Analysis in Brief
Gross domestic product, 2023: An in-depth look at provincial and territorial economies

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Acknowledgements

The author would like to thank analysts in the provincial and territorial gross domestic product by industry program (Francois Crépin, Bekele Gebregiorgis, Nathan Keen, Serge Larocque, Dérek Nolet Regaudie, Eveline Yeung, Abdifatah Yussuf, Yu Zhang) for their contributions to the text and David Connell, Karan Landge and Matthew Prescott for their helpful review and comments.

Abstract

In 2023, real gross domestic product (GDP) increased in all provinces and territories, with the exception of Newfoundland and Labrador and the Northwest Territories, as outlined in Gross domestic product by industry: Provinces and territories, 2023. Economic activity across the country was tempered despite progress toward recovery to pre-pandemic levels in key sectors. As shown in the first graph, only two jurisdictions remained below 2019 levels.

This text serves as a more in-depth look into the largest contributors and detractors to growth in each province and territory and complements the data published in the May 1, 2024, Daily release.

Canada’s population ascended to new heights

In 2023, Canada reached a milestone with a population of more than 40 million.

Alberta led with the highest rate as its population surge was partially explained by an intensified net interprovincial migration, with most of the migrants coming from Ontario and British Columbia. GDP per capita decreased in 2023 for most jurisdictions as economic growth slowed while population increased.

Housing market

Residential building construction and offices of real estate agents and brokers and activities related to real estate fell in all provinces and territories. In parallel, the Bank of Canada’s target rate rose to its highest level since 2001. Investment in construction of single-detached houses dropped by double-digits in all provinces and was only partially offset by at least double-digit growth in construction of apartments in Newfoundland and Labrador, Prince Edward Island, Saskatchewan, and Alberta.

Activity of lessors of real estate rose in eight provinces and Yukon as vacancy rates slowed, and residential rents increased at a record pace nationally. Commercial rents also recorded an increase in 2023.

Wildfires were on the rise across Canada

The 2023 forest fire season broke several records across the country. In a few cases, evacuations and health impacts from smoke in the air caused interruptions or slowdowns in industries’ output. In northern Quebec, some power outages were the result of intense smoke, and resulted in the evacuation of hydroelectric plants. In the Northwest Territories, the capital was affected by an evacuation order which, among other things, delayed the opening of Yellowknife aquatic centre.

Newfoundland and Labrador declined due to decrease in oil and gas and mining activity

Newfoundland and Labrador’s total economy contracted 2.5% in 2023 after declining 1.5% in 2022. The goods-producing sector (-6.9%) recorded a fourth consecutive year of negative output and was only partially offset by the services-producing sector (+1.0%).

The largest contributor to the decline was the mining, quarrying, and oil and gas extraction sector which decreased 11.9%. Despite the Terra Nova platform returning to service in November after being out of production since late 2019, oil and gas extraction fell 13.3%. Mining and quarrying (except oil and gas) fell 10.7% with copper, nickel, lead and zinc ore mining dropping as the Voisey’s Bay open pit mine depletes and transitions to underground. Iron ore mining decreased as wildfires in Northern Quebec, maintenance and equipment failure hampered production.

The manufacturing sector (-7.5%) declined as food manufacturing fell 9.6% following a pricing dispute for snow crab, and primary metal manufacturing dropped 25.7%.

The only goods-producing sectors that contributed to growth were construction (+10.5%) and utilities (+9.9%). Engineering construction contributed the most to the gain in construction with growth of 27.2%, which was tempered by declines in residential building construction (-11.2%) and non-residential building construction (-18.2%).

Increased exports helped the electric power generation, transmission and distribution industry to a 10.8% increase.

In services-producing industries, growth was mainly attributed to health care and social assistance, accommodation and food services and retail trade.

Health care and social assistance (+1.4%) saw nearly equal contributions from nursing and residential care facilities (+4.0%) and hospitals (+1.1%).

Retail trade advanced 1.7% with growth in 7 of 12 subsectors.

Prince Edward Island led the way in growth for provinces

Prince Edward Island’s real GDP expanded 2.2% in 2023, highest among the provinces, following 3.0% growth in 2022.

Services-producing industries rose 3.0% with contributions from real estate and rental and leasing (+4.5%), public administration (+3.8%), and retail trade (+4.0%). The goods-producing sector edged up 0.2% for its lowest growth rate since the pandemic in 2020.

The province's economy benefited as international immigration helped drive record population growth (+3.9%), and tourism was supported by events such as the 2023 Canada Winter Games.

Robust activity in manufacturing (+4.9%) helped the goods-producing industries. However, this was partly offset with declines in both construction (-5.0%), and agriculture, forestry, fishing and hunting (-3.9%), where wet weather reduced the province’s harvest season.

Additionally, despite the increase in the number of people coming to the province and higher demand for housing, lower residential investment led to a decline in residential construction (-15.5%). In recent years, real GDP in residential construction and housing starts have slowed while mortgage rates have increased.

In the labour market, the unemployment rate of the province stood at 7.3% in 2023, a decline of 0.3 percentage points from 2022. The participation rate increased 0.9 percentage points, while the employment rate rose 1.0 percentage point. The labour force rose 5.3%, the highest growth rate since 1979.

Wide-spread growth in services-producing industries drove growth in Nova Scotia

Nova Scotia’s real GDP rose 1.3% in 2023 following 3.0% growth in 2022. Services-producing industries increased 2.1%, more than offsetting the decline in the goods-producing industries (-1.8%).

The growth in services was widespread as 11 out of 15 sectors recorded an increase. This was led by real estate and rental and leasing (+2.3%) as increased demand for housing was supported by rapidly rising population growth from international and interprovincial migration.

The health care and social assistance sector (+3.3%) was the second largest contributor to growth as all components increased, led by a 3.5% increase in hospitals. To respond to the high demand, the province has, among other things, attracted internationally trained healthcare professionals and provided more funding for settlement support. The increase in educational services (+3.6%) was the highest among all provinces and territories.  A broad-based 3.0% increase in retail trade also contributed to growth in services-producing industries in 2023.

Economic regions in the province kept pace with the changes in the national labour market as the availability of vacancies shifted drastically from 2022 to 2023. The unemployment rate also decreased from 6.5% to 6.3%, the lowest rate on record.

New Brunswick economy supported by utilities and services-producing industries in 2023

New Brunswick's economic landscape in 2023 displayed resilience, with a 1.3% increase in its GDP. The services-producing industries contributed most to the total growth, expanding by 1.6%, with gains observed in 10 out of 15 sectors. Meanwhile, the goods-producing industries advanced 0.7%, despite only two out of five sectors increasing.

Within the services industries, the public sector was up 2.3%. This growth was largely attributed to gains in public administration (+2.0%), and health care and social assistance (+2.4%) which rose for the third consecutive year with strength in ambulatory health care services. Additionally, the retail trade sector advanced 3.7%.

In the goods-producing industries, the utilities sector surged 16.9% led by electric power and distribution, as outside of province sales almost doubled.

However, the gains were partially offset by a decline in the construction sector, which contracted by 3.8%, with residential building construction (-5.4%) experiencing its first downturn since 2019 and engineering construction declining by 7.6%. Additionally, the agriculture, forestry, fishing, and hunting sector (-2.0%) was impacted by unfavorable weather conditions which led to reduced crops yields and lower landings in fishing.

The increased population in New Brunswick led to a similar increase in labour force (+2.8%), compared to a modest gain of 0.5% in 2022 when the population rose 2.4%. The unemployment rate (+6.6%) reached its lowest level on record (since 1976), down from 7.2% in 2022.

Quebec's economy was a mix of gains and losses

Quebec’s real GDP edged up 0.2% in 2023 as economic activity increased in 12 of 20 sectors. This dropped Quebec’s output to the fifth largest contributor to Canada’s total economic growth in 2023, where it typically ranks second or third.

The growth in services-producing industries (+1.3%) was sufficient to offset the decline in goods-producing industries (-2.6%).

Activity in services-producing industries rose for a third consecutive year, driven by increases in transportation and warehousing (+5.7%), public administration (+2.7%), professional, scientific and technical services (+2.6%) as well as retail trade (+2.4%) and accommodation and food services (+5.7%).

Mining, quarrying, and oil and gas extraction (+4.0%) was the only sector in the goods-producing industries to record gains in 2023. Construction (-4.3%) was heavily impacted as residential construction plummeted 19.1%. Housing starts declined 31.9%, the most pronounced decline since 1995 for the province and across the country for 2023.

Utilities dropped 6.8% on reduced electricity sales with historically low water levels in reservoirs and manufacturing fell 1.4% with 12 out of 19 subsectors declining.  Excluding the pandemic, it is the first time since 2012 that utilities were a detractor to economic growth.

Quebec registered the lowest growth in the public sector among provinces as the labor market experienced a number of disruptions in 2023, including an unlimited general strike at the end of the year by public sector workers. This event impacted the educational services (-0.5%) and health care and social assistance (+0.0%) sectors. However, employment in Quebec was at its highest level in 2023 since 1976.

Ontario’s output outpaced national growth

Ontario grew 1.6% in 2023 following 3.7% growth in 2022. The province continued to lead the contribution to national percentage, accounting for nearly half of the national growth in 2023.

The services-producing industries (+2.2%) and the goods-producing industries (-0.4%) moved in different directions with the latter tempering Ontario’s economic momentum. This was the first time since 2008 where both aggregates registered opposite signals. Growth was widespread on the services side as 12 out of 15 sectors grew.

Professional, scientific and technical services grew 3.7%, decelerating from the 10.9% growth registered in 2022 as several tech layoffs were publicly announced throughout the year. Information and cultural industries (-0.7%) declined while the strike by the Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA) impacted active production in Toronto.

Transportation and warehousing rose 5.8% with air transportation contributing the most to the sector, although the industry still remained below its pre-pandemic level. Public administration increased 4.3% with contributions from local, municipal and regional public administration (+4.5%).

Construction (-1.7%) was the main detractor to growth in Ontario with a second consecutive year of decline in residential construction (-6.6%). Mining, quarrying, and oil and gas and extraction (+0.8%) as well as manufacturing (-0.0%) both decelerated in 2023.

Transportation equipment manufacturing (+15.7%), which was helped by increased exports of motor vehicles and parts, tempered some of the declines in plastics and rubber products manufacturing (-14.9%), chemical manufacturing (-5.3%), and computer and electronic product manufacturing (-11.0%).

Construction reached half a decade of declines in Manitoba

Manitoba’s total economy grew for the third consecutive year, expanding 1.3% in 2023, as services-producing industries rose 2.3% while goods-producing industries fell 1.1%.

The construction sector declined 3.6% in 2023 and has not seen growth since 2018. Residential building construction (-9.5%) contributed the most to the decline.

On the services-producing side, transportation and warehousing contributed the most with growth of 5.8%. Public administration (+2.7%) expanded as local, municipal and regional public administration and provincial and territorial public administration grew 5.3% and 2.3%, respectively.

As Manitoba’s population continued to rise in 2023, health care and social assistance (+2.3%), real estate and rental and leasing (+1.4%), and educational services (+2.1%) all increased. Wholesale trade expanded 3.8% as seven of nine subsectors rose with farm product merchant wholesalers contributing the most. Retail trade advanced 1.8% with 8 of 12 subsectors increasing.

In the goods-producing industries, manufacturing rose for the third consecutive year (+1.9%). This was led by transportation equipment manufacturing (+20.9%) which reversed four years of declines. Notable gains were also recorded in machinery manufacturing (+12.8%) and fabricated metal product manufacturing (+13.5%). Primary metal manufacturing dropped 40.5% as the full effect of the smelter shutdown in 2022 was observed in 2023.

Utilities declined 9.8% as all components declined with the drought hitting electric power generation, transmission and distribution (-10.2%) particularly hard. Agriculture, forestry, fishing and hunting (+0.9%) was also slowed by the dry weather, with crop production increasing only 0.4%. From the principal field crops, canola and oats production declined in all Prairie provinces in 2023.

Saskatchewan’s economy slowed by dry weather conditions

Saskatchewan’s real GDP increased 1.6% in 2023 following 6.0% growth in 2022. Services-producing industries (+2.3%) contributed to a larger share of the province’s total economic output than good-producing industries (+0.9%).

The services-producing industries were resilient with 13 out of 15 sectors registering growth. Wholesale trade (+5.8%), public administration (+2.8%), transportation and warehousing (+3.3%), health care and social assistance (+2.3%), and educational services (+2.9%) contributed the most to the increased activity.

Increases in four of the goods-producing sectors more than offset the weakness in agriculture, forestry, fishing and hunting (-6.9%). Construction (+13.6%) gains were driven by engineering construction (+37.5%), largely the result of an ongoing potash mining project.

The manufacturing sector increased 4.5% driven by an increase in petroleum and coal product manufacturing (+9.0%).

Mining, quarrying, and oil and gas extraction activity edged up 0.2%, with a steady increase in oil and gas extraction (+1.1%) while the mining and quarrying (except oil and gas) subsector decreased by 1.0%. Despite strong gains in other metal ore mining (+72.4%) due in part to favourable uranium prices, market conditions and environmental considerations, they were offset by challenging global market conditions for potash mining (-3.3%).

With the volatility in the goods-producing industries, construction and manufacturing were the only two sectors with larger contributions to economic growth in 2023 compared with the previous year.

Saskatchewan’s net interprovincial migration was negative as more people left than entered the province. The last time the province recorded positive net interprovincial migration was in 2012. The population increased 2.6% with almost 10,000 more persons coming from international immigration than in 2022.

Services-producing industries along with oil and gas pump Alberta’s economy

In 2023, Alberta’s gross domestic product increased 1.5% as 16 out of 20 sectors recorded growth. The services-producing industries grew 2.7%, while goods producing industries decreased by 0.3%.

The growth was widespread in the services-producing industries with contributions from health care and social assistance (+3.7%), real estate and rental and leasing (+1.8%), transportation and warehousing (+3.5%), retail trade (+4.3%) and public administration (+3.3%).

The public sector (+0.49 percentage points) accounted for almost one third of the growth in Alberta’s services-producing industries in 2023. Additionally, Alberta recorded the highest growth rate in retail trade in the country.

Alberta’s strong population growth was intensified by the inflow from net inter-provincial migration (+55,107 persons) and net non-permanent residents (+63,277 persons).

Mining, quarrying, and oil and gas extraction grew by 2.3%, led by a 6.7% increase in oil and gas extraction (except oil sands) and a 1.6% increase in oil sands extraction. This growth was partially offset by a decline in the construction sector (-5.3%).

Agriculture, forestry, fishing and hunting decreased 12.6%, led by a 14.1% decrease in crop production (except cannabis, greenhouse, nursery and floriculture production) as dry weather in the Prairies reduced the production of important crops.

Services-producing industries continue to drive growth in British Columbia

In British Columbia, real GDP grew 1.6% in 2023. The province recorded one of the most destructive wildfire seasons in its history and experienced disruption from the port strike. Both services-producing (+2.4%) and goods-producing industries (-0.8%) were impacted with a deceleration in activity compared to the previous year.

Real estate and rental and leasing (+2.8%) and professional, scientific and technical services (+4.7%) contributed the most to the services-producing industries. Transportation and warehousing growth (+5.7%) was led by air transportation (+31.4%). Urban transit systems, which benefited from an increase in office commuters, also contributed to the sector’s growth. However, both air transportation and urban transit systems remained below their pre-pandemic levels.

On the goods side, manufacturing (-4.6%) contributed the most to the decline with 13 of 19 subsectors reporting decreases. The largest declines were seen in wood product manufacturing (-10.0%) as output from sawmills and paper manufacturing (-20.4%) declined.

Mining, quarrying, and oil and gas extraction (+4.7%) and construction (+1.8%) tempered the decrease as the only two goods-producing sectors registering growth. Construction increased largely due to on-going engineering projects transporting petroleum products. Residential construction (-12.7%) fell in 2023, its sharpest decline since 1999.

Yukon regained momentum for tourism season

Yukon’s real GDP rose 1.6% in 2023, following 5.8% growth in 2022. Services-producing industries led the territory’s economic growth, reflecting steady increases in public administration (+1.8%), health care and social assistance (+3.6%), real estate and rental and leasing (+2.2%), and transportation and warehousing (+10.5%).

Yukon’s tourism sector rebounded from the pandemic slump as a higher number of visitors contributed to growth in accommodation and food services (+3.3%) with surges in food services and drinking places and recreational vehicle (RV) parks, recreational camps, and rooming and boarding houses. Arts, entertainment and recreation (+10.5%), and retail trade (+2.8%) also contributed to the economic growth.

Goods-producing industries contracted 0.8%, as both mining, quarrying, and oil and gas (-0.9%) and manufacturing activities (-5.9%) declined. This was the first decrease in the goods sector since the growth rate plunged in 2019.

Metal ore mining grew (+0.6%) with increased output in gold and silver ore mining, partially offset by a decrease in copper, nickel, lead and zinc ore mining as a major copper mine shut down in May 2023.

Yukon’s unemployment rate was 3.6% in 2023, down from 4.5% in 2022. The territory saw gains in the labour force (+2.0%), while the number of employed people rose 2.6% and the compensation of employees grew 6.6%.

Oil and gas extraction and diamond mining dragged on Northwest Territories economy

Northwest Territories’ GDP edged down 0.1% in 2023 as economic activity declined in 9 of 20 sectors. The services-producing industries registered an increase of 0.7% while goods-producing industries retreated 1.9%.

The largest contributor to a decrease in goods-producing industries was the mining, quarrying, and oil and gas extraction sector which declined 5.6%. This drop in production was led by oil and gas extraction (except oil sands) declining 33.5%. Diamond mining (-1.9%) also decreased with lower output reflecting resource depletion. Partly offsetting these negative contributions, the construction sector rose 7.8% as engineering construction advanced 16.0%.

Among the services-producing industries, the public sector was up 1.6% as health care and social assistance grew 4.2%, a slower pace than for the two preceding years. Hospitals and ambulatory health care services led the sector’s growth as both rose 3.7%. Public administration also recorded gains as local, municipal and regional public administration and indigenous public administration grew 3.5% and 5.4%, respectively.

Gold and silver ore mining and construction supported Nunavut’s economy

In Nunavut, real GDP rose 3.4% in 2023 as the higher activity was driven by increases in 14 of 20 sectors. Nunavut recorded the highest growth in the country and was the only jurisdiction where both goods-producing industries (+5.8%) and services-producing industries (+0.7%) accelerated relative to 2022.

Nunavut's goods-producing industries continued to grow in 2023 with contributions from the construction sector (+33.7%) and mining, quarrying and oil and gas extraction (+2.8%). Engineering construction (+68.0%) was supported by a major gold mining expansion project. Despite gains in construction, the sector remained below its pre-pandemic levels.

Metal ore mining advanced 2.9% as positive contributions from gold and silver mining (+8.2%), including increased output from the Meadowbank Complex, more than offset a decline in iron ore mining (-4.4%).

One third of the services-producing sectors recorded declines in 2023 which tempered increases in transportation and warehousing (+8.4%), health care and social assistance (+2.5%), and accommodation and food services (+8.6%).

Nunavut registered the lowest population growth in 2023 when compared to other territories while its employment growth was the strongest.

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Appendix