Provincial GDP in 2003*

Newfoundland and Labrador led the provinces for the second year running with oil-fired GDP growth of 6.5%. Saskatchewan was the only close runner-up, as an end to two years of drought brought a 4.5% rebound.

Quebec’s growth slowed to 1.6%, less than half its pace in 2002, as the stronger dollar hampered manufacturing and exports abroad. The dollar, SARS, the power outage and a strike at Inco slowed Ontario’s growth to 1.3%. Nova Scotia recorded 0.9% growth, the lowest among the provinces.

Despite the slowdown in GDP across central and eastern Canada, domestic demand improved almost everywhere. Business investment was a major factor behind this pick-up. Households remained a driving force, as consumer spending outpaced GDP in most provinces, while housing advanced a solid 7.5% nationally. Low interest rates helped to sustain consumer spending and the housing boom in 2003. British Columbia and Newfoundland and Labrador led housing with 15% growth. At the other end of the spectrum, Ontario recorded a 5.1% advance and Alberta was flat.

Figure 1

Consumer spending also outpaced personal disposable income, bringing down the personal saving rate across the country. The saving rate was highest in Alberta and lowest in British Columbia, who drew down savings and borrowed more to finance spending.

Corporate profits were up 10% nationally, with strong gains everywhere except Ontario and Quebec. In Ontario, corporate profits were held back by weakness in mining, utilities, accommodation and food services, and manufacturing. In Quebec, they were dragged down by manufacturing and mining. At the other end of the scale, diamond production propelled profits up 36% in the Northwest Territories, while higher natural gas prices were behind a 43% gain in Alberta.

Canada’s exports fell for the third year running, as seven provinces recorded lower international exports. Natural gas contributed to a decline in Nova Scotia’s exports. Weak global demand for aircraft led to a decrease in Quebec’s exports, while a levelling-off of US demand for cars contributed to a decline for Ontario. Weak growth in the US hurt Canada’s exports in 2001 and 2002, but in 2003 the stronger dollar was more of a factor. It also contributed to a 7.0% decline in the price of imports. International imports accelerated everywhere except Nova Scotia.

The volume of interprovincial exports advanced 0.7% after gaining 4.3% in 2002, led by Newfoundland and Labrador’s oil exports to the rest of Canada.

Manufacturing output edged down 0.4% nationally in 2003. Much of the weakness was centered in Quebec, where aerospace, clothing, pulp and paper, fabricated metal and communications equipment all reduced output. Manufacturing in Ontario edged down as 13 of 21 industries reduced output. Nova Scotia and New Brunswick were the only other provinces to record lower manufacturing output.

The stronger dollar, SARS, the war in Iraq and global concerns about air travel made 2003 a difficult year everywhere for travel and tourism. In Ontario, it was down a sharp 8.4%. Increased federal funding boosted health care across all the provinces.

Oil fuels Newfoundland growth

Newfoundland and Labrador’s GDP grew 6.5%, more than three times the national increase, but well below the spectacular 15% increase in 2002. Oil and gas extraction was up sharply, as the Terra Nova drilling platform entered its second year of operation. Exports of crude oil were up strongly, contributing to the best export showing among the provinces.

Consumer spending grew 3.1%, the best in four years. Retail trade benefited from sales at home centres and hardware stores, which were boosted by a hot housing market, which forged ahead 15%.

Investment in non-residential structures bounced back 9.4% from a sharp drop in 2002 (due to the completion of Terra Nova). Outlays for machinery and equipment were up 8.1% as corporate profits increased 22%, helped by the gains for crude oil.

Manufacturing buoys PEI

PEI grew 1.9%, just above the national average, after a robust 5.7% gain in 2002. Manufacturing output jumped 7.0% mainly on export-driven strength in aerospace and the printing industry. A healthy potato crop helped frozen food producers to raise output. However, farm income was down.

Imports from other countries were up 11%, while imports from other provinces were flat. Exports rose 3.2%, driven by frozen potatoes and aircraft services and repairs.

Natural gas slows Nova Scotia

Nova Scotia grew a lacklustre 0.9%, the slowest pace since 1996, and lowest among the provinces. Oil and gas extraction fell as a result of lower Sable Island production. However, stronger natural gas prices boosted corporate profits by 13%.

Following the completion of a drilling platform in 2002, shipbuilding fell sharply, contributing to lower manufacturing output. Business investment in machinery and equipment fell 15%. But non-residential structures rebounded 3.3%, stimulated in part by the utility and oil and gas industries. The damage caused by Hurricane Juan spurred repair and reconstruction activity.

Exports of seafood and natural gas were down, contributing to the first decline in international exports since 1995. Exports to other provinces recorded the weakest showing since 1994.

Provincial public administration output increased 1.3% after three years of cutbacks. An upsurge in call centre activity contributed to a 5.8% jump in administrative and support services. The service sector increased 1.9%.

Business investment shores up New Brunswick

New Brunswick’s growth slowed to 2.6% from 4.0% in 2002, but remained above the national average. Business investment bounced back 17% after edging down in 2002, as non-residential structures rebounded 43% from three years of decline. Electric power construction more than doubled with the refurbishing of the Coleson Cove power plant.

Exports to other countries fell 2.5%, the first decline since 1991, dragged down by gasoline, seafood products, diesel oil and lumber. Exports to other provinces were down 0.3%, the second consecutive decline. Mining output climbed 16%, the best among the provinces. Potash mining was up sharply on strong demand at home and abroad.

Manufacturing slump restrains Quebec

Quebec grew 1.6%, just short of the national average and less than half its pace in 2002. The main source of weakness was international exports, which fell 4.5%, the third consecutive decline. Exports of transportation equipment were hard hit. Exports to other provinces edged down 0.1%, the first decline since 1996.

Manufacturing slipped 2.3%, with drops in transportation equipment (because of the closure of an auto plant and weak demand for aircraft and parts), computer and electronic products, and pulp and paper. Weakness in manufacturing contributed to a 4.2% decline in corporate profits.

Despite the dip in profits, investment in non-residential structures advanced 1.4%, after two years of decline. Machinery and equipment also turned around, gaining 3.5% after a two-year slump. Office machinery and equipment imports were up sharply, boosting international imports after two years of decline.

Personal disposable income rose in tandem with consumer spending, which advanced 3.5%, driven by outlays on services and durable goods, notably home furnishings and electronics. Retail trade was helped by sales at home centres, furniture and hardware stores. The housing boom continued, up 10%.

Ontario lags

Ontario’s growth slowed to 1.3%, the second lowest among the provinces. Exports to other countries were a major source of weakness, falling 2.1%, more than offsetting higher exports to the rest of the country. Transportation equipment led the drop in exports abroad. Transportation equipment output, which accounted for one-fifth of Ontario’s manufacturing sector, was down 0.5%. Overall manufacturing slipped 0.2% as 13 of 21 industries reduced their output.

Electric power fell 5.4% in 2003 due in part to the power outage. Mining output fell 8.8% largely because of the strike at Inco. Tourism-related industries were severely affected by SARS, the stronger dollar and concerns about air travel.

On the upside, domestic demand picked up steam, advancing 4.0% on a rebound in business investment. Outlays for machinery and equipment increased 8.0% after two years of decline. Continued strength in corporate profits and cheaper US imports contributed to the spending spree.

Consumer spending continued at a quick pace, despite a halving of income growth. Outlays for services were up 4.3%, boosted by double cohort spending on educational services. Spending on durables slowed markedly as a result of fewer auto purchases. Housing advanced 5.1%, the fifth straight year of solid gains.

Mixed results for Manitoba

Manitoba grew 1.4%, below the national average, and down from its 2.1% showing in 2002. The fastest population increase since 1986 sustained demand, as consumer spending advanced 2.5% and housing 7%.

Manufacturing edged up, led by chemicals and pharmaceuticals. Outlays for non-residential structures were down 6.4%, partly because of lower spending by manufacturers. Financial services fared well, boosting corporation profits to an 8.9% gain.

Exports were down due to grains and other crops. Hydroelectricity exports tumbled. Electric power fell 12% as a result of low water levels after dry conditions in the past few years.

The unemployment rate fell to 5.0%, the lowest in the country. Labour income advanced 3.3%, more than twice the pace of personal disposable income growth.

Saskatchewan rebounds from drought

Saskatchewan rebounded 4.5%, the second best among the provinces, after two years of contraction. Increased farm production followed two years of drought. Farmers continued to lose money, however, as grain prices slipped and livestock producers were battered by the mad cow scare. Exports of cattle and calves, many of which go to Alberta for processing, tumbled. Farm inventories surged.

Mining and oil and gas also contributed to the economy’s turnaround. After two years of decline, international exports were up 3.2% on strength in mineral fuels, grains and other agricultural products.

Consumer spending outpaced personal disposable income for the fourth year in a row. The new casino in Moose Jaw helped to boost spending. Housing had another banner year.

Oil patch keeps Alberta growing

Alberta grew 2.2%, well above the national average, after growing 1.5% in 2002. Although oil and gas production advanced only 0.4%, higher natural gas prices helped raise corporate profits and finance a surge in exploration, which lifted business investment after a 4% decline in 2002.

The revelation that an Alberta cow died of mad cow disease closed international markets to Canadian beef. Alberta’s beef exports tumbled, as did the province’s meat product manufacturing, and farm income remained weak despite a good crop. International exports edged down, the third straight decline, because of weakness in oil and gas, beef and lumber.

Inventories ballooned as farmers waited for an end to the trade restrictions on cattle. Wholesale trade jumped 8.2%, the strongest in the country and its best showing in three years, helped by improved harvests.

Consumer spending rose 4.0%. Spending on durable goods slowed to one-third its torrid pace in 2002, as new auto purchases fell sharply.

Housing boosts BC

British Columbia advanced 2.2%, above the national average of 1.7%, and about the same pace as 2002.

The housing market remained strong, up 15%. Business investment rebounded, mainly due to oil and gas. Corporation profits were up 12% after two years of decline, propelled by higher prices for natural gas.

Record dry weather set the stage for large forest fires in British Columbia in the summer of 2003. Forestry contracted 2.1%, the fifth straight decline. Efforts to combat forest fires resulted in a 24% surge in output of the agriculture and forestry support industry.

Pulp and paper, chemical and electronic product manufacturers contributed to higher manufacturing output after two years of decline.

Total hours worked accelerated and labour income rose 3.3%. Despite a slowdown in personal disposable income, consumer spending advanced in line with the previous four years. The personal savings rate fell to -8.2%.

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Note

^* Contact Information Officer, IEAD, (613) 951-3640. Adapted from The Daily, April 28.