Ontario Economic Accounts

Highlights

• Ontario’s real gross domestic product (GDP) declined 0.2% in the fourth quarter (October, November, December) of 2022, following five consecutive quarterly increases.
• Slower inventory accumulation and declines in business investment more than offset improved net trade and modestly higher consumer spending.
• Nominal GDP edged up 0.1%, matching growth in the third quarter.
• Economy-wide prices, as measured by the implicit price index for GDP, increased 0.3% in the fourth quarter.
• Economic production, measured on an industry basis, declined 0.1% in the fourth quarter. A decline in goods-producing output (−0.7%) was partially offset by higher service sector output (+0.1%).

2022 Annual Highlights

• Ontario’s real GDP advanced by 3.7% in 2022, following a 5.2% increase in 2021.
• In 2022, the increase in real GDP was supported by gains in household consumption (+6.2%) and exports (+4.5%). Business investment declined (−7.1%) in the year.
• Nominal GDP rose 9.2% in 2022. Compensation of employees increased by 9.5%, while the net operating surplus of corporations advanced 4.7%.
• Economic production, measured on an industry basis, rose 3.6% with both goods sector output (+1.9%) and service sector production (+4.0%) increasing.

Expenditure details

Ontario’s real GDP declined 0.2% in the fourth quarter of 2022, after a 0.4% advance in the third quarter. As of the fourth quarter, Ontario’s real GDP was 3.9% above the pre-pandemic level in 2019 Q4.

Household consumption spending rose 0.2%, following a 0.6% decline in the previous quarter. Higher spending on durables (+3.7%) was partially offset by lower spending on semi-durables (−1.9%), non-durables (−0.4%) and services (−0.1%).

Total business investment was 0.9% lower, the third consecutive quarterly decline. Declines were concentrated in machinery and equipment (−7.5%) and residential construction (−1.4%), while investment was higher in non-residential structures (+3.3%) and intellectual property products (+3.3%).

Exports decreased by 0.9% in the fourth quarter, while imports declined 3.5%. International exports (−2.1%) and imports (−4.1%) both declined. Interprovincial exports were 1.1% higher, while interprovincial imports declined 1.7% in the quarter.

Businesses accumulated $7.0 billion worth of inventories in the fourth quarter, down significantly from an accumulation of $20.3 billion in the previous quarter.

Income details

Ontario’s nominal GDP increased 0.1% in the fourth quarter, matching the third quarter gain.

Compensation of employees, which includes both wages and salaries and supplementary labour income, increased 0.8%, after rising 1.6% in the third quarter.

Net operating surplus of corporations declined 7.1%, following a 6.1% decrease in the third quarter.

Net mixed income, which is comprised of farm income, unincorporated business income and rental income, increased 2.3%, after rising 1.6% in the previous quarter.

Price details

Economy-wide prices, as measured by the implicit price index for GDP, increased 0.3% in the fourth quarter, following a 0.3% decline in the third quarter.

Prices for household consumption expenditures rose 1.1%, following a 0.7% increase in the third quarter.

Business investment prices rose 1.0%, following a 0.9% increase in the third quarter. Prices for machinery and equipment (+3.4%), non-residential construction (+1.1%), intellectual property products (+0.9%) and residential construction (+0.1%) all increased in the quarter.

Export prices (+1.4%) and import prices (+1.9%) both increased in the quarter.

Industry details

Ontario real GDP, measured as value-added by industry, edged down 0.1% in the fourth quarter of 2022. A decline in goods-producing output (−0.7%) was partially offset by higher service sector output (+0.1%).

Manufacturing output declined 1.6% in the quarter, with lower output in plastic and rubber (−11.1%), primary and fabricated metal (−5.1%) and food and beverage (−2.9%). Transportation equipment output advanced 2.8% in the fourth quarter, following a 0.7% decline in the third quarter.

Construction output increased 1.1% due to an increase in non-residential structures and engineering construction (+2.1%). Residential construction output declined 0.5% in the quarter.

Primary industry output was 1.2% lower, as agriculture and forestry output declined 1.9%.

Utilities output declined 1.2%, as natural gas and water (−2.2%) and electric power (−0.8%) production was lower.

Service industry output rose 0.1% in the quarter. Higher output in transportation and warehousing (+1.8%) and professional and administrative services (+0.5%) was partially offset by a decline in retail trade (−1.4%).

Jurisdictional comparison

Canada’s real GDP was unchanged in the fourth quarter of 2022, following an increase of 0.6% in the third quarter. Lower inventory accumulations, as well as declines in business investment were offset by higher household and government spending and improved net trade. As of the fourth quarter, Canada’s real GDP was 2.9% above its pre-pandemic level in 2019 Q4.

Quebec’s real GDP increased 0.5% in the fourth quarter of 2022, following a decline of 0.3% in the third quarter. Fourth quarter output was supported by higher household spending, while business investment declined. As of the fourth quarter, Quebec’s real GDP was 3.0% above its level in 2019 Q4.

In the U.S., real GDP increased 0.6% in the fourth quarter of 2022, following a 0.8% increase in the third quarter. The fourth quarter increase reflected gains in inventories, consumer spending, non-residential investment and government spending. This was partially offset by declines in residential fixed investment and exports. As of the fourth quarter, U.S. real GDP was 5.0% above its level in 2019 Q4.

Global economic environment

Economic growth stalled in many major economies in the fourth quarter of 2022, as activity was impacted by high price inflation and rising interest rates. Euro area real GDP was unchanged in the fourth quarter, following a 0.4% increase in third quarter. Real GDP in Japan was also unchanged in the fourth quarter following modest declines in the third quarter. In China, real GDP was also unchanged in the fourth quarter, decelerating from 3.9% growth in the third quarter, as economic activity was hindered by rising COVID‑19 infections and related public health restrictions. U.K. real GDP grew by 0.1% in the fourth quarter following a 0.1% decline in the third quarter. The U.S. economy continued to grow in the fourth quarter, with real GDP increasing by 0.6%, following a 0.8% increase in the third quarter.

Major economies continued to grow in 2022, although at slower rates than in 2021. U.S. real GDP grew by 2.1% in 2022, after 5.9% growth in 2021. Euro area real GDP increased 3.5% in 2022, after 5.3% growth in 2021; U.K. real GDP increased 4.1% in 2022, after 7.6% growth in 2021; Japan real GDP increased 1.0% 2022, after 2.1% growth in 2021; and China real GDP increased 3.0% in 2022, after 8.4% growth in 2021.

Crude oil prices remained volatile in the first quarter of 2023 amid increased economic and financial uncertainty and changing oil demand expectations. The West Texas Intermediate (WTI) crude oil price averaged US$83 per barrel in the fourth quarter of 2022 and declined to an average of US$76 per barrel in the first quarter of 2023, in large part due to increased financial market uncertainty.

The Canada-US exchange rate was little changed in the first quarter of 2023 compared to the last quarter of 2022, averaging 74.0 cents U.S.

To help moderate elevated consumer price inflation, the Bank of Canada raised its key policy interest rate, the target for the overnight rate, from 3.25% in September 2022 to 4.25% in December 2022, before raising it a further 25 basis points to 4.50% in January 2023. The Bank of Canada maintained the target for the overnight rate at 4.50% at its monetary policy announcement in early March. The Bank of Canada stated that it will continue to assess economic developments and the impact of past interest rate increases to determine if future policy rate increases are needed to return inflation to target.

Canada’s 3-month government treasury bill yield rose from an average of 4.1% in the fourth quarter of 2022 to 4.4% in the first quarter of 2023. The Canadian 10-year government bond yield edged down from an average of 3.2% in the fourth quarter of 2022 to 3.0% in the first quarter of 2023.

Appendix A: OEA release dates

The Fiscal Sustainability, Transparency and Accountability Act, 2019 states that the quarterly Ontario Economic Accounts should be released within 45 days of the Statistics Canada release of the National Income and Expenditure Accounts.

In compliance with the legislation, the OEA will be released according to the following schedule:

Appendix B: Structure of the Ontario economy

Appendix C: How GDP is measured

The Ontario Economic Accounts provide measurements of GDP using three different methodologies, by expenditure, income and industry.

The GDP by expenditure approach defines GDP as the aggregate of all expenditures on final consumption, gross capital formation and net trade by consumers, governments and businesses that occur within Ontario’s economy over a given time period. This measurement of GDP can also be defined as the sum of consumer spending, gross investment, government spending and net trade.

The GDP by income approach equates GDP to the total income earned through contributions to production within Ontario’s economy by labour and capital over a given time period. That is, GDP is the sum of all wages and salaries paid to employees, the gross operating surplus of businesses, gross mixed income and indirect taxes less subsidies.

The GDP by industry approach measures GDP by calculating the total output of the goods and services producing industries within Ontario’s economy and subtracting the cost of intermediate inputs used in final production. This approach can also be referred to as the value-added approach as it quantifies the additional value generated by industries through the production of final products within the economy.

For a full list of definitions used in the Ontario Economic Accounts, please see Statistics Canada's System of Macroeconomic Accounts Glossary at https://www150.statcan.gc.ca/n1/pub/13-605-x/gloss/gloss-a-eng.htm.

Accessible chart descriptions

Chart 1.1: Real GDP growth

The bar chart illustrates Ontario’s quarterly per cent real GDP growth from the first quarter of 2019 to the fourth quarter of 2022. In the four quarters of 2019, real GDP growth was 0.1%, 0.7%, 0.3% and 0.0%, respectively. In the four quarters of 2020, real GDP growth was −1.2%, −11.7%, 9.9% and 2.3%, respectively. In the four quarters of 2021, real GDP growth was 1.3%, −0.8%, 1.5% and 1.7%, respectively. Ontario real GDP grew by 1.1% in the first quarter of 2022, 0.8% in the second quarter, 0.4% in the third quarter, and −0.2% in the fourth quarter.

Source: Ontario Ministry of Finance.

Return to chart 1.1

Chart 1.2: Nominal GDP growth

The bar chart illustrates Ontario’s quarterly per cent nominal GDP growth from the first quarter of 2019 to the fourth quarter of 2022. In the four quarters of 2019, GDP growth was 0.6%, 1.9%, 0.8% and 0.5%, respectively. In the four quarters of 2020, GDP growth was −1.3%, −12.4%, 12.2% and 4.2%, respectively. In the four quarters of 2021, GDP growth was 2.7%, 0.1%, 2.1% and 2.7%, respectively. Ontario nominal GDP grew by 3.2% in the first quarter of 2022, 3.5% in the second quarter, 0.1% in the third quarter, and 0.1% in the fourth quarter.

Source: Ontario Ministry of Finance.

Return to chart 1.2

Chart 1.3: Real GDP change by industry, 2022 Q4

The horizontal bar chart illustrates the per cent change in real GDP by industry for the fourth quarter of 2022. The output of all industries decreased 0.1% in the quarter. Output decreased in goods-producing industries (−0.7%), with industry changes as follows: primary (−1.2%); utilities (−1.2%); manufacturing (−1.6%); and construction (+1.1%). Output in the service industries increased 0.1%, including industry changes as follows: other services (+0.6%); professional and administrative services (+0.5%); wholesale trade (+0.4%); health, education and public administration (+0.2%); finance and insurance (+0.1%); real estate, rental and leasing (−0.1%); and retail trade (−1.4%).

*Other services include transportation and warehousing; information and cultural; arts, entertainment, and recreation; accommodation and food services; management of companies and enterprises; and other services.

Source: Ontario Ministry of Finance.

Return to chart 1.3

Chart 1.4: Real GDP growth across jurisdictions

This bar chart shows quarterly percentage changes in real GDP for Ontario, Canada, Quebec and the U.S. for the third and fourth quarter of 2022. Ontario real GDP increased 0.4% in the third quarter and decreased 0.2% in the fourth quarter. Canadian real GDP increased 0.6% in the third quarter and remained unchanged in the fourth quarter. Quebec real GDP decreased 0.3% in the third quarter and increased 0.5% in the fourth quarter. U.S. real GDP increased 0.8% in the third quarter and rose 0.6% in the fourth quarter.

Sources: Ontario Ministry of Finance, Statistics Canada, U.S. Bureau of Economic Analysis and Institut de la statistique du Québec.

Return to chart 1.4

Chart 1.5: Real GDP growth

This bar chart shows quarterly percentage changes in real GDP for the U.S., the euro area, the United Kingdom, Japan, and China for the third and fourth quarter of 2022. U.S. real GDP increased 0.8% in the third quarter and rose 0.6% in the fourth quarter. Euro area real GDP increased 0.4% in the third quarter and remained unchanged in the fourth quarter. Real GDP in the United Kingdom decreased 0.1% in the third quarter and increased 0.1% in fourth quarter. Japan’s real GDP decreased 0.3% in the third quarter and remained unchanged in the fourth quarter. China’s real GDP increased 3.9% in the third quarter and remained unchanged in the fourth quarter.

Sources: U.S. Bureau of Economic Analysis, Eurostat, U.K. Office for National Statistics, Cabinet Office of Japan, and National Bureau of Statistics of China.

Return to chart 1.5

Chart: Appendix B, Per cent share of nominal GDP, 2021

This pie chart shows the percent share of nominal GDP by industry for 2021. Goods-producing industries accounted for 22.3% of Ontario’s nominal GDP with industry shares as follows: manufacturing (10.5%); construction (7.9%); utilities (1.8%) and primary industries (2.2%). Services-producing industries accounted for 77.7% of Ontario’s nominal GDP with industry shares as follows: real estate, rental and leasing (13.5%); health and education (13.2%); wholesale and retail trade (11.0%); finance and insurance (10.3%); public administration (7.7%); transportation and warehousing (3.2%); information and culture (4.0%) and other services (14.7%).

Note: Numbers may not add due to rounding.

Source: Statistics Canada

Return to chart

Chart: Appendix C, GDP measurement methods

• Expenditure Approach
  • Sum of expenditures of all sectors of the economy
  • Consumer Spending + Investment + Government Spending + Exports – Imports
• Income Approach
  • Sum of all incomes
  • Wage and Salaries + Profits + Mixed Incomes + Indirect taxes – Subsidies
• Production Approach (GDP by Industry)
  • Sum of value added in all industry sectors
  • Output of Goods Producing Industries + Output of Services Producing Industries – Intermediate Inputs

Return to chart