The Site C dam is helping to pick up the slack in a subdued northeast B.C. economy, as weak resource market conditions will continue to hamper growth this year, says a new economic report released Monday.
Central 1 Credit Union’s Regional Economic Outlook expects employment and population growth in the region to remain flat as the oil, gas, forestry, and mining industries remain subdued from 2019. The $10.7-billion Site C buildout is bringing economic benefits to the region, says Central 1’s deputy chief economist Bryan Yu.
article continues below
Trending Stories
“B.C.’s economic growth will be driven by investment in the burgeoning technology sector in Vancouver and the surrounding Southwest quadrant. It will also benefit from major infrastructure projects, including LNG Canada’s $40 billion natural gas liquefaction plant in Kitimat and the associated Coastal Gaslink Pipeline in the North Coast region and public-sector investments such as the Site C Dam in Fort St. John,” Yu said in a statement.
“Interior B.C. markets will face more challenging economic circumstances due to the combination of forestry sector job losses, challenging coal and energy markets and still subdued investment in mining,” he added.
The B.C. economy is forecast to grow by 2.8% this year.
Read Yu’s outlook for northeast B.C. below:
Regional economic conditions in B.C.’s northeast were soft in 2019 as subdued commodity market investment, weakening forestry and fl at employment weighed on labour and housing markets. Weak resource market conditions will continue to hamper growth in 2020 before prospects improve.
Employment
Headline employment data pointed to a reversal in employment growth following 2018 gains. Average employment declined 2.5 per cent in 2019 albeit with some upward momentum late in the year. The only positive story was relatively steady full-time employment levels as part-time employment pulled back sharply. Average unemployment rose to 6.3 per cent of the labour force, from 5.7 per cent in 2018. Caution is warranted in areas with relatively smaller populations and geographic reach like the Northeast. Indeed there are some signs that the labour market is stronger than headlines suggest. Labour force participation rates remain firm at 75 per cent, while there has been no discernible increase in the number of employment insurance recipients in the region which is encouraging, although forestry sector influences are still reverberating.
Site C
Economic drivers in the northeast are mixed. Currently, build out of the Site C dam continues to provide economic benefits for the region. According to BC Hydro, there were more than 3,900 construction and non-construction contractors working on the site in November, which was up by a third from same-month 2018. While only 20 per cent are from the Peace region and the remainder being filled by mobile workers from other parts of B.C. Many of these individuals are not captured in the Labour Force Survey estimates but do contribute to the local consumer demand.
Oil and gas
At the same time, key industries remain in subdued. Investment interest remained low in the oil and gas space with land right sales plunging in 2019. Only 20,000 hectares were disposed of by the government, with total tender bonus at a $14.7 million and down 77 per cent from an already weak year of $64.1 million in sales 2018. This was the lowest on record. Drilling rigs in B.C. continued to decline in 2019. There is little in the near-term to drive a sectoral improvement. Natural gas prices remain low, while an increase in B.C. natural gas demand will likely require a sectoral rebound in Alberta oil production and investment which is not forthcoming. Longer-term completion of LNG Canada’s export terminal will boost natural gas drilling in the region and investment, although this will lift the economy in 2021 and after. Work on the Coastal Gaslink Pipeline will modestly support employment.
Forestry
Like other regions, forestry has been hit by the broad market downturn. While less impacted by the mountain pine beetle epidemic than other regions in B.C., the Northeast has not been immune to the downturn. Louisiana-Pacific OSB mill in Fort St. John shut down its operation in June citing slumping demand and high wood costs. The firm reportedly employed 190 people and had capacity of 800 million square feet. Louisiana Pacifi c’s Dawson Creek plant is in better shape, with the plant receiving $4.5 million in funding in early 2019 to convert to SmartSide Lap Siding production, generating higher value production. Curtailments have also occurred at Canfor’s Chetwynd and Fort St. John operations, alongside similar decisions by other fi rms in the region. Timber harvest activity has declined sharply. Improved market conditions could lift the region given less MPB effects, but recent closures suggest lower manufacturing capacity in the future and fewer available jobs. Affected workers will likely transition into projects like Site C and possibly the buildout of LNG Canada’s liquefaction plant and pipelines, although skills are not entirely transferable.
Mining
Adding to the parade of negative news has been a weakening coal market which is curtailing exploration and hampering expansion plans for new mines. Conuma operations are stable but low prices will bite into operations. The U.S.-China Phase 1 trade deal will support global market conditions for steel which will stabilize the coal outlook.
Labour & Population
Not surprisingly, challenging conditions in key economic sectors will hamper labour market performance and be a deterrent in attracting potential newcomers. Average employment is forecast to be unchanged in 2020 following a 2020 contraction before rising thereafter as economic activity improves. The unemployment rate trends near six per cent and dips to near fi ve per cent in in 2021.
Population growth is forecast to remain flat, as net outflows to other parts of the province are offset by positive contribution for births and modest international immigration. Stronger economic prospects, job and education opportunities for younger residents outside the northeast have consistent driven net interprovincial and intraprovincial losses in recent years which will continue. Statistics Canada estimated net losses of more than 1,000 persons annually to other regions of B.C. and Canada. Population in the Northeast is forecast to remain unchanged this year, with mild uptick of 0.2 per cent in 2020 and 2021.
Housing
Sluggish sales conditions have generated downward pressure on home values in recent years. The median resale value in the Northeast came in at $301,000 during the first five months was essentially unchanged in 2019 at $268,000. Broadly, the housing market remains weak. Housing sales-to-listings conditions in the northeast, proxied by the Northern Lights real estate board region, and the B.C. Northern board area point to prevalence of a buyers’ market. The median value is forecast to hold near $270,000 through 2021 with upside later in the forecast as higher investment lifts the housing market.
Email Managing Editor Matt Preprost at editor@ahnfsj.ca.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
