Canada's State of Trade: Trade and Investment Update 2010

III. Canadian Economic Performance

Canadian economic activity was deeply affected by the global recession— real output contracted in the fourth quarter of 2008, and continued to fall over the first half of 2009 before returning to growth in the second half of the year. For the year as a whole, real GDP contracted by 2.6 percent in 2009. It was the second-largest decline in real output since the years of the Great Depression, and not far off from the 2.9 percent decline catalogued during the 1982 recession. Output fell in each province and territory, except Prince Edward Island and the Yukon. Provincially, the largest declines in output occurred in the resource intensive economies of Newfoundland and Labrador, Saskatchewan and Alberta. Manufacturing output fell in every province and territory, except P.E.I. Job losses were widespread across Canada, with only three provinces Saskatchewan, New Brunswick and Manitoba posting gains over 2008 levels. The unemployment rate slipped 2.2 percentage points to 8.3 percent as the economy shed some 276,900 jobs—the first setback after 16 years of steady employment growth.

Gross domestic product

Provoked by the bursting of a global financial bubble, the world economy was in themidst of a synchronized recession at the start of 2009. Canadian economic activity was deeply affected by these events, and real output contracted in the fourth quarter of 2008 and continued to fall over the first half of 2009 before growth returned in the second half of the year (Figure 3-1). For the year as a whole, real GDP contracted by 2.6 percent, down fromthe 0.4 percent growth registered in 2008.

Figure 3-1
Canadian Real GDP Growth, 2004-2008

Figure 3-1 depicts Canadian Real GDP Growth, annual percentage change from 2005 to 2009 and quarterly annualized growth in each of the quarters of 2008 and 2009. In 2005 Real GDP Growth was 3.0; in 2006 2.9; in 2007 2.5; in 2008 0.4 percent, and registered a 2.6-percent decline in 2009. In Q4 2008 quarter-over-quarter annualized economic growth was -0.9 percent, worsened to -1.8 percent in Q1 2009 before limiting the slide in economic activity to – 0.9 percent in Q2 2009 and returning to positive growth at 0.2 percent in Q3 and 1.2 percent in Q4 2009.

Source: Statistics Canada

Turning to the expenditure-based categories of GDP (Figure 3-2), growth in real personal consumption expenditures on goods and servicesmanaged to hold its level of a year earlier, as expenditures advanced by 0.2 percent. It was the slowest rate of expansion for this category since the 1991 recession when real expenditures contracted by 1.6 percent.

Real expenditures on goods fell by 1.2 percent while those for services were up by 1.1 percent. Spending on semi-durables and durables fell by 2.9 percent and 2.8 percent in volume terms, respectively, while that for non-durables, the largest of the three goods categories, advanced by 0.6 percent. Expenditures were down broadly, except for those related to food, shelter, and health care. Consumers appear to have put off discretionary spending given that disbursements on the following fell the most: miscellaneous personal effects (down 8.6 percent); furniture, carpets, and other floor coverings (down 7.3 percent); semidurable household furnishings (down 5.7 percent); reading and entertainment supplies (down 4.7 percent); and new and used motor vehicles (down 3.2 percent).With the slowdown in spending, this category of GDP contributed slightly less than 0.1 percentage points to real GDP growth, down from 1.6 percentage points in 2008 and 2.5 percentage points in 2007.

Figure 3-2
Real GDP, Expenditure-based, 2004-2008 (Billions of Chained 2002 Dollars)

Figure 3.2 depicts the contribution of various components to real (Chained 2002 Dollars) Gross Domestic Product (GDP, expenditure based) growth over the period 2005-2009 in percent. Consumer expenditures on Goods and Services expanded its contribution form 2.0 percent in 2005 to 2.5 percent in 2007 before declining to 1.6 percent in 2008 and 0.1 percent in 2009. The contribution from Government expenditures gradually expanded from 0.6 percent in 2005 to 1.1 percent in 2008 and 2009. The contribution from Business expenditures gradually declined from 2.1 percent in 2005 to -0.4 percent in 2008 and -4.0 percent in 2009, while Net exports reversed its negative contribution at -1.3 percent in 2005 and -1.9 percent in 2008 to a positive 0.1 percent in 2009.

Source: Statistics Canada

Real business investment tumbled for the second consecutive year to a level not seen since 2004. Between the fourth quarter of 2007 and the second quarter of 2009, business investment plunged 21.2 percent before starting to turn around in the second half of last year. Investment in machinery and equipment fell 19.2 percent over the year as most sub-categories (e.g. industrial machinery, agricultural machinery, computer and other office equipment, telecommunications equipment, and transportation equipment) experienced double-digit declines. Investment in plants was off by 15.6 percent, with investment in engineering structures down 18.2 percent and investment in buildings down 8.4 percent.

Investment in residential construction, which includes new housing construction, resales, and renovation activity, fell for the second consecutive year—down by 7.4 percent over 2008 levels. The overall decline came mostly from declines in new housing construction, down 20.1 percent in real terms. Resale activity was up 10.6 percent while renovation activity posted a small gain of 1.2 percent.

Inventories for non-farm businesses were drawn down last year reversing the accumulation that had occurred in 2008 while farming inventories were accumulated, resulting in a net $4.9 billion reduction in business inventories in real terms in 2009.

Overall business activities removed 4.0 percentage points from economic growth in 2009, significantlymore than the 0.4 percentage points it removed from growth in 2008. Business investment accounted for the bulk of the decline at 2.8 percentage points while changes in inventories accounted for the remaining 1.2 percentage points of decline.

In 2009, the volume of exports and imports of goods and services fell by 14.0 percent and 13.4 percent, respectively. In real terms, this means that exports of Canadian goods and services fell by $68.1 billion (in chained 2002 dollars) while imports fell $77.1 billion on the same basis. The decline in real exports removed nearly 4.6 percentage points in 2009 while the decline in real imports raised growth by 4.6 percentage points over the year. As a result, the overall impact of trade on growth in 2009, although very small (one half of one-tenth of a percentage point), was nevertheless positive for the first time since 2001.

About 95 percent of the decline in the volume of exports in 2009 occurred on the goods side. Three categories of goods accounted for the majority of the declines: automotive products (down $26.0 billion in chained 2002 dollars, or 32.8 percent), machinery and equipment (down $17.7 billion in chained 2002 dollars, or 17.2 percent), and industrial goods and materials (down $15.4 billion in chained 2002 dollars, or 20.6 percent). Overall, the volume of exports of goods was down 15.3 percent last year. Services exports experienced a more modest 5.5 percent decline in real terms: transportation services fell the most (down 12.0 percent), while commercial services and travel slipped by 4.8 percent and 4.4 percent, respectively.

Likewise, the bulk of the declines in the volume of imports came on the goods side, led by machinery and equipment (down $33.0 billion in chained 2002 dollars, or 19.1 percent), automotive products (down $22.7 billion in chained 2002 dollars, or 25.3 percent), and industrial goods and materials (down $12.2 billion in chained 2002 dollars, or 14.9 percent). In total, the volume of goods imports was down 14.7 percent over 2008 levels. Services imports fell 7.0 percent by volume last year. As was the case for exports, transportation services led the declines for imports, down 11.0 percent, followed by travel (down 7.4 percent) and commercial services (down 4.8 percent).

With respect to GDP by industrial activity, the economy began the year on the downside of the business cycle. That trend continued over the first five months of the year, as GDP fell by 2.0 percent from its December 2008 level. Over the summer months, the economy mounted a weak recovery but could not sustain thatmomentumand GDP again dipped in August before registering four consecutive months of growth to close out the year. Altogether, GDP for December 2009 was 2.5 percent below the peak observed in July 2008.

The heavy impact of the recession on the production of goods caused output to fall for the second consecutive year, down 9.2 percent in 2009, with all major sectors contracting. The services sector also contracted over the year, as output fell 0.1 percent. A small number of sectors managed to expand their output, but the majority registered declines.

Manufacturing, the largest of the goods-producing sectors, was also the hardest hit. Reductions in foreign demand and domestic consumer expenditures on goods, along with inventory draw downs, combined to create a 12.3 percent reduction in output. Losses were widespread, led by primarymetals, textile products, transportation equipment, plastics and rubber, clothing, machinery, non-metallic minerals, fabricated metals, wood and textile mills—all which experienced declines of 15.0 percent or greater. Overall, 19 of the 21 major manufacturing industries experienced declines in output in 2009, with only miscellaneous manufacturing (up 2.8 percent) and food manufacturing (up 2.6 percent) registering output growth in 2009.

The above-mentioned downturns residential, industrial, and engineering structures were at the heart of the decline in construction, as output was down by 6.7 percent.

Forestry, fishing, oil and gas were also affected by reduced foreign demand as well as by price effects. Output in forestry and logging fell 19.6 percent, down for the fourth consecutive year. In contrast, fishing increased its output for the third year in a row, advancing 5.3 percent last year. However, oil and gas had the largest absolute decline in output in this sector, retracting by 8.2 percent in 2009, or $4.6 billion.

In the two other major categories of goods, agriculture output fell 7.2 percent and utilities production was down by 4.6 percent last year.

The effect of the recession on services was much less than on goods; output fell only 0.1 percent in 2009. Gains were led by finance, insurance, real estate and leasing, health care and social assistance, public administration, and educational services, while all other sectors recorded losses.

Within the finance, insurance, real estate and leasing sector, most of the gains were registered by real estate and leasing, which advanced 2.8 percent. Gains in finance and insurance were more modest, up by only 0.4 percent.

During the recession, public spending on infrastructure and social services rose, reflected by a 2.3 percent increase in public administration output for the year.

In parallel with the decline in personal consumption expenditures, output in trade fell, declining by 3.8 percent. Retail trade was down 1.0 percent and wholesale trade was down 6.8 percent. Likewise, output in transportation and warehousing was down 4.3 percent compared to the previous year. Most other services sectors, including accommodation and food services, business, building and other support services, information, culture and recreation, professional, scientific and technical services, and other miscellaneous services posted small losses in output ranging from 0 to 2 percent, generally speaking.

Canada’s recession: short and mild

G7 GDP Contractions (peak-to-trough)

This graph depicts the peak to trough real GDP contraction (in percent) for each of the G7 countries during the 2008-2009 recession. Canada registered the smallest contraction at 3.3, followed by the U.S. at 3.8, France at 3.9, the UK at 6.2, Germany at 6.7, Italy at 6.8 and Japan at 8.6.

Source: Office of the Chief Economist, based on data from National Statistical Agencies.

After posting growth rates in excess of 5.0 percent in both 2006 and 2007, global real GDP growth slowed to 3.0 percent in 2008, before contracting by 0.6 percent in 2009. However, different economies entered into economic decline at different periods, with the G7 North American economies staving off the downturn for longer than their European and Japanese counterparts. Most of the major economies endured four quarters of decline, with the exception of Canada, where the downturn was shorter by one period, and Italy and Great Britain, which suffered longer declines.

All G7 members emerged from recession in 2009. Measured from peak-totrough, Canada recorded the mildest downturn, with a 3.3 percent decline in GDP. The United States experienced the second-smallest contraction (down 3.8 percent), while Japan posted the largest decline in GDP (down 8.6 percent).

GDP growth by province

The national decline in real output was mirrored on a regional basis, as output fell in each province and territory, except Prince Edward Island and the Yukon. However, the economic downturn affected some regional economies more than others, with Ontario, the western provinces, and northern territories affectedmore than Quebec and theMaritime provinces (Figure 3-3). The exceptions to this were the Yukon, with its positive growth; Manitoba, which registered small negative growth; and Newfoundland and Labrador, which posted double-digit negative growth.

As indicated above, goods-producing sectors were hardest hit. Provincially, the largest declines in output occurred in the resource-intensive economies of Newfoundland and Labrador, Saskatchewan and Alberta—these three provinces also registered the biggest volume declines inmining and oil and gas extraction.

Manufacturing output fell in every province and territory except Prince Edward Island. Manufacturers in Ontario, Alberta, British Columbia, Newfoundland and Labrador, and all three territories experienced double-digit declines in production in 2009.

Figure 3-3
Real GDP Growth by Province, 2009

Figure 3.3 depicts Real GDP percentage Growth by Province in 2009. GDP growth for all of Canada was -2.9, for Newfoundland and Labrador -10.2, for Prince Edward Island 0.6, for Nova Scotia -0.5, for New Brunswick -0.8, for Quebec -1.0, for Ontario -3.1, for Manitoba -0.2, for Saskatchewan -6.3, for Alberta -5.1 and for British Columbia -2.3.

Source: Statistics Canada

In Newfoundland and Labrador, economic output fell 10.2 percent in 2009, following a 0.7 percent increase the year before. Sharp drops in oil extraction and metal ore mining were behind the declines, as these two sectors accounted for over 80 percent of the overall decline. In manufacturing, a 23.5 percent decline in the production of seafood product preparations accounted for just under half of the sector’s overall decline. Seafood preparations fell in concert with a decline in fishing output. The permanent closure of a paper mill triggered a 54.6 percent drop in forestry activity.

Construction activity advanced 4.0 percent after having retracted 1.3 percent in 2008. Both residential and non-residential building construction registered increases, while engineering construction weakened following the completion of several construction projects.

The economy of Prince Edward Island grew for the eighth consecutive year, up by 0.6 percent in 2009, following a 0.7 percent increase a year earlier. Asmentioned above, P.E.I. was the only province that increased itsmanufacturing output last year. The transportation equipment industry posted gains, while a plant closure hampered production in food industries thereby limiting the gains. Output in agriculture, forestry, fishing and hunting fell 1.6 percent, notwithstanding increased output in aquaculture and a higher lobster harvest. Health care and public administration also contributed to the overall gains.

Nova Scotia posted a 0.5 percent decline in GDP—well below the national average of 2.9 percent—following 2.4 percent growth in 2008. Declines in mining and oil and gas extraction and manufacturing outweighed gains in construction and in several service sectors—notably hospitals, education, and public administration. A mine closure and lower gas extraction led to a 24.3 percent drop in output inmining and oil and gas extraction, while weak demand fromabroad helped curtail output in forestry and forest products.

In New Brunswick, output fell 0.8 percent, after having risen by 0.1 percent in 2008. The goods-producing sectors were responsible for most of the declines, led by construction, which fell 8.4 percent as work neared completion on several engineering construction projects. Residential construction fell too (down 6.5 percent), although the losses were partially offset by a 5.2 percent gain in non-residential construction. Output in forestry and forest products was down 16.6 percent owing to weak demand fromabroad, while falling commodity prices hampered mining output and exploration activities, as output in this sector retracted by 18.1 percent. Public sector output expanded in areas such as health care, public administration, and education, and retail output posted a 2.2 percent increase as labour income increased.

The Quebec economy contracted by 1.0 percent in 2009, after having expanded by 1.3 percent in 2008. Manufacturing accounted for more than the whole of the decline, although wholesaling, electricity, and forestry output also registered notable losses. Advances in construction, retail, and the public sector partially offset the declines. Forestry output fell 13.5 percent. Further downstream, production in wood products (down 13.2 percent) and in pulp and paper (down 19.5 percent) fell in tandem. Elsewhere in manufacturing, output was down 12.0 percent for transportation equipment, including an 8.1 percent decline in aerospace products. Production of primary and fabricated metals also registered a notable decline (down 12.8 percent), as didmachinery manufactures (down 15.1 percent), and electronic product manufactures (down 16.6 percent). Construction output increased 2.6 percent overall as electric power engineering construction and transportation engineering construction advanced while residential and non-residential building construction suffered losses.

In Ontario, the effects of a weak global environment accelerated, and GDP fell 3.1 percent after having been trimmed back by 0.3 percent in 2008. Manufacturing incurred most of the losses, followed by wholesale activity and construction to a lesser extent. Overall, 17 of the 21 major manufacturing industry groups posted declines. Motor vehicles and parts output fell the most—by over 29 percent—following a decline of nearly 24 percent in 2008. Primary and fabricated metals (down 29.6 percent) and machinery manufactures (down 20.4 percent) also posted sizeable declines. Weak export demand was at the root of declines in the production of wood. With manufacturing output down, transportation services output contracted in 2009 by 4.2 percent.Wholesale activities were also off, down 6.1 percent. A 10.6 percent decline in residential construction, along with a smaller 2.8 percent fall in non-residential construction, accounted for most of the decline in construction, as gains in engineering construction were largely offset by declines in repair construction.

After a 2.2 percent expansion in 2008, economic activity in Manitoba edged down 0.2 percent in 2009. Gains in construction and public sector output were offset by losses in manufacturing and in agriculture, forestry, fishing, and hunting. Crop production edged down in 2009 after a bumper harvest a year earlier, while animal production declined as world demand softened. Manufacturing output slipped 9.0 percent as output retreated in most industries. However, three industries—primary and fabricated metals, printing, and wood products— accounted for about half of the overall decline in the sector. In construction, most of the gains came from engineering construction, in particular, electric power engineering construction. Education, health care, and public administration also registered gains.

Saskatchewan’s GDP contracted by 6.3 percent in 2009, after expanding by 4.4 percent in 2008. After Nunavut and Newfoundland and Labrador, this constituted the third-largest decline among the Canadian provinces and territories. Mining and oil and gas production fell 17.6 percent; potash production fell bymore than 50 percent as a result of weak export demand. Oil and gas extraction fell for the sixth consecutive year, down 3.3 percent, and mining exploration retreated 35.0 percent as commodity prices declined. Crop production remained high, although down fromrecord levels in 2008. Manufacturing activity also declined, down 7.0 percent,mostly attributable to declines in industries that supply materials to mining industries. Wholesale activity was 18.2 percent lower in 2009 than in 2008, while transportation and warehousing was down by 3.7 percent. Partially offsetting the declines were small advances in most other services industries, except for wholesaling and transportation, especially those related to public sector output. Construction activity also edged up 0.1 percent, as non-residential building construction increases were offset by declines in residential and engineering construction.

Following a 0.3 percent increase in 2008, Alberta’s GDP fell 5.1 percent in 2009. Declines were widespread, with most goods producing sectors and several services sectors down. Construction activity fell 22.6 percent after several oil and gas engineering construction projects were put on hold and both residential and non-residential building construction declined. Crop and animal production was also down significantly, falling 22.0 percent. Manufacturing output was down 16.5 percent overall, with machinery manufacturing, chemicals, wood,metal, and cement products all declining by more than 20 percent, and meat products down by 19.1 percent. Retail trade experienced a rare setback, falling to levels not seen since 2006, and wholesale trade was off by 11.5 percent. With the drops in construction, manufacturing, and mining activities, output in professional and technical services, in administrative and support services, in miscellaneous services (such as repair andmaintenance), and in transportation services all fell for the first time in many years.

In British Columbia, GDP fell 2.3 percent, compared to a 0.2 percent increase a year earlier. A 14.5 percent contraction in manufacturing output accounted for about 60 percent of the overall decline. Manufacturing output losses were widespread, led by wood, metals, pulp and paper, machinery, and cement products. Production in forestry products continued to decelerate for the fifth straight year, falling by 18.8 percent last year. Falling export demand resulted in the decline, as did a 15.8 percent drop in residential building construction. Job losses throughout the forestry and downstreamsectors contributed to a decrease in labour income, affecting both retail (down 2.3 percent) and wholesale trade (down 8.7 percent).

The Yukon economy grew by 1.4 percent in 2009, after having expanded by 4.3 percent the previous year. Mining activity and construction associated with a new mine helped to raise territorial output, while completion of work on transmission lines allowed for more electric power generation. In services, public sector output, especially in public administration, expanded, while those related to tourism and trade experienced setbacks.

In the Northwest Territories, GDP fell by 5.9 percent last year, compared with a 7.7 percent decline in 2008. Some 90 percent of the decline was attributable to mining and oil and gas extraction as diamond mining output dropped sharply in tandem with a slump in world demand. Construction activities were up by 3.8 percent, although strong advances in residential and non-residential building construction were mitigated by declines in engineering construction, as several mining projects were put on hold due to the uncertain economic climate. Reduced economic activity led to a decrease in labour income, affecting both retail (down 2.5 percent) and wholesale trade (down 12.2 percent).

The Nunavut economy experienced the sharpest contraction of all Canadian regions, falling 10.6 percent in 2009 after rising 8.9 percent in 2008. Reduced construction activity was responsible formuch of the decline. Notwithstanding strong increases in residential and non-residential building construction, construction output fell by 40.7 percent as engineering construction contracted sharply following the completion of work at the Meadowbank gold mine. By year’s end, the mine had not begun production, and Nunavut was without a producing gold or diamond mine for the first time since the territory was formed. As a result, mining and oil and gas production fell 43.8 percent over the year, accounting for most of the remainder of the decline.

Employment

Figure 3-4
Unemployment Rate in Canada, 2005-2009

Figure 3.4 depicts the Unemployment Rate (percent) in Canada for the period from 2005 to 2009. The unemployment rate was 6.8 in 2005, 6.3 in 2006, 6.0 in 2007, 6.1 in 2008, and 8.3 in 2009.

Source: Statistics Canada

After 16 years of growth, Canada experienced a setback in job creation in 2009, as employment fell 1.6 percent (i.e. by 276,900 jobs). All the job losses came from full-time positions as part-time jobs expanded by 71,300. With the overall job losses, the national unemployment rate slipped 2.2 percentage points to 8.3 percent for 2009 (Figure 3-4).

Job losses were widespread across Canada, with only three provinces Saskatchewan, New Brunswick andManitoba posting gains over 2008 levels. Saskatchewan was the only province to add to both full-time and parttime jobs. On the other hand, both Newfoundland and Labrador and Quebec shed jobs in both categories.

Four provinces accounted for the bulk of the job losses. Losses in Ontario were responsible for almost 60 percent of the national total, followed by B.C. at nearly 20 percent, Quebec at 13.5 percent, and Alberta at 9.1 percent.

All major categories in the goods-producing sector shed jobs in 2009. The number of manufacturing jobs fell 9.1 percent over the 2008 level, as this sector cut some 179,700 net positions. The impact of the recession was also severe on construction employment, which shed 70,800 net jobs, a decline of 5.7 percent over the previous year. Forestry, fishing,mining, oil and gas reduced its workforce by 23,900, while agriculture and utilities registered smaller losses of 6,500 and 4,000 jobs, respectively, last year.

The services sector added 8,000 positions to the payroll over 2009. Gains in health care and social assistance (up 51,600), miscellaneous services (up 37,200) and finance, insurance, real estate and leasing (up 23,600) were largely offset by losses in trade (down 39,000), transportation and warehousing (down 37,400) and business, building and other support services (down 30,000).

The above analysis is based on annual averages. However, the brunt of the economic downturn was most severely felt in late 2008 and through the first half of last year. From November 2008 through July 2009, the Canadian economy shed 417,400 jobs. It has since recouped 158,500 jobs over August 2009 through February 2010, notwithstanding some 51,500 jobs lost in October and December of 2009, combined. Nonetheless, employment levels remain below their previous high mark (or peak level) observed in October 2008, and will likely remain so for the remainder of 2010.

Inflation

Figure 3-5
Inflation Rate in Canada, 2005-2009

Figure 3.5 depicts the annual percent increase in the Consumer Price Index (CPI) from 2005 to 2009. The increase in the CPI was 2.2 in 2005, 2.0 in 2006, 2.2 in 2007, 2.3 in 2008, and 0.3 in 2009.

Source: Statistics Canada

For the year as a whole, consumers paid only 0.3 percentmore, on average, for goods and services included in the Consumer Price Index (CPI) basket in 2009 compared to 2008 (Figure 3-5). This was the smallest increase in annual inflation since the 0.1 percent increase registered in 1994. In fact, overall prices were lower between June and September 2009 than they were over the corresponding months a year earlier.

Energy prices exerted the most significant downward pressure on the CPI last year as they retreated from their historical highs recorded a year earlier. Prices for energy were 13.5 percent lower in 2009, as gasoline prices fell 17.5 percent for the year, while prices for natural gas were down 20.1 percent and those for fuel oil and other fuels were down 29.9 percent.

Of the eight major components that comprise the CPI, three were down over the year while five increased. Gains were led by food prices, which rose 4.9 percent, and health and personal care prices, which were up by 3.0 percent. Prices for household operations, furnishings and equipment, alcohol and tobacco, and recreation and education prices also advanced in 2009. Prices fell for transportation, shelter, and clothing and footwear which helped to limit the overall increases in the CPI.

The Canadian dollar

Figure 3-6
Canada-U.S. Exchange Rate, 2009

Figure 3.6 depicts the value of the Canadian dollar and its volatility during 2009. Trading occurred over a range of US76.9¢ to US97.2¢ for the year. The dollar began the year at US82.6¢ on January 2, 2009, quickly rose US2¢, then began slowly falling to US76.9¢ by March 9. At the end of May, the dollar broke through the US90¢ mark but, unable to sustain that level, fell back to US85.8¢ by July 8. The Canadian dollar subsequently rallied, peaking at US97.2¢ on October 14 before closing out the year at US95.6¢.

Source: Bank of Canada

After appreciating for six consecutive years against the U.S. dollar, the Canadian dollar fell against the U.S. dollar in 2009. Averaging US87.57¢ in 2009, the Canadian dollarwasworth US6.24¢ less than in 2008, a decline of 6.7 percent in its value against the U.S. dollar over the year. Relative to the other major currencies, and based on annual averages, the Canadian dollar also fell 15.0 percent against the yen and by 1.6 percent against the euro, while it was up 10.2 percent against the British pound sterling.

The value of the Canadian dollar was very volatile in trading during 2009. Trading occurred over a range of US 76.9¢ to US 97.2¢ for the year (Figure 3-6). The dollar began the year at US 82.6¢ on January 2, 2009, quickly rose US2¢, then began slowly falling to US 76.9¢ by March 9. At the end of May, the dollar broke through the US 90¢ mark but, unable to sustain that level, fell back to US 85.8¢ by July 8. The Canadian dollar subsequently rallied, peaking at US 97.2¢ on October 14 before closing out the year at US 95.6¢.