Economic activity expands at moderate pace in the first half of 2024

Statistics Canada has published a summary of its most recent observations of the Canadian economy showing that household spending supported growth while employment slowed, and business labour productivity continued to trend lower in the first half of 2024.

Real gross domestic product (GDP) rose 0.5 per cent in the second quarter after increasing 0.4 per cent in the first quarter of the year, with consumers making a smaller contribution to growth in the second quarter – household spending rose 0.2 per cent, down from 0.9 per cent reported in the first quarter. “Higher outlays on basic household services, including utilities, fuels and rental fees, were tempered by lower spending on new trucks, vans and sport utility vehicles, which contracted for the first time in eight quarters,” they write. “Overall household expenditure volumes in the second quarter were 1.9 per cent higher than in the second quarter of 2023.”

Employment rose during the first six months of the year, meanwhile, but two-thirds of the cumulative employment gains in the first half were part-time positions.

Shelter inflation 

New housing construction fell 1.6 per cent in the second quarter after a 0.4 per cent decline in the first quarter of the year. Shelter inflation continued to accelerate early in the year, as well with year-over-year shelter costs up 6.2 per cent in January before rising to 6.5 per cent in February and March. “Shelter costs in August were 5.3 per cent higher than in August 2023,” the report states. “Mortgage interest costs were up 18.8 per cent in the twelve months to August.”

Rental costs also accelerated 8.6 per cent in August, matching highs reported in May this year. “In contrast, yearly price changes for homeowners’ replacement costs, which partly reflect new housing prices, have remained in negative territory for 16 consecutive months,” they write. 

Income gains 

Household income advanced in the first half of the year, rising 1.5 per cent in the second quarter after advancing 1.7 per cent in the first quarter. “Income gains were mainly from higher wages and salaries as growth in investment income slowed. The household savings rate rose to 7.2 per cent and is two-and-a-half times larger than its pre-pandemic benchmark. Households added $25.9-billion in currency and deposits in the second quarter.” 

That said, real GDP per capita continued to trend lower in the first half of 2024, driven by temporary and permanent immigration increases. “With declines in seven of the past eight quarters, real GDP per capita in the second quarter was 2.8 per cent below its pre-pandemic baseline. Household final consumption spending, measured on a per capita basis, has declined in six of the past eight quarters.”