Like other nations, Canada and its economy are ever-changing. In part, these changes can be assessed by examining what are sometimes characterized as key economic indicators.
In chart form, this HillNote uses the most recent annual or monthly data, as appropriate, to provide information on a number of key economic indicators, including:
- gross domestic product;
- the relative value of the Canadian dollar and the price of crude oil;
- the country’s unemployment, employment and labour force participation rates; and
- various interest rates, including the Bank of Canada’s target for the overnight interest rate.
Real gross domestic product
Between 2000 and 2014, the inflation-adjusted value of goods and services produced in Canada – or Canada’s real gross domestic product (GDP) – grew at an average annual rate of 2.0%, the highest among the G7 countries.
In 2015, however, the growth rate in Canada’s real GDP was 1.2%, which was fourth-highest among the G7 countries.
Rising energy prices contributed positively to Canada’s real GDP growth between 2000 and 2014 by increasing incomes and investment. The slower rate of growth in 2015 was due partly to declines in commodity prices.
Real GDP by sector
Between 2007 and 2014, output in both the real estate and rental and leasing sector, and the oil and gas sector, grew at an average annual rate of more than 2%; the manufacturing sector contracted.
In 2015, however, output in the oil and gas sector fell 5.6%. This sector includes the engineering construction subsector, which accounted for most of the sector’s decline, as construction activities related to oil and gas declined. The finance and insurance sector, and the real estate and rental and leasing sector, grew by 4.6% and 3.1%, respectively, in that year.
Between 2000 and 2014, average real GDP growth in the major oil-producing provinces – Alberta, Saskatchewan, and Newfoundland and Labrador –exceeded the Canadian average.
In Ontario and Quebec, real GDP growth during this period was lower than the national average. In both provinces, private non-residential investment as a share of GDP was below the national average. Also, the export growth of these provinces may have been limited by slow growth in U.S. demand for these exports, an appreciation in the Canadian dollar and increased international competition.
In 2015, 1.1 percentage points of the 1.2% increase in real GDP resulted from growth in non-government – or private – consumption; the remaining 0.1 percentage points resulted from growth in other components of GDP.
Since 2001, non-government consumption has made positive contributions to real GDP growth in every year except 2009. Among other factors, increases in household incomes and consumer credit – the latter caused partly by rising home prices and falling interest rates – have contributed to growth in this consumption since 2001.
Non-government – or private – investment has been volatile since 2009, when it contributed negatively to real GDP growth. That was followed by three consecutive years of positive contributions that exceeded 1.0 percentage points; the contributions in 2013 and 2014, while positive, were relatively smaller.
Due partly to declining investment in the energy sector, the contribution of non-government investment to growth in real GDP was negative in 2015.
Government consumption and investment
Consumption and investment by all levels of government contributed a total of at least 0.5 percentage points to real GDP growth each year from 2001 to 2010; since then, their contribution has been relatively lower.
This decreased contribution was due partly to the completion of fiscal stimulus measures implemented by Canadian governments to support the economy during the 2008–2009 recession.
Between 2001 and 2013, Canada’s net exports contributed negatively to real GDP growth in most years as imports generally grew at a faster rate than exports. From 2013 to 2015, the contribution from net exports was positive. In 2015, the positive contribution of net exports partly reflects the depreciation in the relative value of the Canadian dollar.
Canadian dollar and the price of crude oil
Since 2000, the relative value of the Canadian dollar has generally moved in the same direction as the price of crude oil. Recently, it has depreciated concurrently with the decline in crude oil prices.
A depreciating relative value of the dollar reduces the price of Canadian-produced goods and services compared to foreign-produced goods and services, thereby increasing demand for the former. As a result, the recent depreciation should have an upward influence on net exports, although other factors may also affect net exports.
In 2015, the unemployment rate – the number of Canadians aged 15 and older unemployed and looking for work as a percentage of those either looking for work or employed – was 6.9%. This rate was lower than the recessionary high of 8.3% in 2009; however, it was also higher than the pre-recession low of 6.0%.
Since 1990, the unemployment rate for males has been consistently higher than the rate for females. Furthermore, in recessions, the unemployment rate has tended to increase proportionally more for males than for females.
In 2015, the employment rate – the percentage of the total population aged 15 to 64 who are employed – was 72.5%.
This rate was higher than the recessionary low of 71.4% in 2009, but lower than the pre-recession high of 73.5%.
Unlike the unemployment rate, the employment rate will not appear to improve when unemployed individuals become discouraged and give up searching for work.
Labour force participation rate
In 2015, the labour force participation rate – the percentage of the population aged 15 and older who are either employed or looking for work – was 65.8%, down from 67.6% in 2008.
The decline in the rate since 2008 has been due largely to the population aging and retiring. Furthermore, female labour force participation, which had been increasing and putting upward pressure on the participation rate, has been declining – although not steadily – since 2008.
Since 2008, the Bank of Canada has substantially decreased the target for the overnight interest rate, with consequences for prime corporate paper rates, government bond yields and mortgage rates, among others.
In June 2015, the target for the overnight interest rate – which is the Bank of Canada’s main monetary policy tool – was 0.5%.
Note: Figures were prepared using data from Statistics Canada, the U.S. Bureau of Economic Analysis, the U.K. Office for National Statistics, the Cabinet Office of Japan, Eurostat, the Bank of Canada and the International Monetary Fund.
Authors: Simon Richards and Dylan Gowans, Library of Parliament