www.td.

com/economics

TD Economics
Special Report
February 4, 2009

FOUR OUT OF FIVE MAJOR CANADIAN INDUSTRIES

TO CUT OUTPUT IN 2009
Even the most negligible output growth will be a rare
occurrence across Canada’s major industries in 2009. HIGHLIGHTS
Among the nation’s 25 key sectors, only the non-residen-
tial and engineering construction sector, agriculture and a • Goods-sector output set to decline by 4% in
smattering of service industries are expected to record gains 2009, led by double-digit drops in auto and resi-
in real output on a Q4/Q4 basis, with the former, in particu- dential construction
lar, being fuelled by a substantial injection of government • Infrastructure-heavy federal and provincial
infrastructure funding in this year’s federal and provincial budgets to mitigate the impact of falling
budgets. On the opposite side of the spectrum, the auto homebuilding activity on overall construction
and residential construction industries are expected to scale • Similar to past recessions, the nation’s service
back production at a hefty double-digit pace – thus sitting sector should hold up relatively well
rock bottom in the 2009 industrial rankings. The majority • Still, about half of service industries expected
of industries will likely turn in Q4/Q4 output declines in the to post declining output in 2009
1-5% range. • A drop of 325,000 net jobs likely this year, with
Similar to past recessions, the nation’s goods sector is about one-third of those in manufacturing
likely to suffer the hardest body blow during the current • In 2010, a moderate recovery in output and jobs
economic downturn, bombarded by a combination of anemic is projected

REAL GDP GROWTH FORECAST

% chg. 09Q4/08Q4
U.S. demand, low commodity prices, and softening de-
SERVICE
mand for “big ticket” items. The service sector has tended
1.0
INDUSTRIES to hold up better during difficult economic times, and this
downturn is not expected to be any different. That being
CONSTRUCTION 0.0
said, about half of service sector industries are projected
to post declining output in 2009, while net service jobs are
UTILITIES -0.5
forecast to decline by 1% – or 144,000 positions – this
PRIMARY
year. By comparison, goods sector employment is fore-
-3.4
INDUSTRIES cast to retreat by -5% or 180,000 positions.
2010 should represent a return to growth across Cana-
MANUFACTURING -6.0
dian industries, although the extent of improvement is likely
-7 -6 -5 -4 -3 -2 -1 0 1 2
to be quite subdued – especially on the employment front,
where only a share of this year’s projected losses is ex-
Forecast by TD Economics as at Jan. 2009; Source: Statistics Canada
pected to be recouped. The hangover from the recent

Sectoral Outlook 1 February 4, 2009

 www.td.com/economics

implosion in the U.S.-housing, global- financial leverage

OPERATING PROFITS
and commodity-price bubbles is expected to take several
years to fully shake off, thus constraining the extent and 90
Y/Y % chg.

speed of recovery. In this environment, significant spare Forecast

70
production capacity will linger into 2010, while profit mar- 50
gins remain constrained by a general lack of pricing power.
30
Total
Broad-based slowing becoming entrenched 10

As 2008 drew to a close, signs of weakness were -10

emerging in virtually every nook and cranny of Canadian -30 Resources

private industry. Not only did the woes of export-oriented -50

manufacturers continue to increase in tandem with those -70

of the U.S. market, but sectors that had been holding up -90
Q1/2006 Q4/2006 Q3/2007 Q2/2008 Q1/2009 Q4/2009 Q3/2010
well earlier in the year began to fall by the wayside. The
formally high-flying resource sector was sideswiped by a Forecast by TD Economics as at December 2008; Source: Statistics Canada
precipitous drop in energy and non-energy commodity
prices during the third and fourth quarters. Canadian con- year. Furthermore, stripping away the public sector, out-
sumers began to pull in their horns, as evidenced by falling put essentially stagnated during 2008.
retail sales and home purchases late in the year and a
The deepening weakness witnessed across industries
lackluster holiday shopping season. And, tightening credit
during the latter part of the year was also reflected in em-
conditions in global markets had started to ripple through
ployment and profitability by sector. Total employment fell
to company investment plans, hurting the prospects of those
by a combined 100,000 jobs in November and December,
industries geared towards business spending.
with the net job losses fairly evenly spread between con-
The evidence of the broadening slowdown in recent struction, overall services and the rest of the market. As
months will be borne out in 2008 year-end numbers for we show in the table on page 10, the Q4 pull-back put a
real output by industry. As revealed in the table on page 9, dent in the total job performance for the year but still left
we estimate that output in manufacturing, primary and resi- net job creation at 135,000 positions in 2008. But that posi-
dential construction industries all declined last year (Q4/ tive showing provided little comfort since the job market
Q4). As importantly, growth in service sector activity, which tends to lag the general economy.
had been running at a 3% Y/Y pace as recently as mid-
Operating profit figures have been released by Statis-
2008, slowed to only about 1% in the final quarter of the
tics Canada up to Q3 2008, which pre-dated much of the
massive reversal in commodity prices. As such, the Q4
REAL GDP AT BASIC PRICES picture will reveal a significant deterioration in profits, with
the Y/Y growth slowing to virtually nil from the solid 12%
Y/Y % chg.
5 Y/Y pace set in Q3. However, even the Q3 numbers were
Services
4 showing that profit performances in many sectors had al-
3 ready begun to slip. In particular, removing the resource
2 sector from the count left a gain of only 3%, which is a far
1 cry from the double-digit annual increases recorded in late
0 2007 and early 2008. It is likely that growth in non-re-
-1 source profits shifted into negative territory in Q4.
-2 Goods
Look ahead to 2009
-3
These recent data highlight the sputtering momentum
-4
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08
heading into the New Year. And with macroeconomic
conditions likely to worsen in the coming quarters, 2009
Source: Statistics Canada/ Haver Analytics promises to be the most challenging year faced by Cana-

Sectoral Outlook 2 February 4, 2009


FEDERAL GOVERNMENT'S FISCAL
POSITION
% GDP
4 80
Projected
2
0 inflation risks have swung the door open for the Bank of
-2
-4
-6
Budget Balance (left scale)
-8
Debt (right scale)
-10
83-84 88-89 93-94 98-99 03-04 08-09
Source: Department of Finance Canada.
dian industry since the throes of the last recession in the
early 1990s. Highlights of the macroeconomic assumptions
underpinning the industrial forecast are presented in the
accompanying text box.
An increasingly visible theme in the year ahead is ex-
pected to be the negative “feedback” loop between the
supply side of the economy and the demand side. As de-
mand for goods and services weakens, production and prof-
its get dampened, ultimately translating into falling employ-
ment and then to weakening demand. As recent data at-
test to, this chain already appears to be in motion. Total
operating profits are expected to drop by 30% between
Q4 2008 and Q4 2009. In the job market, some 325,000
jobs are expected to be shed on a net basis this year, push-
ing the unemployment rate towards 8.8%. In 2010, we ex-
pect output and profits to rebound moderately, but employ-
ment will struggle to improve, making up only about one-
third of this year’s net job loss.
Early 1990s still the worst recession in recent times
Although Canada’s industries may be headed for a very
rocky road over the next 12-18 months, we don’t believe
that the severity of the coming downturn will match the
particularly painful recession of early 1990s – one that ef-
fectively dragged out for three years and where massive
joblessness took the unemployment rate up to 11.5%. True,
some problems are unique to today’s experience, such as
a synchronized world recession, a global credit crisis and
extreme volatility in commodity markets. However, the one
over-riding advantage lies with the healthier state of the
domestic economy heading into the downturn. Whereas
Sectoral Outlook
www.td.com/economics
the late 1980s spawned incipient inflation, double-digit nomi-
nal interest rates, large government deficits, and vast specu-
% GDP
lation in nation-wide housing and commercial office mar-
70
kets, froth in the domestic economy in recent years has
largely been confined to the western markets. Tumbling
60
50 Canada to aggressively cut its bellwether overnight rate
40 over the past year, to only 1%, with a further 0.5% cut
likely at the next fixed announcement date in March. Ac-
30
cordingly, the chartered bank prime rate currently sits at a
20 record low of 3% and the 5-year fixed term mortgage rate
10 has sunk near historical lows. And the budget surpluses
0
racked up during the 1990s have provided governments
13-14 with increased wiggle room to stimulate their economies,
especially the federal government, which unveiled a $40
Macroeconomic Assumptions
• At only 0.5% in 2009, world real GDP growth is fore-
cast to fall to its weakest pace since the data were
first tracked in 1960.
• Despite the implementation of a massive stimulus
package later this year, the U.S. economy will expe-
rience a deep decline in real GDP in the first half of
2009 and then record a tepic recovery.
• Ongoing anemic global demand will likely push com-
modity prices lower during the first half of 2009, with
crude oil falling to an average of US$30 per barrel in
Q2 2009. The forecast assumes prices rebound
thereafter, but stay well below their 2007-08 peaks.
(WTI prices are expected to rise to US$75 by the
end of 2010).
• Deflation, not inflation, will remain the watchword this
year, with a lack of pricing power increasingly crimp-
ing business profit margins.
• Faced with growing economic slack, falling inflation
trends, and ongoing challenges in credit markets,
the Bank of Canada is expected to cut short-term
interest rates further, to 0.5% by the end of Q1 2009.
Rates will remain at that ultra-low level until mid-2010,
after which time the Bank will begin the process of
engineering hikes.
• The Canadian dollar is expected to remain close to
80 US cents in the first quarter, before strengthening
to 87 US cents by year-end on the back of higher
commodity prices and U.S. dollar weakness. In 2010,
we expect the loonie to trade in the 87-90 range.
3 February 4, 2009
 www.td.com/economics

billion (2.5% of GDP) stimulus package in its 2009 budget.

MANUFACTURING JOBS
Significant further cuts facing manufacturers in 2009
Share of total jobs
20%
For Canada’s manufacturing sector – which has con-
tracted steadily since 2005 – the worst is yet to come. TD
18%
Economics’ projects overall factory output will slump by a
hefty 6.4%, shaving almost a full percentage point directly
16%
off overall Canadian goods and services production alone
this year. A further 117,000 net jobs are expected to be
14%
shed by manufacturers by the end of 2009, sending the
sector’s share of total employment to 11%, or a striking 4
12%
percentage points lower than its 2004 peak.
Over the past few years, strong Canadian household 10%
and business spending provided an important counterbal- 1998 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
ance to domestic manufacturing sales in the face of sof- Source: Statistics Canada
tening U.S. purchases. However, with the U.S. woes only
worsening and Canadian domestic spending now faltering,
there will be little to prop up orders in 2009. Recent drops FIRMS' EXPECTED INVESTMENT IN
in commodity prices and the Canadian dollar – along with MACHINERY AND EQUIPMENT
Balance of Opinion* (% of responding firms)
federal and provincial government assistance – will ease 40

some of the pressure, but not nearly enough to staunch the 30

bleeding. 20

Prospects this year for output and employment in the 10

auto and parts sector are particularly grim, as North Ameri- 0
can light vehicle sales slump to a 4-decade low this year, -10
necessitating steep output cuts across the industry. Con-
-20
siderable uncertainty continues to surround the Detroit 3,
-30
and notably General Motors and Chrysler. But while there
-40
is no shortage of possible outcomes – including mergers,
2001-03 2002-06 2003-09 2004-12 2006-03 2007-06 2008-09
strategic alliances and even bankruptcy protection – what
is clear is that a further substantial downsizing of their op- *Proportion of firms that expect increases in their M&E investment minus those
expecting decreases; Source: Bank of Canada Business Outlook Survey

AUTOMOTIVE SALES AND PRODUCTION

erations remains in store over the medium term. (For more
000's Per cent Change details, please see TD Economics’ January 2009 Auto
2007 2007 2008E 2009F 2010F Outlook, available at www.td.com/economics).
SALES OF LIGHT VEHICLES In addition to negatively affecting downstream retail
NORTH AMERICA 18,835 -2.1 -15.8 -25.5 13.8 and wholesale industries, the bleak prospects for the auto
Canada 1,653 2.6 -1.1 -12.9 5.3
and parts sector bode ill for many of its suppliers, including
United States 16,089 -2.5 -18.0 -28.0 15.8
those in the metal, rubber and plastics products industries.
Mexico 1,093 -3.5 -6.2 -13.7 6.8
On top of weakening global demand picture, the steel and
PRODUCTION OF LIGHT VEHICLES
15,021 -1.5 -16.1 -27.7 15.0
aluminum industries face the double-whammy of sharply
NORTH AMERICA
Canada 2,542 1.8 -19.6 -28.3 13.3
lower prices for their products. As we discuss later, the
United States 10,473 -3.0 -19.3 -30.4 16.0 downturn taking shape in Canadian housing activity is also
Mexico 2,006 2.6 5.1 -16.3 13.0 not doing any favours for these supplier industries, although
Forecast by TD Economics as at January 2009 a number stand to benefit from increased government in-
Source: DesRosiers Automotive Reports, Ward's, TD Economics frastructure spending in this year’s round of budgets.

Sectoral Outlook 4 February 4, 2009


The wood and paper products industry is expected to
contract for the fourth consecutive year in 2009. The
Canadian lumber industry will confront further rationaliza-
tion in the months ahead, as lumber demand continues to
sink and prices remain at distressed levels. On the bright
side, signs of a bottoming in U.S. homebuilding activity by
the end of this year are likely to spur a healthy rebound in
lumber prices, setting the stage for a long-awaited recov-
ery in 2010. Elsewhere in the forestry sector, supply cuts
in the North American newsprint and pulp industries helped
to keep prices relatively well supported last year. But with
demand expected to take a turn for the worse over the
near term, newsprint and pulp prices are projected to lose
significant traction before regaining some strength next
year. (For more details on forestry and other commodity
prices, please see TD’s Revised Commodity Price Fore-
cast, available at www.td.com/economics)
While other major manufacturing sub-industries appear
somewhat better off, few areas are expected to avoid the
trend towards lower output in 2009. It is only a matter of
time before the global recession takes a toll on the recently
high-flying aerospace industry, even if a hefty backlog of
unfilled orders built up over the past few years mitigates
the downside risk to production this year. The food prod-
ucts industry tends to be more recession-proof than many
of its counterparts, but even there, the impact of a more
cautious consumer will be felt. Industries closely tied to
business capital spending – including machinery and elec-
trical & computer products – will likely witness a soften-
ing in sales as companies reduce capital spending plans.
Indeed, in the Bank of Canada’s January 2009 Business
COMMODITY PRICE INDICES
600
Index (1997=100)
Forecast
Energy
500 Non-Precious Metals
400
300
200
100
0 still expected to rise over the next few years, fuelled by
1997 2000 2003 2006 2009F
As forecast by TD Economics as at November 2008
Sectoral Outlook
www.td.com/economics
COMMODITY PRICE INDICES
Index (1997=100)
250
Forecast
Agricultural Products
Forest Products
200
150
100
50
0
1997 2000 2003 2006 2009F
Forecast by TD Economics as at November 2008
Outlook Survey, about half the companies surveyed ex-
pected to lower machinery and equipment purchases over
the next 12 months. Makers of smaller-ticket electronic
products such as wireless hand-held devices should hold
up somewhat better than the industry average, but will still
be in for a tough year.
Price rout sideswipes commodity sector
In a matter of a few months, the commodity sector
transformed from a leading area on Canada’s industrial
landscape to a lagging one. This abrupt turnaround will be
visible beginning in Q4 earnings reports. Based on our 18-
item TD Commodity Price Index, prices have plummeted
by an average of 60% in U.S.-dollar terms since July, with
crude oil, natural gas and base metals declining the most.
The concurrent softening in the value of the Canadian dol-
lar has cushioned some of the blow, but prices are still
down by 50% in own-currency terms. The impact on pro-
ducer bottom lines from the decline in prices has been ac-
centuated by other developments, notably the rising global
cost of credit.
Accordingly, the number of delays and cancellations of
resource projects around the world has been gaining steam.
In Canada’s oil and gas sector, 2009 capital spending plans
are being slashed, with the number of wells drilled expected
to decline by some 20-25% compared to last year. Billions
of dollars in long-term oil sands expansion plans have been
delayed, in some cases, indefinitely. Oil sands output is
the recent completion of extraction facilities and additional
pipeline capacity to the United States. Still, earlier ana-
5 February 4, 2009
 www.td.com/economics

lysts’ projections of oil sands output reaching 2.5 million

HOUSING STARTS AND EXISTING HOME
barrels per day (bpd) by 2015 from the current 1.2 million
PRICES
bpd are being scaled back by at least half a million bpd.
Thousands, SAAR Y/Y % chg.
Commodity prices are unlikely to hit a trough until the 250 15

global economy reaches rock bottom, which we don’t ex-

10
pect before Q3 2009. Until then, prices could fall another 200

10%, putting even more pressure on producers to find cost 5

150
savings. Prices across the commodity complex should
0
strengthen in 2010, supported in part by the current cut-
100
backs in spending plans around the world. Nevertheless, -5
we don’t believe that prices will return to the speculation- 50
-10
driven peaks set in 2007-08 over the next two years. Crude
oil prices, for example, are expected to strengthen to US$75 0 -15
per barrel by the end of 2010, which would be between 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009f 2010f

their 30-year average (US$30 in 2008 dollars) and last Forecast by TD Economics as at December 2008; Source: CREA/CMHC

year’s high of US$147 per barrel.

Among the commodity-based industries, agriculture is Infrastructure spending to backstop construction
expected to hold up the best in 2009, supported by momen- As 2008 came to an end, Canadian housing activity was
tum from this year’s good harvest. And while crop prices showing clear signs of retrenching, reflecting both the im-
have pulled back substantially since their heights reached pact of past excesses and growing concerns about the job
in 2007, they remain reasonably high, while many input market. Housing starts fell from readings of above 200,000
costs have eased since mid-2008. Livestock producers units at annual rates in the summer and early fall to below
have not been faring as well as their crop counterparts, 175,000 units at annual rates in November and December.
particularly in the hog industry. However, with North Average resale prices in Canada also pulled back, consist-
American hog inventories expected to decline this year, ent with a shift from a balanced market earlier in the year
we believe that a firming in hog prices is in the cards. to a buyers’ market. Looking ahead to 2009, little let-up in
Uncertainty regarding U.S. government legislation on coun- these recent housing market trends is expected, with prices
try-of-origin labeling (COOL) remains a major challenge projected to drop by about 11% on average and housing
facing Canada’s livestock industry. starts poised to decline to an 9-year low of 140,000 units.
Affordability should continue to improve as the year
progresses particularly in light of the price declines and
CONSTRUCTION REAL GDP low borrowing rates. However, with unemployment likely
Index (07Q1=100)
to rise into 2010, we don’t project much of a recovery in
130
Engineering
housing demand – and prices – until 2011.
120
On the commercial side, a number of markets will face
Forecast
a combination of declining demand for prime office and
110 retail space as well as upward supply pressure from the
completion of projects, notably in Calgary and Toronto. Still,
100
Non-residential at 4-5% in most major cities, vacancy rates remain rela-
90 tively low, which should help the office market whether
the storm. Over the medium term, vacancy rates will be
80 Residential capped by a shortage of new projects that are likely to
emerge this year, partly reflecting the recent problems in
70
2007Q1 2007Q4 2008Q3 2009Q2 2010Q1 2010Q
global credit markets.
Despite the headwinds from weakening housing and
Source: Statistics Canada; Forecast by TD Economics as at January 2009
commercial markets, rising engineering work is likely to

Sectoral Outlook 6 February 4, 2009

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limit the overall decline in construction activity in 2009 and

SERVICES RELATIVELY STABLE THROUGH
contribute to the sector’s recovery in 2010. Through cost- RECENT RECESSIONS
sharing arrangements, the federal government anticipates
that other levels of government will provide an additional % change over recessionary period
2.0
$9 billion to its own tally. Despite efforts that have been Real GDP 0.9
1.0 0.7
Services
made to identify priority projects and speed up the approval
process, the jury remains out on how much of this spend- 0.0

ing will actually flow before the end of 2010. In the con- -1.0 -0.5
struction forecast we assume that roughly half of the total -0.88

amount, or about $10 billion, is spent over the next two -2.0
-1.93
years. -3.0

Service sector to stall in 2009 -4.0 -3.4

Early Eighties (81Q3- Early Nineties (90Q1- Current Recession

Canada’s service sector has been a key driver of growth 82Q4) 92Q1) (08Q2-09Q4*)
in recent years, now accounting for 70% of overall output *As forecast by TD Economics as at January 2009; Source: Statistics
– up about 6 percentage points over the past quarter cen-
tury. Similar to the experience in past recessions, we
project that the service side will hold up relatively well. RETAIL SALES AND EMPLOYMENT
For example, in both the early 1980s and 1990s recessions, Y/Y % chg. (3Q moving average) Y/Y % chg. (3Q moving average)
8 3.0
Employment
real output in services was essentially unchanged amid (right scale)
7
slumping goods-sector production. This relative stability can 2.5

be partly chalked up to the fact that it is much easier for 6

2.0
companies and consumers to postpone purchases of goods 5
than it is for services. And while manufacturers are ex- 4 Sales 1.5
posed to costly buildups in stockpiles during recessions, (left scale)
3
services don’t hold “inventory”. 1.0
2
At the same time, some service sector industries have
0.5
proved to be more vulnerable to cyclical downturns than 1
others. Those areas that are reliant on the goods sector 0 0.0
industries tend to see their fortunes weaken the most. 2007-03 2007-07 2007-11 2008-03 2008-07 2008-11
Transportation services and wholesale trade are particular December 2008 estimate by TD Economics; Source: Statistics Canada
examples. Consumer-oriented industries, such as retail
trade and accommodation and food services, have also by 5% in 2010.
suffered more than average during periods of rising unem- The tourism sector will also represent a major pocket
ployment. of weakness this year. The impact of the economic down-
Early reports on the 2008 holiday shopping season pro- turn on tourism activity has already been evident. Total
vided an indication of where trends are likely headed within trips to Canada by residents and non-residents – which
the consumer-oriented industries in 2009. While official had been growing modestly in early 2008 compared to year-
retail sales numbers for December won’t be released until earlier levels – fell by 10% in October. Little reprieve is
mid-February, a survey by the Retail Council of Canada expected in the coming months as the impact of reces-
showed that in spite of margin-cutting promotions, 60% of sions in both Canada and globally keeps individuals close
retailers reported lower sales compared to a year earlier to home.
and more than 75% reporting fewer store visits. 2009 will Canada’s financial services sector has been negatively
likely be marked by continued price discounting and shrink- affected by the global financial and credit crisis, although
ing sales volumes. Auto dealerships are expected to face a the well diversified structure of many of its key players
particularly difficult time as Canadian light vehicle sales and solid regulatory system compared to many other coun-
plunge by 13% this year before snapping back modestly tries has stood it in good stead. While the stress in finan-

Sectoral Outlook 7 February 4, 2009

 www.td.com/economics

cial markets is expected to dissipate throughout 2009, the
sector will continue to face the challenge of growing weak-
ness in the housing market along with other elements of
the domestic economy in the coming quarters. The same
can be said for real estate services, which also tends to
ebb and flow in line with the broad domestic economic
trends.
In contrast to most other service industries, public ad-
ministration and “other services” (which comprises the large
health and education services industries among others) are
projected to grow in 2009, albeit modestly. The significant
$30 billion in spending undertaken in the federal fiscal stimu-
lus plan over two years will support growth in public ad-
ministration. And while provincial governments are facing
more significant fiscal constraints, several have already
indicated that they will run near-term deficits, suggesting
that significant cuts to public-sector services are not in store
in the upcoming budget season. In the short run, rising
unemployment and significant federal injections into train-
ing will provide a boost to educational services. In Cana-
da’s publically-funded health care system, demand contin-
ues to grow regardless of the business cycle.

Derek Burleton
AVP & Director of Economic Analysis
416-982-2514

This report is provided by TD Economics for customers of TD Bank Financial Group. It is for information purposes only and may not
be appropriate for other purposes. The report does not provide material information about the business and affairs of TD Bank
Financial Group and the members of TD Economics are not spokespersons for TD Bank Financial Group with respect to its
business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not
guaranteed to be accurate or complete. The report contains economic analysis and views, including about future economic and
financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and
uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that
comprise TD Bank Financial Group are not liable for any errors or omissions in the information, analysis or views contained in this
report, or for any loss or damage suffered.

Sectoral Outlook 8 February 4, 2009

 www.td.com/economics

CANADIAN INDUSTRIAL OUTLOOK

REAL GROSS DOMESTIC PRODUCT (GDP) BY INDUSTRY*
Level Share of Y/Y % change Q4/Q4 % change
$billions Output Actual Est. Forecast Actual Est. Forecast
2007 2007 2007 2008 2009 2010 2007 2008 2009 2010
ALL INDUSTRIES (GDP) 1,219.3 100.0% 2.5 0.8 -1.4 2.8 2.8 -0.3 -0.4 3.5
GOODS INDUSTRIES 374.1 30.7% 0.5 -2.4 -4.5 1.9 0.1 -3.0 -3.7 3.9
PRIMARY INDUSTRIES 84.1 6.9% -1.0 -1.9 -2.5 1.4 -1.6 -0.2 -3.4 3.0
Agriculture 19.0 1.6% -1.5 3.6 3.2 1.4 0.0 4.1 2.5 1.5
Oil & Gas 47.9 3.9% -0.8 -2.9 -4.2 1.2 -1.4 -0.3 -5.8 3.1
Non-energy Mining 9.4 0.8% 6.7 -0.1 -3.4 1.2 -0.2 -0.9 -2.9 2.6
Forestry, Logging & Other Primary 7.8 0.6% -8.9 -11.4 -6.3 4.0 -8.1 -9.5 -4.8 7.7
MANUFACTURING 185.3 15.2% -0.9 -4.6 -7.3 1.7 -0.8 -5.6 -6.0 4.5
Autos & Parts 25.0 2.1% -4.5 -20.4 -33.3 2.4 -6.5 -27.0 -27.5 12.0
Aerospace & Other Transport. 6.9 0.6% 5.4 10.5 3.2 1.6 9.2 7.2 3.0 1.0
Wood & Paper Products 22.0 1.8% -7.9 -12.9 -8.2 2.2 -9.7 -12.2 -5.5 6.3
Food Products 19.0 1.6% 1.9 1.7 -0.7 1.8 0.1 2.6 -1.4 2.9
Chemicals 15.8 1.3% 0.0 -0.8 -3.1 1.6 0.2 -0.5 -3.2 3.3
Plastics & Rubber 9.9 0.8% -4.2 -8.4 -9.7 2.0 -1.9 -11.9 -6.3 5.2
Computer & Electronics 7.2 0.6% 3.7 0.1 -7.0 -1.3 3.1 0.3 -10.1 4.3
Machinery 13.6 1.1% 1.5 1.4 -4.0 1.4 2.8 0.0 -4.0 4.1
Metal Products 26.3 2.2% 2.0 -3.1 -7.1 0.8 4.3 -6.0 -4.8 2.3
Other Manufacturing 39.5 3.2% 0.1 -0.3 -1.3 2.6 0.7 1.4 -2.5 4.4
CONSTRUCTION 72.9 6.0% 2.9 2.1 -1.3 3.1 2.4 0.6 0.0 4.2
Residential 23.8 1.9% 2.5 0.2 -12.3 -7.2 5.8 -4.7 -13.7 -2.8
Non-res. & Engineering 49.1 4.0% 3.2 3.0 3.9 7.2 0.9 3.2 6.2 6.7
UTILITIES 31.3 2.6% 3.9 -0.9 -1.7 1.4 6.9 -3.8 -0.5 2.3
SERVICE INDUSTRIES 846.6 69.4% 3.5 2.2 -0.1 3.2 3.9 0.9 1.0 3.4
Wholesale Trade 70.3 5.8% 5.5 0.4 -6.4 3.3 9.0 -5.8 -2.3 4.6
Retail Trade 72.4 5.9% 5.8 3.5 -1.2 2.9 6.4 1.7 -0.8 4.0
Transportation & Warehousing 56.6 4.6% 1.7 0.5 -2.9 1.8 2.0 -0.6 -2.1 2.8
Information & Cultural Industries 44.3 3.6% 2.6 1.7 -0.3 2.8 2.9 0.8 0.1 3.3
Finance, Insurance & Real Estate 231.9 19.0% 4.1 2.6 -0.1 3.1 3.8 1.5 0.7 3.4
Professional Services 57.9 4.7% 3.4 1.0 -0.8 2.7 2.7 0.6 -0.6 3.4
Accommod. & Food Services 27.1 2.2% 1.7 2.7 -1.0 2.1 3.5 1.4 -1.2 2.9
Public Administration 67.5 5.5% 2.0 2.9 3.1 2.8 2.6 3.2 3.2 2.5
Other Services 218.6 17.9% 2.8 2.6 2.5 4.0 3.1 2.0 3.8 3.4
*Measured in chained 2002 dollars; Forecast by TD Economics as at Jan. 2009. Source: Statistics Canada / Haver Analytics, TD Economics.

Sectoral Outlook 9 February 4, 2009

 www.td.com/economics

CANADIAN EMPLOYMENT OUTLOOK BY INDUSTRY *

Level Share of Q4/Q4 Chg '000s Q4/Q4 % change

000s Jobs Actual Forecast Actual Forecast
2008 2008 2007 2008 2009 2010 2007 2008 2009 2010
ALL INDUSTRIES (GDP) 17,125.9 100.0% 406.1 135.8 -323.6 137.0 2.4 0.8 -1.9 0.8
GOODS INDUSTRIES 4,021.3 23.5% -13.3 24.4 -180.2 66.9 -0.3 0.6 -4.5 1.8
PRIMARY INDUSTRIES 667.1 3.9% -2.0 -16.9 -19.2 1.2 -0.3 -2.5 -2.9 0.2
Agriculture 327.0 1.9% 3.7 -20.7 1.6 -1.6 1.1 -6.2 0.5 -0.5
Oil & Gas 138.8 0.8% 6.3 4.8 -9.4 1.3 4.8 3.4 -6.5 1.0
Non-energy Mining 125.4 0.7% -3.6 10.8 -9.3 0.6 -3.1 9.5 -7.5 0.5
Forestry, Logging & Other Primary 75.9 0.4% -8.4 -11.7 -2.1 0.8 -9.4 -14.4 -3.0 1.2
MANUFACTURING 1,970.3 11.5% -94.8 -51.3 -117.0 28.4 -4.5 -2.6 -6.0 1.6
Autos & Parts 186.9 1.1% -19.9 -18.3 -22.0 7.4 -9.3 -9.4 -12.5 4.8
Aerospace & Other Transport. 83.1 0.5% 9.1 1.4 0.4 0.0 11.8 1.6 0.5 0.0
Wood & Paper Products 219.7 1.3% -24.5 -6.3 -18.0 3.9 -10.1 -2.9 -8.5 2.0
Food Products 259.4 1.5% -2.5 -5.9 -10.2 1.0 -0.9 -2.2 -3.9 0.4
Chemicals 109.8 0.6% 8.2 -6.1 -6.4 1.0 7.5 -5.2 -5.8 1.0
Plastics & Rubber 103.3 0.6% 2.1 -28.5 -4.6 1.9 1.8 -23.4 -4.9 2.2
Computer & Electronics 157.3 0.9% 13.4 -1.3 -9.1 2.7 13.1 -1.1 -8.0 2.6
Machinery 112.3 0.7% -4.7 -16.1 -4.3 1.9 -3.6 -13.0 -4.0 1.8
Metal Products 254.9 1.5% -26.6 24.7 -23.1 4.1 -10.1 10.4 -8.8 1.7
Other Manufacturing 483.8 2.8% -49.5 5.1 -19.7 4.5 -8.7 1.0 -3.8 0.9
CONSTRUCTION 1,232.2 7.2% 65.6 86.5 -43.9 36.3 5.9 7.4 -3.5 3.0
UTILITIES 151.7 0.9% 18.0 6.0 0.0 1.0 14.3 4.2 0.0 0.7
SERVICE INDUSTRIES 13,104.5 76.5% 419.3 111.4 -143.5 70.1 3.3 0.9 -1.1 0.5
Wholesale Trade 632.7 3.7% 32.1 20.9 -32.2 9.2 5.4 3.4 -5.0 1.5
Retail Trade 2,046.1 11.9% 21.6 -46.7 -51.2 16.0 1.0 -2.2 -2.5 0.8
Transportation & Warehousing 857.7 5.0% 25.2 27.0 -34.5 9.1 3.1 3.2 -4.0 1.1
Information & Cultural Industries 759.6 4.4% 52.4 -34.5 3.7 4.4 7.3 -4.5 0.5 0.6
Finance, Insurance & Real Estate 1,075.4 6.3% 7.0 8.3 -12.9 4.2 0.7 0.8 -1.2 0.4
Professional Services 1,200.0 7.0% 59.8 48.9 -9.6 8.3 5.5 4.3 -0.8 0.7
Accommod. & Food Services 1,073.5 6.3% 23.3 3.7 -40.9 12.1 2.3 0.4 -3.9 1.2
Public Administration 925.7 5.4% 68.6 37.4 13.8 1.9 8.4 4.2 1.5 0.2
Other Services 4,533.8 26.5% 129.4 46.5 20.2 4.9 2.9 1.0 0.4 0.1
*Labour Force Survey; Forecast by TD Economics as at Jan. 2009. Source: Statistics Canada / Haver Analytics, TD Economics.

Sectoral Outlook 10 February 4, 2009