Our mining, oil and natural gas industries may get all the headlines, but they will not displace service industries any time soon. The services sector dominates the economy. Canadian businesses and consumers rely heavily on the services sector for a wide range of activities.So what does it mean when the rate of change in consumer services goes negative?
While it's too early to make predictions based solely on this statistic, I think it's important to keep in mind that the federal government has made it clear that it too is in the process of reducing its contribution to the services sector in order to eliminate its budget deficit. Also, if you consider the fact that consumer borrowing is slowing down and export potential isn't what it used to be due to the strong Canadian dollar, it's clear that all there is left to keep GDP growing is business investment, an area that is actually doing well these days.
Perhaps the fall in demand for consumer services is simply a one-off event.* That being said, it should be emphasized that a negative rate of change in consumer services has only occurred once before in the last decade. And that was in 2008 at the start of the last recession.
* Statistics Canada defines consumer service as follows:
Services consumed by households, such as rent (including the rent imputed on owner-occupied housing), transportation, education, medical care, child care, food and accommodation services as well as travel expenditures of Canadians abroad, less travel expenditures of foreigners in Canada. Also includes the current (operating) expenses of associations of individuals and unincorporated businesses.