The Daily. Monday, April 22, 2002

Provincial gross domestic product

Real gross domestic product cooled down markedly in most provinces and territories in 2001.

Alberta led the provinces with gross domestic product (GDP) growth of 2.9% in 2001, but this was down from 5.6% in 2000. Nova Scotia was a distant second at 2.4%; it was also the only other province to enjoy growth of more than 2%.

Both provinces were well ahead of the national growth rate of 1.2%, which itself was down sharply from 4.6% in 2000. Only Nova Scotia, Yukon and the Northwest Territories bucked the trend to slower growth.

At the other end of the scale, Prince Edward Island registered only 0.1% growth, and Saskatchewan's economy contracted 1.9%. The Northwest Territories' GDP gained 20.8%, the best in the country.

All provinces registered slower consumer spending in 2001 except Newfoundland and Labrador. At the national level, the pace of consumer spending slipped to 2.6% in 2001 from 3.7% in 2000. Ontario's consumers tightened their purse strings considerably; their spending slowed to 2.2% from 4.1% in 2000. In Alberta, consumer spending continued at a robust 4.9%, down slightly from 5.1% in 2000.

Note to readers Preliminary provincial gross domestic product accounts estimates for 2001 are included with this release. No revisions have been made to data from previous years. Revised estimates for 1981 to 2001 will be published in the autumn. The constant-dollar estimates included with this release continue to be calculated at 1997 prices. When the provincial economic accounts are released in the fall, the Fisher volume index formula will be adopted, consistent with the method now used to produce the national estimates.

With the slumping US economy, Canada's exports fell in 2001 for the first time since 1982. Lumber and wood pulp contributed to a 9.0% decline in British Columbia's international exports. Motor vehicles contributed to a 4.1% decline in Ontario's exports abroad. Quebec's exports of telecommunications equipment plummeted, contributing to a 3.5% drop in the province's exports to other countries. Only the Maritimes and the Northwest Territories saw higher volumes of international exports.

Weaker demand at home and south of the border contributed to a 4.0% slide in manufacturing output country-wide in 2001. The high-tech meltdown hit manufacturing, notably in Quebec and Ontario. Ontario bore the brunt of the slump in the automobile industry, but Quebec was hurt as well. The softwood lumber dispute affected downstream industries like wood products, pulp, paper and paperboard mills, bringing manufacturing down in British Columbia and contributing to its slide in New Brunswick.

In 2001, businesses reacted to weaker demand in part by selling off non-farm inventories on a massive scale. Most of the draw-down took place in Ontario, particularly in manufacturing, wholesale, retail and utilities. Much of it was related to the clearance of new motor vehicles, helped by purchase incentives offered late in 2001.

At the national level, corporate profits tumbled 6.0% in 2001. They were down sharply in Ontario and Quebec with the slump in manufacturing fortunes. Lower prices for oil helped to bring down profits in Newfoundland and Labrador and Saskatchewan. Higher natural gas prices helped prop up corporate profits in Alberta, British Columbia and Nova Scotia, the only provinces where profits advanced. Diamond and gold mining propelled corporate profits in the Northwest Territories.

Business investment in non-residential building structures advanced 0.9% at the national level in 2001, propped up by higher outlays for oil and gas projects in Alberta and British Columbia. Investment was down in Quebec and Ontario with the slump in manufacturing, and down substantially in New Brunswick, Nova Scotia and Newfoundland and Labrador with the completion of several major oil and gas projects. The three territories posted stellar gains.

Historic-low interest rates in 2001 stimulated housing markets across the country. Business investment in residential structures turned around notably in British Columbia, advancing 8.0% after three straight declines. Business investment in residential structures continued to advance in Ontario (+2.5%), but this was down from the pace of 1999 and 2000. Investment fell in Saskatchewan, Prince Edward Island and Nova Scotia.

Employment growth weakened in all provinces except Alberta and Newfoundland and Labrador in 2001. At the national level, the growth of labour income slowed to 4.2% from 6.8% in 2000. It also slowed in all the provinces and territories except the Northwest Territories.

Slowdown in Newfoundland and Labrador

Economic growth in Newfoundland and Labrador eased to 1.3% in 2001, down from an average 6.7% in the first three full years of Hibernia production. The slowdown in GDP growth resulted from slower growth in the oil industry and lower production in iron ore mining, electric power generation and construction.

The drop in oil prices dampened profits - they fell 16.7% after three years of strong growth.

Personal expenditures advanced 2.9%, reflecting higher spending on durable goods such as motor vehicles, furniture and household appliances.

Higher business investment for machinery and equipment in the oil and gas industry was offset by a drop of almost 18% in non-residential investment. Higher interprovincial shipments compensated for declining international exports, as more of Hibernia's oil was processed elsewhere in the country.

While labour income grew at a slower pace in Newfoundland and Labrador than it did nationally, unemployment fell to a 12-year low of 16.2%.

Output slows in Prince Edward Island as drought hits potato crop

The impact of the 2001 drought on the potato crop helped restrict Prince Edward Island's GDP growth to just 0.1%.

Farmers made up for reduced potato crops by selling off inventories. In addition, potato processors maintained production by importing more potatoes from other provinces. Overall exports increased 4.4%, helped by sales of frozen potato products.

Farm incomes fell sharply, even as subsidies to farmers were increased. Labour income grew 5.7%, a slower pace than in 1999 and 2000. Unemployment fell to 12%.

Growth edges up in Nova Scotia

GDP in Nova Scotia increased 2.4%, almost even with the 2.3% increase in 2000, and higher than the national average of 1.2%.

Personal expenditure contributed to growth, particularly spending on services. Spending on communications services rose 10.3% and spending on meals in restaurants increased 5.2%.

Business investment in machinery and equipment grew 8.8%, boosted by an imported floating drilling rig. This increase was offset by reduced investment in non-residential construction, particularly by utilities.

Production related to gas extraction increased significantly, with Sable Island coming into full production. Exports of natural gas grew, but were offset by lower exports of processed fish products.

Growth in labour income slowed to 3.9% following stronger gains in 1998, 1999 and 2000.

Lower capital spending slows output in New Brunswick

GDP growth slowed to 0.7% in New Brunswick, the lowest rate in 10 years. The refined petroleum products industry fared well, with substantially higher output, but construction and pulp and paperboard mills were notably down.

Total spending on non-residential construction declined following completion of the Fredericton-to-Moncton highway, an oil refinery refit and a gas pipeline to the United States.

Exports from New Brunswick increased on the strength of growth in exports of seafood products, gasoline and diesel oil.

Unemployment increased to 11.2%, and growth in labour income slowed.

Electronic product manufacturing slumps in Quebec

GDP grew 0.9% in Quebec, its smallest increase since 1992. Many manufacturing industries cut production, notably electronic products.

Production in this industry retreated to levels not seen since 1997, as exports of telecommunications equipment to other countries plummeted more than 64%, and those of integrated circuits dropped 31.5%. These declines in exports were partly offset by higher exports of aluminum and aircraft. Overall exports declined 2.6%.

Business investment in plant and equipment fell following the completion of a large aluminum processing and production project.

Personal expenditures advanced 2.6% on the strength of new car sales. Housing investment rose 5.1% as starts jumped 12.1%. Sales of associated items such as televisions, radios and furniture were strong.

Layoffs were widespread in manufacturing industries and the unemployment rate increased to 8.7%. Growth in labour income slowed to 3.7%.

Slumping US economy halts four years of strong gains in Ontario

Ontario's economy grew just 1.0% in 2001, a sharp slowdown from a gain of 5.3% in 2000. Lower exports to a weak US economy and a slide in manufacturing output halted four years of solid growth.

A 2.8% drop in exports, the first since 1991, and a massive inventory sell-off, the sharpest since 1993, also contributed to the slowdown in growth.

The same industries that fuelled the expansion of the late 1990s and 2000 were the main contributors to the slowdown in 2001. Output in the computer and electronics industry tumbled; manufacturers of semi-conductors and telephone apparatus were hit especially hard. With sluggish sales, falling exports and bloated inventories, motor vehicle manufacturers idled assembly lines. Financing incentives on new passenger vehicles late in 2001 helped to boost sales and clear inventories. Production in the motor vehicle manufacturing and parts industry was still down.

The slump in manufacturing and trade had repercussions elsewhere. Wholesaling was flat in 2001. Transportation services were down - rail, truck and air transport were hit especially hard. Delays at border crossings and reluctance to travel following September 11 also contributed to the slowdown in transportation. On the brighter side, broadcasting and telecommunications services and software publishing all posted solid gains.

Corporate profits were down 12.8%, after eight straight annual gains. Labour income advanced 4.3%, its weakest showing since 1996. Employment increased 1.6%, half the rate of 1998, 1999 and 2000. Growth in personal expenditures slowed to 2.2%, following 4.1% growth in each of 1999 and 2000.

Manitoba sees weakest growth in six years

Manitoba's GDP advanced 1.4% in 2001, the weakest growth since 1995. Employment was up 0.7%, after gaining 1.3% or more since 1997.

The province's manufacturing sector made its best showing since 1998, driven by added capacity in the agricultural chemicals, furniture making, and meat and food processing industries. However, clothing, primary metal and fabricated metal products, and machinery manufacturing all lost ground.

Excessive soil moisture levels early in 2001 hurt crop farming. Crop production was down, particularly of wheat, canola and potatoes. Livestock production increased, helping to raise farm income.

Wholesale and retail trade registered the best output gains since 1998. Retailing was helped by an upturn in new vehicle sales, while wholesaling benefited from sales of farm products.

Corporate profits were down 2.7%, after two consecutive years of gains. Labour income rose 3.5%, just over half its pace in 2000.

First decline in Saskatchewan's output since 1992 as drought hammers crops

Saskatchewan's economy contracted 1.9% in 2001, the first decline since 1992, as drought devastated crops, farm incomes dried up, and the population shrank for the second straight year.

With a steep drop in business investment spending, final domestic demand fell 0.3%. Lower exports and a massive draw-down of inventories contributed further to the contraction.

Agricultural output was hammered by severe drought conditions across most of the province. All major field crops were hit. Livestock operators increased output, despite scarce water supplies and higher feed prices.

The oil and gas extraction industry posted another healthy gain, as did uranium production following the opening of the McArthur River mine. Potash production was down.

The first full year of natural gas deliveries to the United States via the Alliance pipeline offset slumping truck and rail transportation and brought overall output of the transportation and storage industries back in line with 2000.

Corporate profits were down 13.8% from the record set in 2000. Labour income advanced a modest 2.7%. Personal income rose only 1.5%, held back by the drop in net farm income.

Consumer confidence, energy propel gain in Alberta

A thriving energy sector and strong population growth helped Alberta to the best showing of all the provinces in 2001 with a 2.9% gain in GDP. This was down from a healthy 5.6% in 2000.

Final domestic demand was up a robust 5.5%. Lower net exports (exports minus imports) and a significant sell-off of inventory helped to temper the province's GDP growth.

Consumer-oriented industries made solid gains in 2001. Consumer spending on durable goods was up 8.3%, helped by incentive-driven new car sales, and sales of semi-durable goods were up 7.2%, helped in part by the furnishing of new homes. Housing investment advanced 7.2%, as starts jumped 11%.

Business investment in plant and equipment slowed as energy prices retreated, but still made solid gains on top of the massive injection of funds in 2000. The high level of investment in the oilpatch generated considerable spinoff activity.

Manufacturers of machinery, primary metal and fabricated metal products all enjoyed strong growth, as did professional services such as engineering, architectural and technical services. The high-tech meltdown hurt electronic products manufacturing, but broadcasting and telecommunications services continued to post double-digit gains.

Corporate profits were up 11.5% from the record level set in 2000, thanks in part to $4 billion in subsidies to offset higher prices for electricity and natural gas. Labour income was up 7.9%. Employment posted its strongest gain since 1998, and the unemployment rate improved to 4.6%, the lowest in the country.

Softwood lumber dispute hits British Columbia

British Columbia's economy grew 0.9% in 2001, its weakest showing since 1991, hurt by the softwood lumber dispute and setbacks in downstream industries. Employment fell for the first time since 1983, pulled down by widespread layoffs in lumber and related industries. Lumber exports dropped almost 15% and pulp almost 34%, contributing to the 6.3% drop in overall exports.

Output in the forestry and logging industry fell 4.6%. Downstream industries, notably wood product manufacturing and pulp, paper and paperboard mills, were hurt as well, contributing significantly to a steep drop in manufacturing output. Makers of computers and electronic products, primary metal and fabricated metal products, and machinery also contributed to the slide in manufacturing.

Natural gas discoveries in the Ladyfern area of northeastern British Columbia triggered an exploration rush and drilling activity jumped. Output of the oil and gas extraction industry made double-digit gains for the second consecutive year. Output in the electric power generation, transportation and distribution industry was cut back as a severe water shortage hampered hydroelectric production and electricity exports to the United States plummeted in volume.

The British Columbia housing market was hot in 2001. Investment in housing rose 8.0%, as housing starts jumped 20% after three consecutive declines. The finance, insurance and real estate industries posted their strongest advance in four years.

Corporate profits edged up over 2000's record high, buoyed by natural gas prices and sales. Labour income edged up 2.0%; income tax cuts helped shore up growth in personal disposable income.

Rate of growth picks up in Yukon

Yukon's GDP rose 1.2% in 2001, up from 0.7% in 2000.

Investment in non-residential structures increased 24.5%, spurred by the development of a retail shopping facility and a hydro transmission system. Exports declined 5.5%, led by falling gold exports.

Current government expenditure, including territorial government spending, gained 3.2%. Personal expenditure rose 2.9%, and labour income growth slowed to 0.5%.

Output surges in Northwest Territories with strength in mining, construction

The GDP of the Northwest Territories surged ahead 20.8% following an 8.8% increase in 2000 with construction on the massive Diavik diamond mine.

Growth was concentrated in investment in non-residential structures related to the development of diamond-mining properties and oil and gas extraction. Production from the construction industry skyrocketed.

Mining production increased 28% on the strength of diamond mining and gas extraction. Exports advanced 14.8%; gains were concentrated in diamonds and gold. Profits rose 21.4%.

Infrastructure spending makes for steady growth in Nunavut

Nunavut's GDP grew 3.7% in 2001, compared with 4.5% in 2000.

The largest contributors to growth were business and government investment in non-residential structures. Government investment was concentrated in educational facility development, while business investment focussed on mining and utilities.

Exports advanced 6.2% on the strength of metal ore exports.

Available on CANSIM: tables 379-0025, 384-0001, 384-0002, 384-0012, 384-0013 and 384-0036.

Provincial economic accounts - preliminary estimates, tables and analytical document, 2001 (13-213-XDB, $80; 13-213-PPB, $50) is now available. To purchase this product, contact the client services officer (613-951-3810; iead-info-dcrd@statcan.gc.ca), Income and Expenditure Accounts Division.

To purchase data on provincial gross domestic product by industry at basic prices, contact Bruce Cooke (613-951-9061; cookeb@statcan.gc.ca), Industry Measures and Analysis Division.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Roger Jullion (613-951-0538), or Bruce Cooke (613-951-9061), System of National Accounts Branch.

GDP at market prices, 1997 prices

GDP at basic prices, 1997 prices

Personal expenditure on consumer goods and services, 1997 prices

Final domestic demand, 1997 prices