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The Daily

Wednesday, April 25, 2007
2006 (preliminary)

Alberta, the economic powerhouse, led the country in economic growth for the third consecutive year in 2006. Economic growth was generally more vigorous among western provinces than in central and eastern provinces in 2006.

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Overall, real gross domestic product (GDP) for Canada eased slightly from 2.9% in 2005 to 2.7% in 2006. Across the country, investment, trade and financial services all contributed as service production generally outpaced goods production.

National labour income grew 6.1% and consumer spending rose 4.1%, while home building reached a new peak in 2006.

Economic growth in Alberta (+6.8%) was more than double the national average. Alberta maintained its impressive lead over other provinces for the third consecutive year. Oil prices continued to rise throughout 2006, spurring investment in Alberta's oil sands, which in turn benefited most areas of the economy.

Note to readers

Percentage changes for expenditure-based and industry-based statistics (such as consumer expenditures, investment, exports, imports, production and output) are calculated using volume measures, that is, adjusted for inflation. Percentage changes for income-based statistics (such as personal income, labour income and corporate profits) are calculated using nominal values, that is, not adjusted for inflation.

More detailed analysis on today's releases from the national accounts, including additional charts and tables, can be found in the 2006 preliminary estimates issue of Provincial and Territorial Economic Accounts Review (13-016-XWE).

Preliminary estimates of provincial and territorial economic accounts for 2006 are included with this release. No revisions have been made to data for previous years. Revised estimates for 2003 to 2006 will be published in the fall.

Please see the Canadian Economic Accounts re-referencing note for information on the gross domestic product re-referencing exercise that will be published on May 31, 2007.

Much of the rest of Canada lagged the national pace, as a 6.8% gain in the value of the Canadian dollar and higher oil prices hampered production, especially in manufacturing. Lower US demand also restrained exports. After Alberta, the only other provinces that managed to top the 2006 national growth rate were Newfoundland and Labrador (+2.8%), Manitoba (+3.3%) and British Columbia (+3.6%).

Goods production puts on a strong showing in Western Canada

Economic growth in Alberta was well above the Canadian average for the fourth year in succession. Oil prices continued to advance in 2006, spurring corporate profits and business investment, which, in turn, stimulated labour income and spending.

The buoyant economic conditions and a low unemployment rate (3.4%) attracted people from across Canada. The province's infrastructure strained to accept 57,000 inter-provincial migrants. Residential construction increased 8.1%, and consumer spending accelerated for the third consecutive year, to 7.9%. The gain in 2006 was particularly important among durable goods (+15%).

Manufacturing activity in Alberta jumped 7.6% after a 6.3% increase in 2005, with most of the growth coming from petro-chemical industries, or those supplying machinery and equipment to the burgeoning oil sands infrastructure projects.

The full benefit of oil sands investment has yet to be seen, but in 2006 the production slowdowns of the prior year were overcome as oil extraction output rose 3.5% and exports of oil products moved in step.

Output in Manitoba advanced 3.3% after a 2.7% increase in 2005, reflecting the best crop in three years. The ideal growing conditions in 2006 allowed for strong exports of canola and wheat.

Low interest rates and a solid employment picture continued to stimulate demand for new housing and consumer spending on durable goods. Business investment in non-residential structures leapt ahead 32%, with building projects in Winnipeg and additions to the electric power infrastructure.

British Columbia outpaced the national average growth for the fifth consecutive year with a 3.6% increase in 2006, slightly behind the 3.7% increase in 2005.

Forestry output increased moderately, but continued strength in the Canadian dollar and lower US demand restrained wood exports. Pulp and paper exports meanwhile benefited from a strengthening of world demand.

The construction industry benefited from the investment surrounding the 2010 Olympics. Services activities outpaced goods production in 2006. Lower output of coal and electricity restrained growth in the goods sector.

Labour income growth and continued low unemployment boosted home building. Consumer spending, particularly on durable goods, rose sharply as new homeowners increased their spending on home furnishings.

Saskatchewan's economic production grew modestly in 2006 (+0.4%), a slowdown from 3.1% in 2005. Production of uranium, potash and wheat fell. Corporate profits remained strong, however, as world demand for these products kept prices high.

Manufacturing of machinery and equipment in Saskatchewan benefited from Alberta's robust investment picture. Labour income strength contributed to home building and a pick up in consumer spending.

Energy costs, foreign competition and the exchange rate squeeze Central Canada

As the fortunes of the western provinces hinged on resource production, Central Canada felt the pinch of high fuel prices on economic activity. In addition, a strong Canadian dollar dampened export demand and therefore goods production.

In Ontario, growth reached 1.9% in 2006, weaker than the 2.8% advance in 2005. In manufacturing, production dropped in 14 of 21 major industry groups resulting in the steepest decline in manufacturing (-3.5%) in several years. Motor vehicle producers curtailed production and parts producers were particularly hard hit by US market conditions.

The weakness in the manufacturing sector was not felt throughout the economy, as service production benefited from continued labour income strength and ongoing construction investment.

Ontario supplied many of the migrants to Alberta's booming economy. Overall strength in the service producing industries allowed the unemployment rate to fall to 6.3%.

Quebec's economy grew 1.7% in 2006 after posting a 2.2% increase in 2005. Production of services outpaced goods as manufacturing edged down 0.2%. The decline was muted by buoyant export markets for aerospace products. Primary metal production picked up as world prices remained high, and pharmaceutical manufacturers recovered from three years of decline.

Not all manufacturers benefited as Quebec's forest and paper industry was hard hit with mill closures and layoffs. Exports of wood and paper products declined precipitously.

Overall, labour income remained strong, and personal expenditure built on increases of 2005.

In Atlantic Canada, activity picked up in Newfoundland and Labrador and New Brunswick

The Newfoundland and Labrador economy advanced 2.8% in 2006, compared to 0.4% in 2005. The first full year of production at the Voisey's Bay nickel mine and the White Rose oil field contributed largely to the advance. Corporate profits benefited from high commodity prices. Consumers took advantage of continued low interest rates and accelerated expenditures.

After increasing 0.3% in 2005, the New Brunswick economy rose 2.6% in 2006. A recovery in pulp and newsprint prices in 2006 spurred the re-opening of two mills, and helped manufacturing advance.

More jobs and labour income gains led to higher new motor vehicle sales for the first time in four years. Investment grew sharply in 2006, as a number of building projects reached completion.

A recovery in agriculture helped Prince Edward Island's economy rise 2.0% in 2006, comparable to the 2.1% growth in 2005. The potato crop recovered from a poor 2005 harvest, fuelling gains in consumer spending. Home-building waned in the province but construction workers turned to a number of building projects, including a wind farm at the east end of the island.

Economic output in Nova Scotia rose 1.1% in 2006, compared to 1.6% the previous year. Manufacturing activity fell for the second consecutive year as production slowed in rubber and plastic industries and labour unrest hampered wood product fabrication.

The province benefited from a number of construction projects in the Halifax area. Labour income advances filtered through to consumer spending, particularly on big ticket items.

A solid year for all three territories

Advances in territorial economic growth were almost entirely hinged on resources, in particular on mineral extraction and exploration.

The Nunavut economy grew by 5.8%, its best performance since 2002 and a turnaround from the decline of 1.1% in 2005. Jericho, Canada's third diamond mine, began production in January of 2006 and accounted for corporate profit growth and a resurgence in exports. As in the other territories, mineral exploration benefited from high commodity prices.

The Northwest Territories' economy advanced 2.0% in 2006, an improvement over 2005 (+0.1%). Diamond mining fell slightly in 2006 but mineral and oil exploration flourished in the Northwest Territories, particularly along the Mackenzie Valley corridor. Construction investment also advanced at the Snap Lake diamond mine.

Output in the Yukon advanced 2.9% after the torrid (+5.2%) pace of 2005. High commodity prices spurred exploration activity, particularly for gold, zinc, uranium and copper. The investment activity gave a lift to wholesalers as demand for machinery and equipment increased. New store openings paralleled growth in labour income.

Products, services and contact information

Detailed analysis and tables

All of Statistics Canada's information and data on the System of National Economic Accounts are available through the National Economic Accounts web module, accessible from the home page of the agency's website.

More detailed analysis on today's releases from the national accounts, including additional charts and tables, can be found in the 2006 preliminary estimates issue of Provincial and Territorial Economic Accounts Review, Vol. 3, no.1 (13-016-XWE), now available online. From the Publication page, choose Free Internet publications, then National accounts.

Provincial economic accounts

Available on CANSIM: tables 384-0001, 384-0002, 384-0004 to 384-0013 and 384-0036.

Definitions, data sources and methods: survey numbers, including related surveys, 1303, 1401, 1402 and 1902.

With this release, preliminary estimates have been made for 2006 without revisions to previous years. The provincial and territorial economic accounts includes estimates of the income and the expenditure based gross domestic product (GDP), real GDP, contributions to percent change in real GDP, implicit price indexes, sources and disposition of personal income and government detail tables.

The government detail tables have not been updated with this release, their 2005 estimates will be included in the fall release. Summaries by sub-sector of government (federal, provincial, local, Canada Pension Plan and Quebec Pension Plan) are provided in tables 6 to 10. Revenue side details are presented in tables 11 to 13. Table 11 disaggregates direct taxes, social insurance contributions and transfers paid by persons to government. Table 12 presents the components of taxes on production and products, while Table 13 lists the sources of government investment income. On the expenditure side, the major transfers to persons are presented in Table 14 while subsidies and capital transfers, to both the personal and business sectors, can be found in Table 15. Finally, Table 16 lists the most important current transfers between levels of governments.

Provincial Economic Accounts, Tables and Analytical Document, Preliminary Estimates, 2006 (13-213-PPB, $54) is now available. The accounts can also be obtained on diskette (13-213-DDB, $428). The diskette can also be purchased at a lower cost seven business days after the official release date (13-213-XDB, $86). To purchase any of these products, contact the client services officer (613-951-3810;, Income and Expenditure Accounts Division.

For more information, or to enquire about the concepts, methods or data quality of this release, contact the information officer (613-951-3640;, Income and Expenditure Accounts Division.

Provincial gross domestic product by industry

Available on CANSIM: tables 379-0025 and 379-0026.

To purchase data on provincial gross domestic product by industry at basic prices, contact the client services officer (toll-free 1-800-887-IMAD;, Industry Accounts Division.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Bruce Cooke (613-951-9061;, Industry Accounts Division.