A snapshot of what’s ailing - and what’s improving - in Canada’s economy

theglobeandmail.com
Sept. 2, 2015
By Ian McGugan

WHAT WENT UP

Household spending

Cheap gasoline and low interest rates appear to have put consumers in a good mood despite the slowing economy. Canadians spent 0.6 per cent more on themselves in the second quarter. At the top of most shopping lists were a new ride, a night out and more insurance and mutual funds. Purchases of vehicles jumped, while outlays on restaurants and financial services also swelled.

Within 24 hours of Alberta’s government confirming the provincial economy is shrinking, corporate Calgary’s workforce shrunk by nearly 1,000 jobs. Jameson Berkow reports on the job cuts at Penn West Petroleum and the Canadian unit of ConocoPhillips.

Housing investment

Canada’s housing market blew both hot and cold during the quarter, but still managed to make a tiny positive contribution to growth. Business investment in residential structures eked out a 0.3-per-cent gain as a decline in new home construction was offset by gains in renovation spending and resales of existing homes.

Exports

A big increase in shipments of tires, engines and other vehicle components helped turn around two quarters of declining exports for Canada. But don’t declare a renaissance just yet: Even with the big boost from auto parts, and solid gains in crude oil shipments, exports of goods and services ticked up only 0.1 per cent.

Debt loads

One unwelcome growth area is the amount that Canadians are paying to support their borrowing. The household debt service ratio, which is the amount of take-home pay needed to keep up with mortgage and other debt payments, edged up by 0.17 percentage points to 14.07 per cent in the second quarter, as low rates encouraged consumers to take on even more debt.

WHAT WENT DOWN

Mining, oil and gas

Canada’s traditional strength in natural resources has turned into an albatross as commodity prices tumble. The mining, quarrying, and oil and gas extraction sector contracted 4.5 per cent in the second quarter. Among the hardest hit areas were oil sands companies and support firms, which had to grapple with crude prices that have been cut in half over the past year.