The natural resources sector rebounded in the second quarter of 2024, posting a 2.0% increase in real gross domestic product (GDP) after a contraction of 0.6% in the first quarter. The rise was largely fueled by strength in the energy and forestry subsectors.
The growth comes at a time of heightened global demand for resources. Despite challenges in exports, particularly in the mining and forestry subsectors, the sector’s overall performance underscores its resilience and critical role in Canada’s economy.
Energy and forestry emerged as the strongest drivers of natural resource GDP growth in the second quarter. The energy subsector saw a notable 2.6% increase, largely attributed to rising crude oil production, which grew by 2.7%. The crude oil boost was substantial enough to counterbalance a 1.0% decline in petrochemical production, the only energy segment to post a decrease.
Meanwhile, the forestry subsector recorded a 1.2% increase, with growth spearheaded by sawmill and wood manufacturing, which surged by 5.0%. However, the forestry sector was not without its struggles, as pulp and paper manufacturing declined by 2.0%, reflecting uneven recovery trends across different resource categories.
In contrast, the minerals and mining subsector saw a more modest 0.7% increase, driven by gains in various mineral products. Nonetheless, this growth was tempered by a sharp 4.1% drop in non-metallic mineral extraction, highlighting the challenges faced by the sector in specific extraction activities.
Despite the uptick in GDP, Canada’s natural resource export volumes dropped by 2.1% in the second quarter, reversing a 1.4% increase from the first quarter. The decline was felt across several key subsectors, with minerals and mining exports plummeting by 5.8%, forestry down by 4.3%, and hunting, fishing, and water seeing a decrease of 2.7%. In the energy subsector, while crude oil exports rose by 3.4% and natural gas exports by 9.7%, these gains were offset by a sharp 17.3% decline in refined petroleum products, reflecting fluctuating global demand and supply chain disruptions.
Imports into the natural resources sector also experienced a 2.8% decrease, following a modest 0.5% increase in the previous quarter. The decline was primarily driven by a sharp reduction in energy imports (-12.7%), especially in refined petroleum products (-14.7%) and crude oil (-8.3%). However, there were areas of growth, notably in the minerals and mining (+6.2%) and hunting, fishing, and water (+6.1%) subsectors, indicating stronger domestic demand in certain segments of the resource economy.
Natural resource prices rebounded in the second quarter, rising by 2.7% after a 0.5% decrease in the first quarter. This price recovery was observed across all subsectors, with minerals and mining seeing the most significant jump of 4.5%, buoyed by a sharp 10.1% rise in metallic mineral prices. In the energy subsector, prices increased by 2.4%, driven by a notable 7.7% rise in crude oil prices.
The forestry subsector posted a modest price increase of 0.8%, while the hunting, fishing, and water subsector edged up slightly by 0.2%. These price trends suggest a recovering global demand for Canada’s natural resources, particularly in the face of ongoing economic uncertainties and volatile market conditions.
Nominal GDP for the natural resources sector rose by 4.7% in the second quarter, reaching an annualized value of $349.4 billion, representing 12.5% of the Canadian economy. This robust growth reflects the combined impact of higher real GDP and rising prices across the sector.
Employment in the natural resources sector also increased in the second quarter, though the gains were modest. Jobs in the sector rose by 0.6%, with the energy subsector leading the way at 0.9%, followed by minerals and mining (+0.7%) and hunting, fishing, and water (+1.7%). However, the forestry subsector saw a slight decline in employment, down by 0.4%, reflecting ongoing challenges in certain areas of manufacturing, such as pulp and paper production.
Downstream activities, particularly secondary and tertiary processing within the forestry and minerals and mining subsectors, experienced a 1.5% decrease in nominal GDP in the second quarter. This decline, which brings nominal GDP for downstream activities to $10.6 billion, points to persistent difficulties in processing and manufacturing sectors. Despite a modest 0.7% rise in prices, the processing industries continue to face headwinds, with sluggish demand and competitive pressures contributing to the overall contraction.
While the second-quarter results indicate strong growth in Canada’s natural resources sector, particularly in energy and forestry, challenges remain. Export declines, particularly in mining and forestry products, suggest ongoing global demand uncertainty. However, rising prices and increased production levels in key areas like crude oil and metallic minerals provide optimism for the coming quarters.
Looking ahead, much will depend on global economic conditions, particularly demand for energy and natural resources from major trade partners. With continued volatility in prices and shifting demand patterns, Canada’s natural resource sector will need to navigate a complex landscape to sustain its current momentum.
The broader implications of this growth also point to Canada’s critical role in global energy and resource markets, positioning the country as a key player in economic recovery and sustainable development initiatives.