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Newfoundland and Labrador

Reduced oil and gas extraction pushes economic activity down

The Newfoundland and Labrador economy contracted 0.1% in 2008, after a 9.1% increase in real GDP in 2007.

Chart 2 Newfoundland and Labrador's GDP
Chart 2 Newfoundland and Labrador's GDP

Following a banner year in 2007, oil and gas extraction fell in 2008. Output at the White Rose field slipped. Equipment failures and a general slowdown in the industry due to economic conditions muted production elsewhere in the province. Total exports, reflecting this downturn, fell 0.2%, following two years of strong growth.

Excluding energy, economic activity continued apace. Fishing output advanced for the third year in a row. Mining production continued to expand on the heels of three years of strong increases.

Corporate profits grew 5.2% following six years of double-digit advances as commodity prices receded in the latter part of the year and production volumes decreased. High commodity prices in the earlier part of the year also propelled royalty income, helping to fill government coffers.

Business investment in non-residential structures slid for the third year in a row. These decreases reflected the movement of large mining and oil projects from the construction to the production phase.

Manufacturing advanced again in 2008, counter to the national trend. Food production was particularly strong.

Labour income continued to be affected by large special payments made in 2006 and 2007 that reduced the actuarial deficits of public sector employee pension plans. Labour income dropped 4.4% in 2008, following a similar decline in 2007. Excluding these special payments, labour income advanced 6.4% in 2008.

Propelled by the strongest gain in employment since 2003 and the first increase in population since 1992, personal expenditure advanced 4.6%. Spending on durable goods, like cars and trucks, increased by 13% for the second consecutive year. Housing starts were up sharply, further reflecting strong spending by the household sector. Business investment in residential structures was up 7.3%, following a similar gain in the previous year. Final domestic demand advanced 3.2%. Retailers and wholesalers benefited from this economic activity and registered advances in the year.

Prince Edward Island

Consumer spending spurs economic activity

The Prince Edward Island economy grew 0.9% in 2008, just ahead of the pace set by the national economy (+0.5%). A 2.9% increase in consumer spending kept the economy moving forward. The GDP growth rate was weaker than in 2007 as production and exports of crops and livestock fell.

Chart 3 Price Edward Island's GDP
Chart 3 Price Edward Island's GDP

The growth of personal expenditure was lower than in 2007, but was similar to the annual average of the previous five years. Automobile purchases increased and labour income rose 3.9%, following a strong gain in 2007.

Government spending on goods and services grew at its strongest pace since 2003. Growth in education services reflected this spending while public administration services grew more quickly than in 2007. Government investment in machinery and equipment was up sharply.

Crop production was down for a second year as farmers reduced crop acreage. Potato production suffered from wet harvesting conditions. With reduced output, farmers were not able to take full advantage of higher crop prices and accrued net income of farm operators declined. Conversely, fishing registered a second consecutive year of strong growth.

Exports were down reflecting a downturn in crop and livestock production and manufacturing activity. Food processing remained at 2007 levels while sharp declines in chemical manufacturing muted growth. In contrast, transportation equipment manufacturing increased. Trucking was up slightly while wholesalers registered a small decrease in output. Corporation profits continued to rise, but at the slowest pace since 2004.

Business investment was down in 2008 with all major components declining. Residential investment fell, due to lower transfer costs associated with the resale market. Investment in non-residential structures dropped for a second consecutive year. Investment in machinery and equipment also declined, following a large gain in 2007. Imports from other countries also were down.

The tourism industry had a lacklustre year in 2008. Output in the accommodation industry was down while food services posted a small gain.

Nova Scotia

Personal and government spending boost economy

The Nova Scotia economy advanced 2.0% in 2008, up from a 1.7% gain in 2007 and well above the national rate of 0.5%.

Chart 4 Nova Scotia's GDP
Chart 4 Nova Scotia's GDP

Consumers provided a boost for the Nova Scotia economy as personal expenditures advanced 3.1% in 2008; the strongest gain since 2002. Purchases of motor vehicles continued to propel spending. Population growth rebounded from a decline in 2007 adding further stimulus. A 1.1% gain in employment provided the impetus for a 4.6% advance in labour income, the largest increase since 2005.

Government spending on goods and services accelerated, increasing 3.8%. Government capital investment also registered strong gains after declining in 2007.

Services produced by health, education and public administration industries all grew more quickly in 2008 than in the previous year. Accommodation and food services also advanced in 2008 after a downturn in the previous year.

Business investment in non-residential construction rebounded after a sharp decline in 2007. With several large projects in the initial stages of development, engineering activity, particularly for energy production, boosted investment. Conversely, residential building investment declined as housing starts fell. Businesses reduced their expenditure on machinery and equipment by 20%.

Exports were up 0.8% in 2008, a deceleration from 1.7% growth in 2007, but well above the 4.7% decline registered nationally. Shipments of natural gas continued to advance, however many manufactured goods did not fare as well. Overall, manufacturing output fell 0.9%. A drop in food, wood products and plastic and rubber manufacturing was only partially offset by gains in transportation equipment manufacturing. Corporation profits were up sharply as energy prices were strong for most of the year. Prices for exported goods and services grew 7.4%.

With economic activity advancing, transportation services also were up. Trucking and support activity for transportation both posted solid growth from the previous year.

New Brunswick

Forestry, manufacturing slow economy

New Brunswick's real GDP was unchanged in 2008, following gains of 1.7% in 2007 and 2.4% in 2006.

Chart 5 New Brunswick's GDP
Chart 5 New Brunswick's GDP

The forestry industry in New Brunswick continued to slow down mirroring the drop in the US housing market. Output in the industry dropped 27% in 2008, following a 9.0% decline in 2007. The slump also spread to forestry-related manufacturing. Wood product manufacturing was down 23% following a decline in 2007. Paper manufacturing also recorded a large downturn.

Food processing fell 5.9% following three years of growth. The decline reflected a downturn in crop production. Large amounts of moisture in the summer led to a diminished potato crop.

Exports decreased 2.8%, hampered by the decline in forestry and manufacturing. Wholesale trade was down for a third year in a row. Transportation, particularly trucking and rail, was also down in the year. Corporate profits, impacted by the downturn in shipments and lower margins, fell 14%.

Business investment in residential structures continued to rise as housing starts edged upward. Business investment in non-residential structures increased again in 2008 (+11%) after growing 75% in 2006 and 27% in 2007. Work continued on several large mining and pipeline projects, and on the refurbishment of the Point Lepreau nuclear plant. With the plant going off-line, however, production of utilities fell and imports of energy products were up.

Manufacturers of construction-related goods increased their output. Fabricated metal production and machinery manufacturing both grew. Another area of growth for the province was the mining and oil and gas extraction sector as declines in coal and metal ore mining were more than offset by new production in oil and gas extraction.

Fuelled by high paying construction jobs and government hiring, labour income grew 4.5%, a pace similar to 2007. Employment growth slowed to 0.8%. With the population advancing and the labour force expanding, the unemployment rate moved upward.

Consumer spending did not advance as quickly as in 2007. However, at 3.4%, the growth was similar to the average of the previous five years. Households increased their spending on durable goods by 8.6%.

Output of insurance carriers increased following a small downturn in 2007. The federal, provincial and municipal governments expanded their services. Hospitals and education services also advanced more quickly than in 2007.

Quebec

Building activity continues to boost economy

The Quebec economy grew 1.0% in 2008 as investment in non-residential structures continued to provide a boost to the economy for a third year in a row. Investment in residential construction recorded a small decline as housing starts slipped.

Chart 6 Quebec's GDP
Chart 6 Quebec's GDP

Personal spending grew 3.1% in 2008. Although not growing as quickly as in 2007, the rate was similar to the average of the previous five years. Purchases of durable goods such as motor vehicles continued to spur growth in consumer spending. A large pay equity settlement contributed to 5.9% growth in personal income in 2007. As a result, personal income grew at a slower pace in 2008. Employment growth also slowed. The unemployment rate remained unchanged from the previous year.

Manufacturing output dropped 2.6%, following two years of smaller decreases. In 2008, declines were widespread. Clothing and textile manufacturing continued the downward trend of the past several years. Wood related manufacturing also fell, reflecting weakness in the forestry sector. Conversely, aerospace manufacturing remained strong.

Forestry output fell for the third year in a row as the continued slump in the U.S. housing market curtailed shipments. Wholesale trade grew at a slow pace, reflecting the weakness in manufacturing. Total exports were down.

Support activities for mining, such as exploration, were up sharply.

Growth in public administration and health accelerated from 2007. The accommodation industry also picked up its economic growth.

Corporate profits decreased 2.9% compared to a 6.4% gain nationally.

Ontario

Manufacturing continues to decline

The Ontario economy contracted 0.4% in 2008, well off the 2.3% gain in the previous year. The slump in manufacturing deepened after two years of decline, and was a major contributor to the downturn. Ontario’s growth has generally been below the national rate since 2003.

Chart 7 Ontario's GDP
Chart 7 Ontario's GDP

Transportation equipment manufacturers were again hard hit as output dropped 21%. Automobile manufacturing as well as the auto parts industry experienced plant closures and cutbacks in production. The economic slowdown in the U.S. continued to create difficulties for producers. The downturn in manufacturing was widespread with 16 of 21 sub-groups registering declines.

Clothing production (-28%) and wood product manufacturing (-14%) fell sharply. Paper production dropped as well, although to a lesser degree. The drop in export demand that affected these industries also affected the forestry industry, which fell 12%. Overall, exports fell 5.3%, the largest decline since the first recording of this data series in 1981. Corporate profits were also down sharply. Wholesalers were affected by the downturn in the manufacturing sector as output fell 1.2%.

Three manufacturing industries were notable in bucking the negative trend of 2008. Aerospace industries bounced back from a drop in 2007. Pharmaceutical manufacturers increased production 13% while output in computer and electronic manufacturing was up slightly.

Construction activity declined as investment in non-residential structures was down. Business investment in residential construction fell for the first time since 1998.

Mining received a boost from the Victor Diamond mine, Canada’s fifth diamond mine which began production early in 2008.

The economy continued to produce jobs, particularly in the first part of the year. Labour income advanced 4.3%, down from 4.7% the previous year. Consumer spending (+2.6%) decelerated to its slowest growth rate since 2001. Personal disposable income advanced 5.1%, while nominal consumer spending increased 4.1%. As a result, personal saving in 2008 was $13.4 billion, up from $10.2 billion in 2007.

Increased activity at airports and bus terminals helped accommodation services build on last year’s increase, and restaurant activity was also up.

Health care, education and public administration all edged ahead. Defence service expenditures contributed largely to the growth in federal government administration.

Manitoba

Capital expenditures help sustain economic growth

The Manitoba economy grew by 2.4% in 2008, the third consecutive year of growth above the national rate. Construction activity continued to provide strength to the economy.

Chart 8 Manitoba's GDP
Chart 8 Manitoba's GDP

Investment in non-residential structures provided the biggest boost, registering double-digit growth for the third year in a row. The completion of the Manitoba Hydro building as well as continued work at the Winnipeg airport and on the Red River floodway contributed to the gains. Expansion in the housing market continued as residential building investment increased for the ninth consecutive year.

Labour income advanced 6.2% after growing 7.3% in 2007. The 2008 growth rate was well ahead of the average increase over the previous five years. Personal spending increased 4.2% following 5.0% growth in 2007. A 1.2% increase in the province’s population provided further stimulus to spending. Wholesalers also registered another year of growth.

After growing 5.3% in 2007, the manufacturing industry edged up in 2008. Declines in primary metal manufacturing, wood products and paper manufacturing were offset by gains in printing, transportation equipment manufacturing and the production of agricultural implements.

Output in the mining industry was down for a second consecutive year. Oil and gas extraction continued to expand on previous years’ advances.

The goods-producing industries outpaced services in the year.

Corporate profits registered a 2.4% gain in 2008, the smallest since 2001.

After a poor harvest in 2007, crop production was up in 2008. As a result, accrued net income of farms was well above the previous years’ levels.

The transportation industry was adversely affected by the downturn in the North American economy. Rail transport fell while truckers experienced only a small gain in output.

The financial industry managed to advance despite the upheaval in the world markets in the latter part of the year. Lessors of real estate, in particular, had a strong year of growth.

Hoteliers and restaurateurs were up 2.1% after three years of little increase.

Saskatchewan

Commodity prices, bumper crop lift economy

The Saskatchewan economy grew 4.4% in 2008, the strongest growth among the provinces. This followed a 2.5% gain in 2007.

Chart 9 Saskatchewan's GDP
Chart 9 Saskatchewan's GDP

The agricultural sector was given a boost with a bumper crop harvested in 2008 as production jumped 22%. Canola exports surged. Net income of farm operators grew by over $1.5 billion from the previous year.

Commodity prices, particularly for potash and oil, resulted in huge gains in income for both corporations and the government. Corporate profits jumped by 58%. Labour income increased 8.4%, higher than the national growth of 4.9%.

Total employment increased 2.2%, while the unemployment rate declined to 4.1%. The population advanced 1.6%, providing further stimulus to the economy.

The growth in labour income and in population propelled consumer spending upward, gaining 5.5%. This was well above the average of the previous five years. Personal spending on durable goods climbed 14%. Motor vehicle sales and expenditures related to setting up new households continued to advance.

Business investment in residential construction increased 7.4% following double-digit growth in 2007 as increases in housing starts continued. Business investment in non-residential construction rebounded from a downturn in 2007, up 17%.

Exploration and support of mining activity surged. Wholesale activity jumped 9.5%.

Counter to the national trend, manufacturers in the province increased their output in 2008. Producers of agricultural machinery maintained busy order sheets as did primary metal manufacturers. Conversely, wood products declined for a third straight year.

With the increase in population, service-producing industries registered gains in the year. Education services were up 3.4%.

Alberta

Production slips but incomes still strong

The Alberta economy contracted 0.2% in 2008.

Chart 10 Alberta's GDP
Chart 10 Alberta's GDP

High commodity prices kept income growth strong in 2008. Corporation profits jumped 28% as overall prices for goods and services produced in the province rose 13%, the highest increase since 2000. Government revenue was boosted by income from royalties.

Personal income grew 8.2%, down slightly from the strong increases of the previous four years, but well above the national growth rate (+4.8%). Employment and population growth also slowed, yet stayed the highest in the country. Despite the gains, personal spending (+2.7%) advanced at a much slower pace than in previous years. The slowdown in spending was particularly noticeable in durable goods. With income gains and a slowdown in spending, personal saving was $19 billion in 2008, up from $14 billion in 2007.

The spending slowdown also affected investment in residential structures, which fell 11% in 2008. Housing starts dropped by 40%. However, the construction industry declined slightly despite continued government investment in infrastructure. Growth in health and other public administration remained strong.

Oil and gas extraction output dropped 5.3% in 2008. The industry responded to weakening economic conditions by cutting production. Drilling activity edged down, following a large decline in the previous year.

Exports fell 1.5%, the first decline for the province since 1986. Natural gas shipments were particularly hard hit. Growth in wholesale trade, reflecting the slowdown in economic activity, continued to decelerate (+3.6%), but still grew at a pace well above the national rate (+0.1%).

Manufacturing activity decreased in 2008, the first decline in the province since 2003. Overall, there was widespread weakness as 16 of the 21 sub-groups fell into negative territory. Oil patch related manufacturing suffered as chemical and petroleum refineries reduced their production. Wood product manufacturers continued to be negatively impacted by the downturn in the U.S. housing market as several mills closed. Iron and steel pipe and tubing manufacturers as well as pump and compressor manufacturers, bucked the overall trend and recorded healthy increases.

Crop production also provided a boost to the economy as a good harvest along with higher prices elevated farm incomes.

Overall, services industries continued to grow in 2008, but a slower pace than in 2007. Transportation output, particularly pipelines, as well as arts, entertainment and recreation declined.

British Columbia

Decline in forestry contributes to economic contraction

In British Columbia output fell 0.3% in 2008, after advancing 3.0% in 2007. The national economy advanced 0.5% in 2008.

Chart 11 British Columbia's GDP
Chart 11 British Columbia's GDP

The effects of a sharp drop in output of the forestry industry (-18%) rippled through the economy. The decrease was triggered by a slowdown in housing construction in the U.S. combined with a high Canadian dollar in the first half of 2008. Forestry-related manufacturing, including sawmills and paper manufacturing, posted large declines. Affected by these declines, the wholesale industry contracted while transportation and warehousing services remained flat. With economic activity slowing, demand for energy was also affected. The output of utilities was down 4.0%.

Exports fell 6.8% following a small decline in the previous year. The 2008 downturn was largely due to a drop in lumber products.

Output in the mining sector was down as oil and gas extraction and metal ore mining reduced production. However, with prices high, especially for commodities such as coal and natural gas, revenues poured in. This income helped to offset the losses in the forestry sector and corporation profits registered a small gain in 2008.

After a decline in 2007, construction grew again in 2008. Business investment in non-residential structures picked up with projects related to oil and gas extraction and electricity generation. Government capital expenditure increased 0.3% after a cumulative gain of 80% over the previous six years. Housing starts fell off putting a damper on housing construction. Investment in residential construction declined 4.1%.

Growth in personal spending decelerated in 2008 to 2.8%. This was the slowest growth since 2001. Purchases of durable goods fell as sales of cars and trucks declined.

Labour market conditions stayed strong. Labour income increased 5.6%. This pace was well above the national growth rate but below the British Columbia average of the previous five years. Employment advanced 2.1% while the unemployment rate edged up to 4.6%.

The slowdown in the economy was also experienced in the service industries. Only health and public administration grew more quickly than in 2007, benefiting from government expenditures on goods and services, which advanced at a similar rate as in the previous year.

Yukon

Metal mining lifts economy

The Yukon economy grew 5.2% in 2008, up from the previous year and well ahead of the national economy.

Chart 12 Yukon's GDP
Chart 12 Yukon's GDP

A full year of production from a new copper-gold mine resulted in a jump in shipments of metal ore. Reflecting this increased activity, the transportation and warehousing industry advanced. Exports also expanded with this new production, up 23%, as exports of goods to other countries jumped 84%. This in turn drove up corporate profits. Support activities for mining, including exploration, declined 8.3%.

With the completion of the new mine in 2007, construction activity fell in 2008. Investment in non-residential structures dropped by 37%, following a 32% gain in the prior year. Electric power engineering construction surged with the partial completion of a new transmission line. Government investment in structures advanced 23%. Investment in residential construction declined for a third year in a row.

Personal spending was up 4.2%, down from the pace set in 2007. The population grew 1.7% providing a stimulus to demand. Labour income advanced 6.2%, decelerating from the previous two years. Personal saving edged up as taxes and expenditures advanced at similar rates as income. Consumer prices grew more quickly than in 2007, mainly due to import prices which were up 5.1%.

Services grew at a faster pace in 2008 than in the year before. The public administration industry, which represents approximately one fifth of total production in the Yukon economy, increased 0.7%. Health care and the financial industry posted stronger gains than in 2007.

Northwest Territories

Diamond production down while income still high

The economy of the Northwest Territories declined 6.5% in 2008.

Chart 13 Northwest Territories' GDP
Chart 13 Northwest Territories' GDP

Output at diamond mines fell in 2008, responding to a downturn in global demand. Oil and gas extraction also declined. The volume of exports out of the territory fell 11%. However, higher valued diamonds pushed the average price of diamonds up considerably from the previous year, resulting in increased income. Corporation profits jumped 30% following double-digit growth in 2007. Prices for all goods and services produced in the Northwest Territories were up 21%, with export prices advancing 32%.

With the completion of the mine at Snap Lake, the growth in construction activity slowed from previous years. Business investment in non-residential structures was up 0.3%. This followed four years of double-digit growth. Governments curbed their spending on infrastructure, further slowing construction activity. Investment in residential structures also declined. A drop in the population softened demand for new living quarters.

Personal income advanced 5.2%, the slowest gain since 2003. Consumer spending also advanced 2.3%, well down from the pace set in the previous year.

The public administration industry registered stronger growth in 2008 than in the year before. Overall, services grew at a slower rate in 2008.

Nunavut

Economy continues to advance briskly

The Nunavut economy advanced 5.5% in 2008, down from a 9.0% gain in 2007 but topping the 2.2% increase in 2006.

Chart 14 Nunavut's GDP
Chart 14 Nunavut's GDP

Construction of the Meadowbank Gold mine carried on in 2008 providing a boost to economic activity. Non-residential business investment was up 52%, while investment in machinery and equipment soared 76%. Imports were up 17%, reflecting these purchases.

Government investment in structures was down in 2008, following two years of large increases.

Labour income was up 3.3%, the smallest increase recorded since the formation of the territory in 1999. Consumer spending also decelerated, although at 4.9%, the gain was still above the average of the previous five years.

Mining experienced a set back in 2008 as shipments from the Jericho Diamond Mine dropped substantially. Exports, in turn, decreased 15%.

Public administration, an important industry for the economy, fell in 2008. However health care and education services were both up.