Skip to main content

Canada’s first Reading of negative GDP figure

It seems that the Bank of Canada’s bet is not working out as planned (maybe), GDP growth that was expected to be more sluggish in the second half of 2010 is turning out to be downright terrible.  It is difficult to blame the BoC, but it remains that Canada’s economy appears to be decelerating rather dramatically, from a 5.8% GDP reading for the first quarter of 2010, to a negative reading of 0.1% for July.


The biggest negative contributors were manufacturing, retail and wholesale trade, construction and forestry.  Confirming that Canadians, although clearly out of recession, are still spending as if they were in a recession.  The sectors which did the best were mining and to some extent the financial sector.  It must be pointed out that the success of our resource economy has little or nothing to do with the health of Canada’s economy; these numbers are entirely driven by foreign factors. 



Manufacturing decreased 0.7% in July, with 11 of the 21 major groups retreating. Manufacturers of non-durable goods reduced their production by 0.9%, in particular those of pharmaceutical and paper products. Manufacturing of durable goods decreased by 0.5%, notably of furniture, metallic and non-metallic products. Increases in the production of food and beverages and motor vehicle parts tempered the decrease in the manufacturing sector.

In the first quarter of 2010, Canada’s GDP grew by 5.8%, followed by a second quarter performance of 2.0%, now the first preliminary results for the third quarter are beginning to emerge, and the performance for that quarter are beginning to look like a sub 1% performance (4th quarter GDP tends to be slightly stronger due to seasonality), still the first half contributed a GDP growth of 3.9%, while the second half is looking increasingly difficult to predict.  It is now possible that my 3.2% target GDP growth for Canada in 2010 may be a little to optimistic, especially if the third quarter stays around zero growth, which would imply that by the end of the third quarter’s Canada’s growth rate may be around 2.6% for the year….

This will have an impact on Canada’s trade deficit (reducing imports), but will have virtually no impact on the CAD, since the currency is now entirely driven by the price of oil.  On thing for sure the BoC’s next 0.25% increase in interest rates would appear to be on hold.

Popular posts from this blog

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b) ground beef requires process
Post a Comment
Read more

21st century milk parlour

When we first looked at building our farm in 2018, we made a few money-saving decisions, the most important is that we purchased our milk herd from a retiring farmer and we also purchased his milking parlour equipment.  It was the right decision at the time.  The equipment dates from around 2004/05 and was perfectly serviceable, our installers replaced some tubing but otherwise, the milking parlour was in good shape.  It is a mature technology. Now, we are building a brand new milk parlour because our milking cows are moving from the old farm to the new farm.  So we are looking at brand new equipment this time because, after 20 years of daily service, the old cattle parlour's systems need to be replaced.  Fear not it will not be destroyed instead good chunks will end up on Facebook's marketplace and be sold to other farmers for spare parts or expansion of their current systems. All our cattle are chipped, nothing unusual there, we have sensors throughout the farm, and our milki
Post a Comment
Read more

So we sold surplus electricity one time last summer...(Update)

I guess that we will be buying an additional tank for our methane after all.   Over the past few months, we've had several electricity utilities/distributors which operate in our region come to the farm to "inspect our power plant facilities, to ensure they conform to their requirements".  This is entirely my fault.  Last summer we were accumulating too much methane for our tankage capacity, and so instead of selling the excess gas, that would have cost us some money, we (and I mean me) decided to produce excess electricity and sell it to the grid.  Because of all the rules and regulations, we had to specify our overall capacity and timing for the sale of electricity (our capacity is almost 200 Kw) which is a lot but more importantly, it's available 24/7, because it's gas powered.  It should be noted that the two generators are large because we burn methane and smaller generators are difficult to adapt to burn unconventional gas, plus they are advanced and can &qu
Post a Comment
Read more