Real Estate Is The Only Reason Canada’s GDP Grew In February

If you’re looking forward to a housing crash, consider the broader impact to the economy. According to the latest calculations from Statistics Canada, real estate and related sectors are the only thing keeping Canada out of a technical recession. February saw real estate related industries take three of the top 5 spots for GDP growth, while the majority of industries stagnated from the month prior. As reliant as this trend has become, it’ll likely be a larger part of the GDP numbers next month.

Real Estate Related Industries

Three of the top five industries experiencing growth in Canada are directly tied to real estate. Construction, real estate and rental/leasing, and finance/insurance experienced 0.5%, 0.5%, and 0.7% in growth respectively. The three combined industries generated $2.4 billion more worth of GDP than the month prior. Considering total GDP only grew by $560 million, these industries are doing more than their share to keep the economy afloat. Had these industries flatlined, we would have experienced a decline in GDP.

Source: Statistics Canada.

GDP Declines or Stagnates In Majority of Industries

While real estate-related sectors were booming, the rest of the economy isn’t doing so hot. A maximum growth of 0% was observed in 18 of the 27 industries. Agriculture experienced the greatest declines, with the industry falling 1.2% from the month prior. Non-durable manufacturing, manufacturing, and durable manufacturing took the next three bottom spots, with declines of 0.7%, 0.6%, and 0.6% from the month prior. Arts, entertainment, and recreation rounds out the bottom five, with a 0.5% decline.

Expect Increased Reliance In The Next Report

As strong as the real estate trend was in contrast, we’ve got pretty good reason to believe that it will become stronger when we see the March numbers come out. March saw a record 235,674 new housing starts, the highest since September 2007. Oil and gas have experienced a mild bounce on a weaker Canadian dollar, so it may also provide better numbers in March. However, there’s few other industry points being touted as a boom, so don’t expect much.

This trend is dangerous for two reason, the reliance on a single industry, and the stagnation of other industries. The Canadian economy is largely focused on buying and selling real estate, and doesn’t seem concerned that people outside that industry are not doing economically well. Despite the fact that the cost of shelter keeps going up, the value of work from people being sheltered is actually stagnating. The government is devoting its efforts to stopping the reliance on real estate, but has provided few other avenues for economic development. Anyway you look at it, this is a disaster waiting to happen.

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