Statistics Canada's year-end economic review highlights continued expansion in the face of setbacks that might have been expected to curb growth. Economic activity steadily increased despite soaring energy prices and downturns in the US housing and automotive industries.
The driving force was Alberta.
Reviewing the year, several Canadian stories stand out. Most obvious was the dominant role of Alberta in economic growth, which increasingly affected other variables, notably population flows. But the theme that echoes throughout every section of this paper is the adaptability of Canadians faced with rapid changes in their economy. Going back several years, the economy has been hit with a number of shocks which in the past could well have triggered a slowdown or even recession. Instead, growth has been remarkably stable since 2003.
The adaptability of Canadians to fast-changing economic circumstances was seen most dramatically in migration to Alberta from other provinces, which last year reached a level never before seen in Canada.
The list of Alberta’s record setting performances for a province last year includes: fastest increase ever in retail sales (16.2%), biggest hike in building permits and in non-residential construction ($3.7 billion and $1.1 billion respectively), the lowest unemployment rate (3.4%) and largest net inter-provincial migration on record. At 66,800, the number of unemployed in Alberta was the lowest in absolute terms since 1981, despite population growth of nearly one million (or 47%) in the past quarter century. Its 4.8% increase in employment was the most of any province in nearly two decades (exceeded only by Alberta in the late 1970s and BC in 1989).
Alberta by itself accounted for the faster gain in employment and retail sales in Canada than in the US. In fact, without Alberta, growth in the rest of Canada lagged slightly behind the US on both accounts. Employment in the US rose 1.9%, while Alberta boosted the 1.6% increase in the rest of Canada to a 2.0% gain for all of Canada. Similarly, Alberta’s record retail sales lifted the rest of Canada’s 4.9% gain to 6.4% national growth, leapfrogging past the 6.1% increase in the US. [footnote omitted]
On the down side, new house prices in Edmonton and Calgary jumped by over one-third in 2006, and Calgary's office vacancy rate has dropped to near zero. Plans have been announced to build a 59-story office tower in downtown Calgary at a cost of $1 billion. When completed, it would become the largest building in Canada west of Toronto.
The oil sands of northern Alberta accounted for 46% of all crude oil produced in Canada last year, almost double the share of ten years before.
Alberta's blistering economy overshadowed that of BC, which in other years would be seen as outstanding. Over the past two years, BC's employment growth matched Alberta's, and its unemployment rate has fallen to below 4%, a level previously seen only in Alberta and Saskatchewan (and now Yukon). BC was the only province besides Alberta to see a net gain from inter-provincial migration.
Last year, metals prices rose even faster than energy prices. Rising prices for copper, zinc, iron ore, and nickel reflect increasing industrial activity in developing countries, particularly China. The mining industry was the only one in Canada to experience employment gains in every province.
The Statistics Canada study, published today, is featured in the online edition of the Canadian Economic Observer, available here (html) and here (pdf).
Sources:
Cross, Philip, 2007. “Year end review: westward ho!” Canadian Economic Observer, April 2007. Statistics Canada catalogue no. 11-010-XIB.
http://www.statcan.ca/english/freepub/11-010-XIB/11-010-XIB2007004.pdf
(accessed 12 April 2007).
Statistics Canada, 2007. “Study: Year end review of the economy.” The Daily, 12 April. Statistics Canada catalogue no. 11-001-XIE.
http://www.statcan.ca/Daily/English/070412/d070412a.htm
(accessed 12 April 2007).
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