rose 0.5% in the second quarter, matching the pace of the two previous quarters. Business investment contributed the most to second-quarter growth. Final domestic demand grew 0.4%. On a monthly basis, real by industry advanced 0.2% in June.
Business investment in plant and equipment advanced 2.3%, the fastest pace since the second quarter of 2011. Non-farm business inventories also increased substantially.
Investment in housing rose 0.4%, following growth of 2.7% in the first quarter.
Exports slowed to 0.2% in the second quarter, after a gain of 1.0% in the previous quarter. In contrast, imports rose 1.6%, up from the first quarter increase of 1.3%.
Consumer spending on goods and services advanced 0.3% in the second quarter, following a similar increase in the previous quarter (+0.2%). However, this was down from the pace of 0.7% in the fourth quarter of 2011.
Final domestic demand advanced 0.4%, similar to the pace of the previous five quarters.
Goods production grew 0.9% and the output of service industries increased 0.3% in the second quarter. Mining and oil and gas extraction, and construction were the main contributors to overall growth. Gains were also recorded in manufacturing, agriculture, wholesale trade, the finance and insurance sector and professional services. In contrast, retail trade and utilities declined.
Oil and gas extraction increased 1.0% in the second quarter, as an increase in crude petroleum production was partly offset by a decrease in natural gas extraction. Mining excluding oil and gas extraction grew 2.7%, as increased output at potash as well as copper, nickel, lead and zinc mines outweighed declines at coal mines. Potash production rebounded from first quarter shutdowns, which were partly attributable to lower foreign demand. Construction grew on the strength of engineering construction and residential building construction. Manufacturing rose 0.5%, as a 1.1% increase in durable goods production, particularly machinery and transportation equipment, more than offset a 0.3% decline in non-durable goods manufacturing.
Expressed at an annualized rate, realexpanded 1.8% in the second quarter, matching the rate of the previous quarter. By comparison, real in the United States grew 1.7% in the second quarter.
Business investment in plant and equipment continues upward trend
Business investment in plant and equipment rose 2.3%, continuing the string of consecutive increases that began in 2010.
Business investment in machinery and equipment grew 1.8%, following a 1.0% increase in the first quarter. This follows two consecutive quarterly declines in the last half of 2011. Machinery and equipment investment was led by purchases of other transportation equipment (+4.4%) and industrial machinery (+3.7%).
Investment in engineering projects advanced 2.8%, while investment in buildings expanded 2.5%.
Housing demand advances
Investment in housing advanced 0.4% in the second quarter, the sixth consecutive quarterly gain. However, this gain was below the 2.7% increase in the previous quarter.
New housing construction increased 4.0% following a 3.9% rise in the previous quarter. This second quarter increase was dampened by a 1.5% decline in renovation activity, as well as a 4.0% decline in ownership transfer costs as housing resale activity slowed.
Business inventories accumulate
Businesses increased inventories by $15.2 billion in the second quarter, $7 billion more than in the previous quarter. This increase was widespread across industry groups.
Farm inventories also accumulated in the second quarter as deliveries were down, especially canola.
Consumer spending rises
Consumer spending on goods and services rose 0.3% in the second quarter, similar to the previous quarter's pace (+0.2%), but slower than the 0.7% increase in the fourth quarter of 2011.
Non-durable goods (+0.9%) and services (+0.7%) increased, whereas purchases of durable and semi-durable goods each declined 1.7%.
Purchases of new and used motor vehicles declined 3.2% in the quarter, following two consecutive quarters of growth. Spending on clothing, footwear and accessories decreased 1.1% after seven quarterly increases in a row.
These declines were partially offset by a 2.4% increase in spending on furniture, carpets and other floor coverings.
Consumer spending on purchased transportation rose 0.5%, the 13th consecutive quarterly increase.
Imports increase for the third quarter in a row
Imports of goods and services rose 1.6% in the second quarter, the third consecutive quarterly increase.
All major categories of goods imports increased in the second quarter, except for agriculture and fish products (-0.9%). Imports of industrial goods and materials and of machinery and equipment increased for the third quarter in a row.
Imports of automotive products rose 4.5%, following an increase of 10.2% in the first quarter. Automotive products contributed the most to quarterly growth in goods imports in the first and second quarters of 2012. In addition, the dollar value of imports of automotive products (in nominal terms) surpassed the $80 billion level reached in 2007.
On the other hand, imports of services fell 1.2% with declines in all major service categories.
Demand for exports slows
Exports of goods and services slowed to 0.2% in the second quarter. This was the slowest pace of growth since the rebound in exports in the third quarter of 2011.
Exports of goods fell 0.1%, led by declines in agriculture and fish products (-4.6%) and industrial goods and materials (-1.8%). Increased exports of other consumer goods (+5.3%), machinery and equipment (+3.0%), and automotive products (+2.2%) partially offset these declines.
On the other hand, export of services (+2.0%) rebounded in the second quarter, reversing the trend of the previous two quarters. This rebound was led by a 4.5% gain in commercial services.
Economy-wide income slows
Nominalincreased 0.1% in the second quarter, after a 0.5% gain in the first quarter. The growth in incomes slowed considerably in the first half of 2012 to 0.3% on average, compared with 1.5% on average in the second half of 2011.
Corporate profits fell 4.7% in the second quarter, following a decline of 3.7% in the previous quarter.
Labour income rose 1.2%, up from the pace in the previous quarter of 0.7%. Wages in goods-producing industries advanced 1.8%, twice the pace of 0.9% in the first quarter.
Personal saving increased 18% in the second quarter, as growth in personal income far outpaced that of personal outlays. The personal saving rate moved up to 3.6% in the quarter. It has remained below 4.0% since the second quarter of 2011.
The national saving rate was 7.5%, similar to the 7.3% rate of the previous quarter. This was the highest national saving rate since 2008.
Canada's real gross domestic income, a measure of purchasing power, declined 0.4% in the second quarter. Canada's terms of trade, which measures export prices relative to import prices, declined 2.7%.
The price of goods and services produced in Canada edged down 0.3%, mostly reflecting a decline in energy prices. Export prices were down 2.5%, while import prices edged up 0.2%.
The price of final domestic demand rose 0.4%, following a 0.3% increase in the first quarter.
Gross domestic product by industry, June 2012
Real gross domestic product grew 0.2% in June after edging up 0.1% in May. Goods production rose 0.3%, while the output of service industries increased 0.1%. The largest contributing sector to growth was mining and oil and gas extraction. Increases were also recorded in the public sector, transportation, utilities, the finance and insurance sector, and construction. There were declines in wholesale and retail trade, manufacturing as well as accommodation and food services.
Oil and gas extraction grew 1.1% in June, with increases in both crude petroleum and natural gas. Mining excluding oil and gas extraction rose 0.4%, as a gain in output at coal mines was partly offset by a decline at copper, nickel, lead and zinc mines. In contrast, support activities for mining and oil extraction declined 2.0% as a decrease in rigging services outweighed an increase in drilling services.
The public sector (education, health and public administration combined) increased 0.2% as a result of an increase in education services and, to a lesser extent, health services. Education services returned to more normal levels in June, following reduced volume of output from March to May due mainly to walkouts by someand university students in Quebec.
Transportation and warehousing services rose 0.7%, mainly a result of an increase in rail services, which rebounded from a strike at the end of May.
Wholesale trade fell 0.8% in June as a result of declines in the wholesaling of petroleum products and in the activities of miscellaneous wholesalers (which include agricultural supplies). Retail trade also decreased in June (-0.2%), after increasing 0.7% in May. Retailing activity was notably down at general merchandise stores (which include department stores) and at building material and garden equipment and supplies dealers.
Manufacturing was down 0.2% in June after declining 0.5% in May. A 0.7% decline in non-durable-goods manufacturing in June, mainly due to petroleum and coal products, outweighed a 0.2% gain in durable goods manufacturing.
Utilities grew 0.8% as both electricity generation and natural gas distribution increased. The finance and insurance sector rose 0.3% on the increased output of banks, insurance carriers as well as security brokerages.
Construction edged up 0.1% in June as a result of increased engineering construction, which was mostly offset by declines in residential and non-residential building construction. The output of real estate agents and brokers fell for a second consecutive month, down 1.6% in June, as a result of a decrease in activity in the home resale market.