Gross Domestic Product (GDP)
Accommodation and Food Services
(NAICS 72)
This section reviews Gross Domestic Product (GDP) at basic prices by industry
for the Accommodation and Food Services (NAICS 72) sector from 1997
to 2004.
The following section does not define or examine recessionary periods for the
Canadian economy, sectors, subsectors or industries. This type of analysis is
possible through examining more precise quarterly and monthly trends. Monthly
data are available from the Statistics Canada website (see Gross domestic product at
basic prices by industry).
Current analyses of the Canadian economy using quarterly and monthly data are
available from Industry Canada's Micro-Economic Monitor
and Monthly Economic Indicators.
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Position in NAICS Hierarchy
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Canada's Accommodation and Food Services (NAICS 72) sector is comprised of the following subsectors :
- Accommodation Services (NAICS 721)
- Food Services and Drinking Places (NAICS 722)
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| Data Sources and Definitions |
The GDP data here is maintained by Statistics Canada's Canadian System
of National
Accounts (CSNA).
The data is obtained using the CANSIM
service. The main series used in this section are CANSIM Table 379-0017 and
CANSIM Table
379-0020.
It is GDP by industry
presented in chained 1997 dollars. The process of chaining takes into account
fluctuations in
price which will occur overtime. In addition, chaining preserves the original
growth rates
within sectors and industries of the economy.
Statistics Canada expresses GDP in basic prices, which is measured as
output
valued at basic prices (subsidized prices less taxes on the products at the
time of sale
and separately invoice transport charges) less intermediate consumption valued
at
purchasers prices.
The reader should be aware that there are other ways of expressing
Gross Domestic Product than presented here (e.g.
expenditure-based and income-based rather than by industry;
at factor cost and market prices
rather than at basic prices and in constant dollars as
opposed to
chained dollars). As a result, caution is recommended when comparing
the data
presented herein with other published sources.
Gross Domestic Product (GDP)
by industry measures the value
of output of an industry less the value of intermediate inputs required in the
production
process. In this sense, it is an output-based measure of economic activity and
is commonly
referred to as the total value-added of an industry.
GDP is gross in the sense that it does not deduct the depreciation of
capital,
and domestic as it measures production occurring within the political
boundaries
of Canada. At the industry level, GDP represents the value each industry adds
to the
production process. At the aggregate level, it represents the total value of
(traditional) production in the economy.
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| Understanding GDP and Value-Added |
The value-added concept is used to
avoid double counting. For instance, GDP in the Retail Bakeries
industry would not include the value of the flour used to make a loaf of bread,
it would
only include the value the Retail Bakeries industry adds
by turning the flour into bread (for example, the mixing, leavening and baking
process).
This example of value-added (GDP) can be broadened to illustrate the total
value of a
loaf of bread. Let us suppose, we live in a simple world, where the only two
inputs needed
to make bread are flour and water. And for the moment, let us assume water is
free.
So as before, it is the baker who turns the flour into bread. This process is
his
value-added (GDP). For the baker, flour is an input into the production of
bread, thus the
value of the flour is not included in the value-added (GDP) of the baker.
The baker buys his flour from the miller, who produces flour by grinding wheat.
So the
value-added (GDP) of manufacturing flour is captured by the miller. Since the
miller
purchases wheat as an input, the value of wheat is not included in the
value-added (GDP) of the
miller.
Who does the miller buy his wheat from? From the farmer, who harvests the wheat
from
his land using his blood, sweat and tears. Then, the value-added (GDP) of
wheat, which is
ground to produce flour by the miller to make a loaf of bread by the baker, is
captured by
the farmer.
Since our baker owns a retail bakery, and sells his wares directly to market,
the total
value of the bread would equal the value-added of the farmer plus the
value-added
of the miller plus the value-added of the baker.
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| Understanding GDP and Economic Growth |
Economic growth is often measured as the percentage increase in GDP, adjusted
for inflation,
from one year over an earlier year. Trend growth rates for an economy, sector or
industry are calculated over a series of years. In Canadian Industry
Statistics,
we often use the compound annual
growth rate (CAGR) to depict
trends in real GDP growth and other economic indicators.
GDP growth is an important economic indicator. It measures progress or the rate
of expansion of the economy's capacity to produce output (goods and services).
It is examined
as a measure of the short term stability or instability of the economy. GDP
growth is also
reflective of the future consumption possibilities for a nation and is the main
source of
improvements to our standard of living
over time.
Economic growth occurs from accumulating human capital (knowledge and skills),
investing in physical capital (factories, machinery and equipment) and the
implementation
of new technologies in the production process.
With benefits to economic growth come costs. One cost to economic growth is
that in
order to increase the consumption possibilities for tomorrow, we have to forego
some
consumption today. To maintain economic growth more effort has to be placed on
the
production of technology and capital in order to produce goods for future
consumption,
rather than the production of goods for current consumption.
Other costs may occur from sustaining a high rate of economic growth, such as
resource
and environmental degradation. However, the impact faster economic growth has
on our
environment and resources are not reflected in the measure GDP growth.
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GDP and Growth in the
Accommodation and Food Services Sector
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The following graph illustrates annual GDP for the Accommodation and Food Services (NAICS
72)
sector between 1997 and 2004.
Gross Domestic Product (GDP)
Accommodation and Food Services Sector
(NAICS 72)
1997-2004
GDP in the Accommodation and Food Services (NAICS 72) sector
increased from from $19.7 billion in 1997 to $23.4
billion in 2004. The increase in GDP reported between 1997 and
2004 represented a compound annual growth rate of 2.6 %.
In comparison, between 2003 and 2004, the total value-added of the
Accommodation and Food Services sector
increased by 2.3 %.
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