the second quarter, lower exports of unwrought gold, silver, and platinum group metals as well as of passenger cars and light trucks and refined petroleum energy products were moderated by higher exports of crude oil and bitumen.
Imports of goods and services edged down 0.1% in the second quarter after recording no change in the first quarter. Lower imports of industrial machinery, equipment and parts, commercial services and refined petroleum energy products led the decrease in the second quarter, while higher imports of passenger cars and light trucks tempered the overall decline.
Chart 4
Volumes of exports and imports
Residential construction continues to decline, falling in eight of the last nine quarters
Housing investment was down 1.9% in the second quarter, the largest decline since the first quarter of 2023. The decrease in the second quarter of 2024 was driven by lower investment in new construction (-1.6%), as work put in place for single-family dwellings and apartments fell, primarily in Ontario. Renovations fell 2.6%, and ownership transfer costs, which represent the resale market, declined 1.1%, led by less activity in Ontario.
Chart 5
Housing investment
Gross domestic product deflator up on higher prices for services
The GDP deflator rose 1.1% in the second quarter, led by higher prices for household consumption of services.
The ratio of the price of exports to the price of imports—the terms of trade—fell 0.1% in the second quarter as growth in import prices outpaced the growth in export prices.
Compensation of employees rose 1.6% in the second quarter after increasing 1.5% in the first quarter. Growth in the second quarter was led by increased wages in health care and social assistance, educational services and finance and insurance. Retroactive payments associated with arbitration decisions for members of the Ontario Secondary School Teachers’ Federation and Elementary Teachers’ Federation of Ontario were a large contributor to the wage growth in educational services. Among all industries, wages and salaries in mining and oil and gas extraction (+5.6%) had the strongest growth in the second quarter.
Map 1
Compensation of employees, quarter-to-quarter % change, seasonally adjusted data
Household saving rate up on higher wages
The household savings rate reached 7.2% in the second quarter, as gains in disposable income outpaced increases in nominal consumption expenditure. Disposable income gains were mainly from wages and salaries.
Growth in investment income slowed in the second quarter, rising 2.8%, mainly on higher interest received and dividends. At the same time, household property income payments, comprised of mortgage and non-mortgage interest expenses, rose at a faster pace (+5.7%) compared with the first quarter (+4.1%). The Bank of Canada announced a cut to the policy interest rate at the beginning of June, followed by a further cut in July; however, many mortgage borrowers are still facing relatively higher renewal costs following the rate hikes that began in early 2022.
Higher income households tend to earn greater share of investment income than lower income households, while lower income households tend to have interest expenses that represent a greater share of their disposable income.
Corporate incomes
In the second quarter of 2024, total corporate incomes (i.e., gross operating surplus) rose 3.1% after falling 5.6% in the first quarter. In the second quarter, the operating surplus of non-financial corporations rose 3.1%, with gains in the oil and gas extraction sector, while financial corporations surplus rose 2.9%.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
