In June 2024, Canada’s economy showed little momentum, with the real Gross Domestic Product (GDP) remaining virtually unchanged from the previous month, according to the latest figures released by Statistics Canada. This follows a modest 0.1% growth in May, signaling a potential slowdown in the economic recovery that had been gaining traction earlier in the year.
The overall stagnation in June was largely driven by a 0.4% decline in the goods-producing industries, marking their most significant drop since December 2023. The manufacturing sector, in particular, was a key contributor to this decline, contracting by 1.5%. This downturn erased gains made in the previous two months and was felt across both durable and non-durable goods manufacturing.
Durable goods manufacturing experienced a significant setback, shrinking by 2.4%—the largest contraction since April 2021. The transportation equipment manufacturing subsector was particularly hard-hit, declining by 2.1%. The drop was largely attributed to retooling activities at assembly plants in the United States and the suspension of production at a major Canadian assembly plant. As a result, the motor vehicles and parts manufacturing industry saw a sharp 3.5% decline.
Non-durable goods manufacturing also faced challenges, with a 0.3% decrease in June. The most substantial decline within this category was seen in the plastics and rubber product manufacturing subsector, which plummeted by 5.4%.
The construction sector also faced headwinds, contracting for the third consecutive month by 0.6%, bringing it to its lowest level since January 2021. The decline was broad-based, affecting nearly all subsectors. However, residential building construction provided a glimmer of hope with a 0.3% increase, its first rise in three months, driven by a surge in apartment construction activity.
Engineering and other construction activities saw a significant drop of 1.4%, marking the first contraction in six months. The sector’s activity level was 7.5% below its peak in June 2023, reflecting a prolonged period of decline, particularly in the wake of the completion of the Kitimat liquefied natural gas project in British Columbia.
In contrast to the struggling manufacturing and construction sectors, the utilities sector posted a 2.3% increase, its second consecutive monthly gain, reaching its highest level since April 2023. The primary driver was a 2.3% rise in electric power generation, transmission, and distribution. Notably, nuclear electricity generation rebounded following maintenance activities at nuclear reactors in April and May. Hydroelectricity generation also saw a boost as drought conditions eased across Canada, particularly in Manitoba and Quebec.
Agriculture also contributed positively, helping to offset some of the losses in the goods-producing industries.
While goods-producing industries struggled, the services-producing industries managed to grow for the third consecutive month, albeit modestly, with a 0.1% increase in June. This sector’s resilience was evident as 12 of the 20 monitored sectors expanded during the month.
The real estate and rental and leasing sector grew by 0.3%, driven by a 3.6% increase in the offices of real estate agents and brokers, spurred by rising home sales in Ontario and Quebec. However, despite this growth, the sector remains 41% below its peak in September 2020, highlighting the ongoing challenges in the real estate market.
Finance and insurance also continued their upward trajectory, increasing by 0.5% in June, marking the third consecutive month of growth. This was largely due to a 2.6% rise in financial investment services, funds, and other financial vehicles, spurred by heightened activity in bond markets and newly issued corporate bonds.
The public sector, which includes educational services, health care, and public administration, expanded by 0.2% in June. However, this was the slowest pace of growth since December 2023. Public administration saw a 0.4% increase, while educational services grew by 0.2%, continuing the recovery from the impacts of the public sector strike in Quebec late last year.
Transportation and warehousing contracted by 0.3% in June, with most subsectors recording declines. Air transportation was one of the hardest-hit subsectors, shrinking by 1.9% due to a strike by pilots at a major Canadian airline, which led to numerous flight cancellations during the busy Canada Day long weekend.
However, not all was bleak in the transportation sector. Pipeline transportation grew by 2.1%, with the newly expanded Trans Mountain pipeline playing a significant role. Water transportation also saw a 2.5% increase, buoyed by a rise in crude oil exports to Asian markets.
Preliminary estimates for July 2024 suggest that real GDP by industry remained essentially unchanged, with continued declines in the construction, mining, quarrying, and oil and gas extraction sectors. However, there were signs of strength in finance and insurance, as well as retail trade. These estimates will be updated with official data on September 27, 2024.
The key sectors and their contributions to the GDP for June 2024
| Sector | June 2024 Growth | Details |
|---|---|---|
| Overall GDP | -0.0% (unchanged) | Following a 0.1% increase in May 2024 |
| Goods-Producing Industries | -0.4% | Largest decrease since December 2023 |
| Manufacturing | -1.5% | Durable goods: -2.4%, Non-durable goods: -0.3% |
| Construction | -0.6% | Decline for the third consecutive month, driven by engineering and other construction activities |
| Utilities | +2.3% | All subsectors rose, with a rebound in nuclear electricity generation and increased hydroelectricity |
| Transportation and Warehousing | -0.3% | Contraction driven by a strike in air transportation and declines in most subsectors |
| Real Estate, Rental and Leasing | +0.3% | Growth driven by increased home sales, especially in Ontario and Quebec |
| Finance and Insurance | +0.5% | Growth for the third consecutive month, driven by financial investment services |
| Public Sector | +0.2% | Growth in educational services, health care, and public administration, but at the slowest pace since December 2023 |
Despite the stagnation in June, the Canadian economy managed to expand by 0.5% in the second quarter of 2024, following a 0.6% increase in the first quarter. Both goods-producing (+0.4%) and services-producing (+0.6%) industries contributed to this growth. The public sector remained a key driver, with educational services and health care and social assistance sectors leading the way.
However, the construction and manufacturing sectors continued to weigh on the economy, with both sectors experiencing declines in the second quarter. The construction sector, in particular, saw a 0.4% decrease, driven by ongoing weaknesses in residential building construction.
The latest GDP figures paint a picture of an economy grappling with mixed signals. While certain sectors like utilities, real estate, and finance show resilience, others, particularly manufacturing and construction, face significant challenges. As Canada moves into the second half of 2024, the economic outlook remains uncertain, with the possibility of further slowdowns if the struggles in key sectors continue.