Canada's Economy Remained Strong in 2006
By Mario Cywinski | April 30, 2007
Alberta's economy coupled with the increased participation of women helped fuel Canada's economy last year, according to two recent reports from Statistic Canada.
Rising gas prices failed to dampen the economy, as some economist had feared and the overall real gross domestic product grew by 2.7 per cent, which was down slightly from 2.9 per cent in 2005.
Meanwhile, national labour income increased by 6.1 per cent and consumer spending grew by 4.1 per cent.
Alberta's economy leads provincial growth
In the provinces Alberta's economy grew by 6.8 per cent in 2006, which was more than double the national average. Employment rose by 4.8 per cent, bringing Alberta's unemployment rate to 3.4 per cent, the lowest in the country. Building permits totaled $3.6 billion and non-residential construction was at $1.1 billion.
“Recent trends in some indicators (retail sales, house prices, business investment) point to a slight deceleration from the break neck pace set in 2006," said Philip Cross of Statistics Canada. "The labour market remains tight as a drum (jobs up 1.6% since December, unemployment well below 4%), so don't send flowers just yet."
Cross noted that last year's sharp drop in natural gas prices appears to have cooled at least one segment of the Alberta economy. However, he also points out that other important economic drivers, such as oil sands development, office construction, and infrastructure spending, are still in place.
"In fact," said Cross, "Freeing up resources from the gas sector will help these sectors grow.”
British Columbia is right behind Alberta with economic growth of 3.3 per cent, with service activities outpacing goods production in 2006. The province's mining industry saw an in employment of 3.1 per cent and the 2010 Winter Olympic Games helped the construction industry.
Consumer spending, particularly on durable goods, rose sharply as new homeowners increased their spending on home furnishings. In 2006 the province's unemployment rate dropped below 4.0 per cent, a feat that was only accomplished by Alberta and Saskatchewan in previous years.
Manufacturing dampens economies of central Canada
In Central Canada the high Canadian dollar, energy costs and foreign competition squeezed the economy, with growth curtailed in both Ontario and Quebec last year.
Ontario's economy grew at 1.9 per cent, compared to 2.8 per cent in 2005, while Quebec's economy grew by 1.7 per cent, compared to 2.2 per cent in the previous year.
Hardest hit was Ontario's manufacturing sector, which saw drops in 14 of 21 major industry groups resulting in the steepest decline in manufacturing (-3.5%) in several years. This impact was felt most strongly in the province's struggling automotive sector, which accounts for one-third of Ontario's shipments.
The decline in Quebec's manufacturing industries (0.2%) was muted by strong export markets for aerospace products. As the manufacturing industry declined, both Ontario and Quebec saw a shift toward service and construction industries last year.
“Weaker commodity prices and a stabilized Canadian dollar will help boost the province's economic growth to two per cent in 2007," said Craig Wright, vice-president and chief economist, RBC in the report: Ontario's economy expected to rebound."
Wright noted that a fuller recovery is anticipated for Ontario in 2008, with growth expected to return to pace 3.1 per cent.”
The economies of eastern and northern Canada in 2006
All Atlantic provinces realized growth in 2006, led by a 2.8 per cent growth in Newfoundland and Labrador. Bolstered by a recovery in pulp and newsprint prices, New Brunswick's economy grew by 2.6 per cent, while Prince Edward Island's economy grew by 2.0 per cent.
Nova Scotia had the lowest growth rate of all the provinces (1.1%) as manufacturing declined for the second year in a row.
Mineral extraction and exploration powered the economies of all three territories in 2006, with growth rates of 5.8 per cent in Nunavut, 2.0 per cent in the Northwest Territories and 2.9 per cent in the Yukon.
Women take bigger bite of employment pie
Women took a bigger role in the economy last year, with a record 62.1 per cent of women in the workforce in 2006. The Stats Can report notes that unemployment rates among women, which currently sit at 5.2 per cent, have been lower then men for every year since 2000.
Women attained more degrees than men for the first time ever in 2006, enabling women to have more of a choice in the type of jobs they wish to pursue. In contrast, in the United States the rate of women in the work force has declined since a peak of 60 per cent in 1999.
Younger workers increase participation in workforce
An increase in the youth employment rate (15-24 year olds) helped to balance the exit of baby boom workers.
“Canada's demographic profile shows the unrelenting impact of the aging of the boomer generation. The share of the prime-aged labour force (25 to 54) continued to fall, dropping below 70 per cent for the first time in nearly two decades as the first boomers turned 60,” said the April 2007 issues of the Canadian Economic Observer.