Statistics Canada recently published 2007 real (inflation-adjusted) Gross Domestic Product (GDP) growth rates for the provinces. A quick review is in order because it gives insight into what is driving the nation’s regional economies.

Canada-wide growth of 2.7% for all of last year was just about the same as the average for the preceding five years. Regional growth was a little more evenly distributed, West versus East, than in the past several years. In particular, Alberta’s GDP increase, while still strong, was more muted than in the previous three years.

Let’s look at the regional highlights, moving from the fastest-growing territories and provinces to the slowest. At the front of the pack was the Northwest Territories (+13.1%). The NWT contains three of Canada’s four diamond mines and production surged in 2007. Also, construction continued strong at the Snap Lake diamond deposit site.

Nunavut’s growth (+13.0%) was aided by production at Canada’s fourth diamond mine. Exploration was strong due to high world commodity prices for metals and minerals. Construction at the Meadowbank gold mine also helped.

Newfoundland and Labrador (+9.1%) had uninterrupted production from its offshore oil platforms and there was a second year of output at the Voisey’s Bay nickel mine. Lofty world commodity prices helped bring in higher dollar returns for the province.

The Yukon (+3.8%) benefited from a strong mining sector (especially copper and gold) and the region also hosted the Canada Winter Games in early 2007.

Manitoba (+3.3%) and Alberta (+3.3%) tied in 2007, although Manitoba’s level was about the same as the year before, while Alberta’s was only half of what it had achieved in 2006. In Manitoba, construction on some large projects (e.g., Winnipeg floodway) bolstered the provincial economy and there were good activity levels in primary metals and transportation equipment.

In Alberta, oil and gas extraction was up, but exploration dropped for the second year in a row. Residential and non-residential construction continued strong in response to the region’s population growth. Workers and their families have been moving to Alberta to take advantage of the employment opportunities resulting from the oil patch boom.

British Columbia (+3.1%) continued to perform well, despite weakness in its lumber and wood products sector due to the American housing market collapse. Other active resource markets kicked in and good homebuilding and high labour incomes propelled consumer spending.

Saskatchewan (+2.8%) was a story of resource sector strength. Crop yields were down slightly, but high world prices caused a pick-up in revenue for grain production nonetheless. Furthermore, commodity price strength drove potash and uranium sales to good levels. The demand for fertilizers was particularly strong from China.

Québec (+2.4%) and Ontario (+2.1%) both grew more slowly than the national average for the fifth year in a row. The appreciation in the value of the Canadian dollar versus the U.S. dollar hurt export-oriented manufacturing in both provinces. However, Québec did make good foreign sales of aerospace products and machinery and equipment, mainly to Europe.

High commodity prices boosted mining activity in both provinces, even as forestry output languished in the doldrums. Ontario was also hit by restrained demand for automobiles in the United States. Ontario’s financial services sector was strong early in the year, but then was shocked by the liquidity crisis that reared up in the fall. However, the Toronto Stock Exchange has bounced back thanks to high world oil prices and Canada’s rich energy sector.

In the Maritimes, Prince Edward Island (+2.0%) was carried forward by food production for export. New Brunswick (+1.6%) was hurt by weakness in its important forestry sector, but large construction projects (e.g., an LNG facility) kept the local economy going. Finally, Nova Scotia (+1.6%) got a shot in the arm from higher natural gas production at Sable Island.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News.

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