In western Canada and in the country as a whole, Alberta still shines. It is the leader among all the provinces in almost every economic category — retail sales, consumer price gains, low unemployment rate, high job growth and almost non-existent office vacancy rates. Only natural gas in the province is currently in some difficulty as a result of oversupply in North America. Drilling is expected to be down this winter.

Premier Ed Stelmach’s proposal to raise royalty rates for oil and gas companies operating in the province will slow down exploration activity for a while and push back some expansion plans that would not have been proceeding immediately anyway. A pause in overheated construction activity levels may not be a bad thing. Eventually, the province and the oil companies will reach a compromise on a new revenue-sharing plan. Nobody wants to kill the “golden goose” that is the Oil Sands.

In other mega construction project news in Alberta, there is a proposal to build a nuclear facility in the Oil Sands region to provide power to all the projects that are up and running and planned. If this happens, Alberta will join a select group of provinces (Ontario, Québec and New Brunswick) in Canada with nuclear power facilities.

Lately, the economy of Saskatchewan has also come to the forefront. With its strong resource base in energy, uranium, potash and agriculture and relatively low costs, economic activity has taken flight. Housing starts and the gains in house prices in Regina and Saskatoon have been two of the yardsticks showing the most bounce upward. Also noteworthy is the fact that Prairie farmers generally are benefitting from soaring crop prices.

Due to Manitoba’s diverse economic base, beginning with agriculture but spreading out into insurance, broadcasting and high-tech, the prospects for that province remain solid. Like other provinces, a major initiative going forward will be an expansion of power generating capacity, at sites along the province’s northern rivers flowing into Hudson Bay. Late in this cycle, Manitoba has begun to see an increase in housing starts and home prices.

British Columbia’s forestry sector is hurting due to U.S. homebuilding weakness, but its mining sector is booming. The province is rich in base metals, coal and oil and gas. B.C.’s west coast ports are expanding and thriving due to their roles as gateways to the Far East. The provincial government is proceeding with a vast array of infrastructure projects, both in transportation and to fulfill its obligations to host the 2010 Winter Olympics.

The high-tech sector, which is important in Vancouver’s suburbs, is showing more signs of life than at any time since the dot.com collapse in 2001. At times this year, NADAQ has shown the largest year-over-year increase among the four major stock market indices in North America. Furthermore, the information services sector has recorded significant year-over-year job gains — after years of job losses — in both the U.S. and Canada.

In Ontario, job losses in manufacturing have been disturbing. Further distress in this area is likely given a weakening housing market and the need to make further cost cuts. The large auto sector is being challenged by the new labour agreement between the UAW and the former Big Three automakers in the U.S. This will diminish the cost-per-car advantage that Ontario production has had as a result of the government social net in Canada (e.g., universal health care). Nevertheless, Japanese auto and parts production is expanding in the province, tied to the good record of quality assurance in existing plants.

(Further with respect to manufacturing, while it is no consolation, it is also inevitable that both the U.S. and Canada will continue to lose manufacturing jobs to low-labour-cost production in China, India, South Korea, the Philippines, Indonesia, Vietnam and other emerging nations.)

Ontario has one major advantage. The province carries its own economic momentum due to its large population base and the size of its service sector, backstopped by the financial community in Toronto, the federal government in Ottawa-Gatineau and knowledge-based expertise centred in academic communities throughout the region.

Office building construction will help to carry Ontario forward in 2007 through 2009 at least. It is also the case that mining, while smaller relative to the province’s total GDP than in some other regions, is still making a substantial contribution. Also on the upside for the construction industry, newly-re-elected Premier Dalton McGuinty has made a commitment to proceed with a new wave of nuclear power projects in the province.

Québec has come to the economic party late in this cycle but is finally making its mark. The provincial election at the start of 2007, which put the sovereignty debate to rest for at least the next couple of years, seemed to be the event that kick-started the pickup.

Major energy projects play key roles in the construction outlook. Ports along the St. Lawrence are being proposed as sites for major new LNG terminals. There was a summer 2007 start on the Eastmain 1-A hydroelectric power project in the north of the province at an estimated cost of four billion dollars. Wind farms are another means to increase electric power generation in the province.

The province will also be spending money in badly-needed areas of hard and soft infrastructure. CanaData is estimating 2009 start dates for two mega hospital projects to be built in association with the two major universities in Montréal. The provincial government has also promised tax cuts for the citizens of Québec, which will help to stimulate consumer and business spending.

Unfortunately, some of the traditional industries of Québec, including clothing, paper and printing and logging, are facing soft markets south of the border and declining competitiveness on account of currency value change. Also, a more extended period of white-collar employment growth will be needed before there will be much in the way of new office building construction in Montréal.

New Brunswick is the only eastern province with a jobs growth rate higher than the national average. Saint John is prospering thanks to its role as an international call centre and also due to construction of a major new LNG terminal. The refurbishment of the Point Lepreau nuclear plant is another major capital spending project in the province.

In the Atlantic region, Newfoundland is the other province with significant mega energy projects on the horizon. Premier Danny Williams has worked out a revenue- sharing agreement with the firms backing the next large offshore oil platform in the region, the Hebron field. Newfoundland and Labrador will also be pushing to develop more hydroelectric capacity on the lower Churchhill River.

East coast ports, with Nova Scotia’s Halifax-Dartmouth in the forefront, are benefitting from greatly expanded world trade. International shipping routes can lead to Canada’s east coast both through the Panama Canal, where construction has just begun, to double capacity, and the Suez Canal, which leads to India and is an alternative route to the Far East.

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