Economic Analysis and Statistics  Canadian Industry Statistics Canadian Economy

Gross Domestic Product (GDP)
Goods-Producing Industries
(NAICS 11 to NAICS 31-33)

Under the North American Industry Classification System (NAICS) the Canadian economy is divided into 20 economic sectors. These can be grouped into five largely goods-producing industries and fifteen entirely services-producing industries.

This section reviews Gross Domestic Product (GDP) at basic prices by industry for the goods-producing industries from 1997 to 2003. GDP for Services-producing industries is examined in a separate section.

The following section does not define or examine recessionary periods for the Canadian economy or certain sectors, subsectors and 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 also available from Industry Canada's Micro-Economic Monitor and Monthly Economic Indicators.

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The sectors of the economy can be regrouped to form five largely goods-producing industries (NAICS 11 to 31-33) and fifteen service-producing industries (NAICS 41 to 91).

The 5 economic sectors specified by the North American Industry Classification System (NAICS) as goods-producing industries are listed below. Links are to the official NAICS Canada 2002 definition of each sector.

• Goods-producing Industries
  • Agriculture, Forestry, Fishing and Hunting (NAICS 11)
  • Mining and Oil and Gas Extraction (NAICS 21)
  • Utilities (NAICS 22)
  • Construction (NAICS 23)
  • Manufacturing (NAICS 31-33)

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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 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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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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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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The graph below illustrates growth in GDP for the goods and services producing industries between 1998 and 2003.

Growth in Gross Domestic Product (GDP)
Canadian Economy
Goods vs Services
1997-2003

Between 1997 and 2003, GDP growth in the Canadian economy increased at a rate of 3.6% per year. The goods-producing industries displayed a compound annual growth rate (CAGR) of 3.0%. On the other hand, services-producing industries exhibited GDP growth at 4.0% per year.

In 2003, the annual change in GDP for the Canadian economy (not shown) slowed to 1.9 %. The above chart illustrates that that while the performance of the goods-producing side of the economy was slightly lower in 2003 than recorded in the previous year, the services-producing industries exhibited GDP growth which was nearly half of its growth in value-added recorded in 2002. In 2003, GDP for goods-producing industries increased 1.4 %, while growth for service-producing industries was 2.2 %.

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GDP and GDP growth for goods-producing industries are depicted in the table below.

Gross Domestic Product (GDP)* by Industry by Goods-Producing Sectors of the Canadian Economy 1997-2003
NAICS Code	Sector	GDP* in millions of chained 1997 dollars		CAGR** 1997-2003	Percent Change 2002-2003
		1997	2003
11	Agriculture, Forestry, Fishing and Hunting	20,426	23,608	2.4%	10.3%
21	Mining and Oil and Gas Extraction	33,936	36,403	1.2%	3.0%
22	Utilities	26,684	26,000	-0.4%	-2.4%
23	Construction	42,995	54,897	4.2%	4.5%
31-33	Manufacturing	142,274	175,982	3.6%	-0.5%
Goods Producing Industries (NAICS 11 to 31-33)		266,316	317,716	3.0%	1.4%
Service Producing Industries (NAICS 41 to 91)		550,440	696,362	4.0%	2.2%
Canadian Economy		816,756	1,012,725	3.6 %	1.9 %
Notes : N/A = Not available * GDP is expressed in chained 1997 dollars in order to maintain accurate growth rates. Sector values may not necessarily add up to the value for the Canadian economy. ** Compound annual growth rate Source : Statistics Canada, CANSIM Table 379-0017

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The chart below compares annual growth of GDP in 2003 to growth in 2002 for goods-producing industries .

Annual GDP Growth
Goods-producing Industries
NAICS 11 to 31-33
2002 and 2003

AFFH = Agriculture, Forestry, Fishing and Hunting (NAICS 11)

In 2003, goods-producing industries displayed slightly lower gains in GDP than in 2002 with an overall growth rate of 1.4 %. In 2003, the Agriculture, Forestry, Fishing and Hunting sector led GDP growth on the goods-producing side. Value-added in the agriculture, forestry, fishing and hunting sector increased 10.3 % over the previous years GDP. Positive GDP growth was also recorded in the Mining and Oil and Gas Extraction and Construction sectors at 3.0 % and 4.5 % respectively.

More detailed data (not shown) illustrates the main influence of the strong gain in value-added for agriculture, forestry, fishing and hunting industries in 2003. While the extreme weather and insect infestations in the mid-western provinces caused a dramatic reduction in GDP growth in 2002, 2003 proved to be a particularly good year for Canadian crops. Between 2002 and 2003, GDP data for the crop production sub-sector shows growth was in the region of 27.9%.

However, declines in output were felt by the largest component of goods-producing industries. In 2003, the Manufacturing sector recorded a slight decline in GDP at -0.5 %. Declining value-added appeared in many industry groups within the manufacturing sector : food, beverage and tobacco producers; textiles, clothing, and leather manufacturers; fabricated metals, machinery, electrical equipment, and transportation equipment; and furniture manufacturers experienced declines. In addition, GDP growth in the Utilities sector declined by -2.4 %.