Economic Analysis of British Columbia Volume 36 • Issue 1 • January 2016 | ISSN: 0834-3980
B.C. Economic Outlook Steady Growth Ahead for B.C. Annual Per Cent Change 4.0
Highlights
3.0
•
B.C. economy will weather global economic turmoil
•
Consumer spending and housing underpin GDP growth of three per cent this year
•
2.0 1.0 0.0 -1.0 Real GDP
-2.0
Low Canadian dollar and U.S. economic growth lift tourism and broader export gains
Employment
-3.0 2008
2010
2012
2014
2016
2018
Source: Statistics Canada, Central 1 Credit Union, 2016-19 Forecast
•
B.C. resource sector will struggle with weak commodity prices
•
Growth in 2017-19 lifted by major project capital spending
•
Job growth gears off economy, reaches two per cent in 2017
Heightened economic volatility is the key theme of early 2016 as global growth concerns have led to sharp movements in commodity and currency markets and dampened expectations for the Canadian economy. Despite national weakness, B.C. is expected to outperform the rest of the country this year, with steady expansion through 2019.
B.C. will continue to benefit from low interest rates and a lower currency despite challenges presented by a weak commodity sector. Lifted by household demand and housing investment, economic growth will ease slightly from 2015 but remain moderate at three per cent. The sharp decline in the Canadian dollar and improving U.S. growth will underpin increased export activity, particularly among sectors like tourism, services, and non-resource goods. Economic growth averages above three per cent from 2017 onwards with steady consumer activity and higher business investment. Hiring momentum will gear off economic growth and drive employment growth of 1.7 per cent this year, and above two per cent over the remainder of the forecast
Forecast Summary: British Columbia 2014 Real GDP, % Change
2015
2016
2017
3.2
3.4
3.0
3.2
Nominal GDP, % Change
4.7
3.4
3.8
Employment, % Change
0.6
1.2
1.7
Unemployment Rate, (%)
6.1
6.1
6.3
2018
2019
3.4
2.8
5.2
6.1
6.2
2.0
2.5
1.6
5.4
4.4
4.0
Population, % Change
1.2
1.0
1.0
1.1
1.3
1.2
Housing Starts (000s)
28.4
31.1
33.8
34.7
34.7
33.9
Retail Sales, % Change
5.6
6.4
4.3
5.3
5.6
5.5
Personal Income, % Change
3.6
4.5
4.6
4.8
5.5
5.4
Net Operating Surplus Corporations, % Change
8.7
-15.7
-9.6
3.6
0.2
6.4
Consumer Price Index, % Change
1.0
1.1
1.8
1.7
1.9
2.3
Source: Statistics Canada, Central 1 Credit Union 1
Central 1 Credit Union
period. Relatively stronger labour market and economic trends in B.C. will attract a rising number of residents from other provinces, offsetting modest international migration trends. Shifting macro-economic environment shapes B.C. outlook A number of key external and domestic economic factors will shape B.C.’s economic growth over the forecast period, including the continuation of low interest and exchange rates, and bifurcation of the global economy between a faster growing U.S. and relatively weaker growth in emerging markets, particularly China. Canada’s economy is expected to remain jittery as low oil prices will hamper growth prospects for another year, keeping GDP growth at an anemic 1.8 per cent this year and 2.2 per cent in 2017. Growth will hold at a moderate pace in 2018 and 2019. Downward momentum in crude prices has yet to be arrested. Following a temporary uplift in mid-2015, oil prices have again retraced to multi-year lows on a combination of excess supply in the U.S., higher potential Iranian output, and higher OPEC supply. The benchmark WTI continues to plummet and is flirting with $30 per barrel at this writing, compared to $50 a year ago and above $90 in early 2013. Alberta crude trades at a discount to WTI. Where oil prices go from here is highly uncertain. Recent tensions between Saudi Arabia and Iran have provided some upside volatility, but we anticipate only modest uplift over the next two years due to improved global economic growth and easing of U.S. shale production. While it may be a stretch given the early year swoon, we forecast that WTI will average $35 this year and $40 next, with modest increases thereafter. Persistence of low oil prices is an ongoing risk for Canada’s growth. While the USD conversion offsets some of this low price environment, the drop will force producers to shave capital expenditures even further after steep cuts in 2015. The sector crunch will reverberate through upstream supplier industries, related professional industries and through the broader economy through income and spending cuts. Weakness will remain concentrated in provinces with high exposure to oil production, creating a two-speed economy with non-producing provinces, including B.C. and Ontario, relatively unscathed. The Canadian economy will be reliant on modest federal government deficit spending and exports to revive growth. Depreciation in the Canadian dollar over the past year and modest improvements in the U.S. economy Economic Analysis of British Columbia
Oil Price Weakness Weighs on CAD Annual Average Dollars/barrel
Cents
105 100 95 90 85 80 75 70 65 60
120 100 80 60 40 20 USD/CAD (L)
2008
2010
2012
Crude (WTI), USD ( R)
2014
2016
0 2018
Source: Statistics Canada, EIA, Central 1 Credit Union, 2016-19 Forecast
should trigger further improvements to competiveness for non-commodities and service exports. That said, the rotation has remained underwhelming thus far, likely reflecting structural issues in the manufacturing sector, including capacity issues and on-shoring trends in the U.S. As Canada struggles, the U.S. remains on a more solid growth track and looks to expand at modest pace of about 2.5 per cent a year through the forecast period, driven by broad increases in consumer spending, residential and business investment, and revival of “animal spirits”. While lower than previously forecast due to potential headwinds from the U.S. Fed rate normalization process, cuts in shale-related investments and a more tempered export profile from global economic weakness, U.S. expansion will lift demand for Canadian and B.C. exports. Advanced economies including those in Europe, Japan and the UK are heading in the right direction. Weak Canadian growth will delay a Bank of Canada rate hike until 2017, with general interest rates remaining broadly unchanged over the next year. That said, we cannot discount the potential for a further cut if oil prices remain below expectation. Divergent economic conditions and narrowing of the interest differential will put downward pressure on the loonie. Expect the USD/CAD to fluctuate in a 68-70 cent band (US) in the first quarter, average 71.5 cents in 2016 and only slightly higher in 2017. Low prices for key B.C. resource commodities will remain a theme going forward reflecting the split in global economic conditions. Emerging market growth has faltered. Chinese economic growth continues to deteriorate and trends well below government policy targets, despite implementation of fiscal and monetary measures to lift the economy. Weaker growth momentum and a rotation in the economy towards
2
Central 1 Credit Union
consumer demand have echoed across the world as growth expectations ratchet lower, punishing mining prices for industrial metals and minerals, including copper, iron and metallurgical coal, which will weigh on provincial growth going forward. B.C. remains Canada’s growth leader Despite global cross-winds, B.C. is in an enviable position with country-leading growth that is anticipated to extend through 2017. Macro-economic themes outlined were already in play last year and will continue to provide a net uplift for the provincial economy going forward, despite challenges in the resource sector. Economic growth, as measured by real gross domestic product, is forecast to hold steady this year at about three per cent – which is slightly lower than our estimate for 2015 but is the third successive expansion of above three per cent. Households will continue to do the heavy lifting as low interest rates, recent hiring momentum, and stronger migration from other provinces will drive demand for consumer goods and services and housing. At the same time, growth will pivot towards export-oriented sectors as a low Canadian dollar and U.S. expansion spur increases in service and non-commodity goods exports. Average growth from 2017 through 2019 will exceed three per cent, driven by key major project construction. Consumer spending is forecast to continue at a brisk pace this year, but will decelerate from last year. We estimate that consumer spending growth surpassed 3.5 per cent in 2015, as accelerating job growth, low interest rates and the offshoot of surging housing demand propelled activity. It is likely that a slowdown in cross-border shopping and increased tourism flows to B.C. due to the lower Canadian dollar contributed to solid expansion of retail output and a near 6.5 per cent gain in sales. Retail sales growth, which owed little to price appreciation, was driven by increased spending on autos and housing-related purchases. Household demand will maintain consumer spending growth above three per cent this year before slowing to 2.7 per cent in 2017. Higher employment, steady housing activity and an upturn in population gains are projected to boost demand, although growth will be less buoyant. Retail sales growth will dip to four per cent this year with real gains closer to three per cent due to import price inflation. Higher new home construction drives investment Despite signs of the market overheating in large urban markets like Metro Vancouver, and recent federal
Economic Analysis of British Columbia
Broad Weakness in Commodity Prices Metal and Minerals, USD Index
2012=100
120 110 100 90 80 70 60 2010
2011
2012
2013
2014
2015
Source: Statistics Canada, Central 1 Credit Union
B.C. to Outperform National Growth Annual Per Cent Change in Real GDP 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5
B.C.
0.0 2010
2012
Canada
2014
2016
2018
Source: Statistics Canada, Central 1 Credit Union, 2016-19 Forecast
Hiring Momentum Rose in 2015 LFS Employment, 2014=100 104 B.C.
Canada excl. B.C.
Alberta
103 102 101 100 99 98 Jan/14
Jul/14
Jan/15
Jul/15
Source: Statistics Canada, Central 1 Credit Union, Latest: Dec 2015
government measures to curb demand that will take effect in February, we see little risk of a downturn in the housing sector. Last year’s massive demand growth, which pushed provincial housing sales up by more than 20 per cent, will not repeat, but low borrowing costs and employment gains will maintain sales and price growth at robust levels. Current market conditions are particularly strong in the south coast region, as elevated demand and lack of supply
3
Central 1 Credit Union
drives sellers’ market conditions in Metro Vancouver and strength on Vancouver Island. Conditions are weaker in most other regions due to weak commodity sector investment and a slump in recreational/ secondary housing demand from recession-riddled Alberta. Elevated home sales, lack of inventory and rising prices will lift new housing construction, which typically lags resale activity. Momentum will propel a nine per cent increase in housing starts to 33,800 units as builders break ground on more apartment and townhome units as the market adjusts to affordability challenges with more intensive use of land via increased multi-family construction. Renovation spending will grow at a moderate pace of close to five per cent as resale activity will underpin spending, and rising prices and equity will push more existing homeowners to re-invest in their existing properties. On the whole, residential investment spending will climb seven per cent this year on the strength of new home construction, before easing to three per cent in 2017 as activity steadies with higher interest rates. Exports gather momentum, commodities drag on economy Adding to growth in housing and consumer demand will be modest export gains. A dive in the loonie to 70 cents will lift exports competitiveness and dovetail with stronger U.S. demand. Growth will be concentrated in non-commodities and services as weak demand for key commodities and a sluggish national economy will limit growth. Exports are forecast to rise 2.7 per cent this year, with a three per cent gain in 2017. On the services front, tourism is poised to build on last year’s strength as Canada remains a “Black Friday bargain” for the U.S., Chinese, and other overseas tourists for at least the next two years. U.S. tourist flows moved to the highest levels since 2007, while range-bound overseas visits trend near record-high levels. On the flip-side fewer Canadian vacations abroad and weekend shopping trips will limit import leakage for retail sales and other services. Favourable export conditions will further rotate export demand towards services, as film and TV operate near capacity and the burgeoning tech sector similarly benefits. Mixed growth is anticipated for international goods exports, the key driver of overall trade performance. Real exports climbed modestly last year despite flat nominal dollar sales. A struggling Chinese economy cut demand for key commodities, but much of the weakness reflected low export prices for coal, natural Economic Analysis of British Columbia
Robust Household Demand in 2015 Year-over-year per cent change 40
12
MLS® Sales (L) Retail Sales (R )
30
10
20
8
10
6
0
4
-10
2
-20
0 -2
-30 2011
2012
2013
2014
2015
Source: Statistics Canada, CREA, Central 1 Credit Union
Residential Investment a Key Driver Annual Per Cent Change 14 12 10 8 6 4 2 0 -2 -4 -6
Total Res. Investment
New Housing
Renovations
2010
2012
2014
2016
2018
Source: Statistics Canada, Central 1 Credit Union, 2016-19 Forecast
B.C. Trade Growth Annual Per Cent Change 12 9 6 3 0 -3 -6
Exports
Imports
-9 2008
2010
2012
2014
2016
2018
Source: Statistics Canada, Central 1 Credit Union, 2016-19 Forecast
gas, copper and wood products. B.C. posted higher shipments for manufactured products, food and consumer goods, as well as real gains in natural gas exports. Commodity price challenges extend through our forecast period owing to weak demand and oversupply and dampen capital spending and medium-term export growth. The latest Consensus Forecasts survey calls for further downside pressure on copper 4
Central 1 Credit Union
Tourism Sector Boosted by Low CAD
Select Commodity Exports
International Tourists to B.C.
YTD November, Per Cent Change
Persons (000s)
480
Total
450
Copper Ore
420 390
Bituminous Coal Copper Ore
330
Electricity
300 2000 2002 2004 2006 2008 2010 2012 2014
and coal prices this year on top of the 30 per cent year-over-year declines already observed. Natural gas prices have bounced off late-2015 lows, but are down 20 per cent from a year ago, and half of mid-2014 levels due to increased supply from U.S. shale. Consensus is for mildly higher prices the next two years, but levels do not revisit 2014 highs over the forecast period. Exchange rate conversion will provide a cushion for Canadian producers, but weak prices will dampen production and export growth over the next two years, cutting into upward momentum for non-resource exports. B.C.’s forestry sector will benefit from stronger U.S. housing demand but will be held back by weaker Chinese demand. Declines in exports to China largely offset gains to the U.S. in 2015, while lumber prices declined on excess supplies both in North America and global markets. However, the growth cycle will be shallow and temporary. B.C.’s logging and forestry manufacturing faces supply constraints, particularly beyond the forecast horizon, relating to the longterm impacts of the mountain pine beetle epidemic. In this environment, private sector capital investment trends will drag on growth over the next years before being lifted by commencement of major projects. Business capital intention surveys, government data on oil and gas rights, and wells drilled point to declines in exploration and prospecting activity last year that is extending into 2016. Similarly, major port projects in the northwest that are dependent on Asian growth prospects are likely to be delayed. Expiration of the softwood lumber agreement in October has added further investment uncertainty to the forestry sector. Higher investment is anticipated in 2017 onwards with mild improvements in commodities and anticipated commencement of a liquefied natural gas terminal.
Economic Analysis of British Columbia
Physical Shipments
Natural Gas
360
Source: Statistics Canada, Central 1 Credit Union, Latest Oct 2015
Dollar-Volume
-60
-40
-20
0
20
40
60
80
Source: Statistics Canada, Central 1 Credit Union * Central 1 calculation
International Merchandise Exports Annual Per Cent Change 20 15 10 5 0 -5 -10 -15 -20 -25 -30
Actual Nominal Adjusted for 2007 product prices*
2007
2009
2011
2013
2015YTD
Source: Statistics Canada, Central 1 Credit Union * Central 1 calculation
A subdued resource-sector performance will drag on growth, but the effect should not be overstated. B.C.’s economy is well diversified and combined resource production and related manufacturing make up just 10 per cent of B.C.’s economic activity. A weak sector performance has a mild impact on the economy as a whole. Public-sector spending is anticipated to evolve in line with our previous outlook as expense growth is held in check, particularly at the provincial government level. Planned federal government deficit spending will provide a lift, but will mostly come through capital investments later in the decade for transportation and infrastructure projects. Direct government expenditure growth will average less than one per cent per year through 2017 and climb to 1.8 per cent thereafter. Lower growth is concentrated in general government and education, while health services will climb at a faster rate due to an aging population. Investment spending will jump in 2018 and 2019 as work ramps up on major projects including the Site C Dam, and replacement of the George Massey Tunnel and Patullo Bridge.
5
Central 1 Credit Union
Hiring momentum picks up with economy B.C.’s employment growth trend accelerated in the latter half of 2015 with year-over-year gains shifting to more than two per cent, led by Metro Vancouver. Led by full-time gains, employment recovered after a soft start to the year to lift the annual growth to 1.2 per cent and a healthy hand-off to 2016. Employment growth will climb to 1.7 per cent this year with economic growth trends driving above-average growth in sectors including trade, construction, and accommodation and food services. In contrast, the commodities rout will hold resource-sector employment down following a 2015 decline. Employment will climb two per cent in 2017 and will jump in 2018 in line with our forecast for increased major project construction. Provincial unemployment is forecast to climb this year to 6.3 per cent but that will reflect increased confidence rather than deterioration in the labour market. Growth and hiring prospects will induce discouraged out-of-work individuals to look for work. Higher labour-force participation will temporarily lift labour force expansion above employment growth. The unemployment rate will return to a declining trend in 2017 onwards, reflecting a combination of hiring and demographics. Labour-force participation is expected to peak below early-decade levels due to baby boomer retirements, limiting labour force growth and lowering unemployment rates. A tighter labour market will increase pressure on wages over the forecast period, but a shift in the economy from higher paying commodity sectors will dampen some of the gain. Growth drives traction in interprovincial migration The draw of a stronger economy and labour market in B.C. is forecast to underpin population growth over the forecast period. With Alberta’s downturn expected to deepen and linger, we will see higher net flows to regions with brighter job prospects. More individuals will bypass the Prairies to come directly to the west coast, and fewer B.C. residents will make trek through the Rockies for a dwindling number of opportunities. Net interprovincial migration to B.C. is forecast to climb to about 15,000 individuals this year, with further gains over the forecast period. Demand for workers during the LNG buildout period will drive a net gain of 25,000 persons in 2018. On the international front, the sharp decline in 2015 is expected to turnaround, but will remain lower than levels observed from 2008-2013. B.C. is anticipated to attract more landed immigrants in the coming Economic Analysis of British Columbia
Labour Market Forecast Per Cent
10.0 8.0 6.0 4.0 2.0 0.0 -2.0
Employment Growth
Unemployment Rate
-4.0 2008
2010
2012
2014
2016
2018
Source: Statistics Canada, Central 1 Credit Union, 2016-19 Forecast
years, with a boost in Syrian refugees adding to 2016, and a broader uptrend expected in economic migrants over the forecast period will reflect modest growth trends in the province. Non-permanent residents are unlikely to add much to growth given restrictions on temporary workers, although students will still flow into the region. Economy faces higher prices Consumers will face rising prices this year as stronger domestic demand and a low Canadian dollar drive inflation. The latter will lift prices for a multitude of items including food, new vehicles, and services such as travel. Declining oil prices will temper gasoline prices, but will be offset by the low Canadian dollar. Total consumer price inflation will reach 1.8 per cent this year, with steady increases in 2017 and 2018, reflecting in part higher interest rates. Nominal GDP growth will slightly outpace real activity this year at 3.8 per cent as higher import prices and tempered commodity prices counter higher prices for consumer goods and services, housing and capital expenditures. Economic growth will lift prices in 2017 onwards, pushing nominal GDP to five per cent in 2017 and six per cent thereafter. On the income front, economic growth will flow mostly to households over the cycle, which will gain through higher employment and wages. In contrast the low commodity price environment and higher import costs will drag on corporate profits this year before a rise in 2017 through 2019. LNG is still part of our base case A key assumption driving our average growth outlook of more than three per cent from 2017 through 2019 period is the commencement of one large liquefied natural gas terminal, which will lift economic growth through higher capital investment. Although more 6
Central 1 Credit Union
Growth Outlook Modest Without LNG Real GDP, Annual Per Cent Change
Employment Growth and Unemployment Per Cent
4.0
8.0
3.0
7.0
Employment Growth
Unemployment Rate
6.0
2.0
5.0
1.0
4.0
0.0
3.0
-1.0
2.0
Base Case with LNG -2.0
Excluding LNG 2010
2012
2014
2016
2018
Source: Statistics Canada, Central 1 Credit Union, 2016-19 Forecast
than half of the investment will be imported from external suppliers, the project would provide a broad lift to the economy through direct and indirect employment and spending. While included in our current outlook, there is significant uncertainty about the future of an LNG industry in the province. The current environment of low global LNG prices, cheap crude, and a challenging profit environment for energy companies could put a B.C. LNG project on the backburner. In the absence of a project, average growth will fall to about 2.5 per cent in 2017 through 2019. Lower growth will cut employment and population gains and lift the unemployment rate by about 0.5 percentage points in 2018 and 2019. Bryan Yu Senior Economist, Central 1 Credit Union
[email protected] www.central1.com 604.742.5346
Economic Analysis of British Columbia
1.0 0.0
-3.0 2008
No LNG Scenario
2012
2014
2016
2018
Source: Statistics Canada, Central 1 Credit Union, 2016-19 Forecast
Appendix Tables Gross Domestic Expenditure ($2007 millions) . . . . . 8 Gross Domestic Expenditure ($ millions) . . . . . . . . . 9 GDP by Industry . . . . . . . . . . . . . . . . . . . . . . . . . . 10-11 GDP, Income Based . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Employment by Industry
. . . . . . . . . . . . . . . . . . . 13
Labour market indicators . . . . . . . . . . . . . . . . . . . . . 13 Residential investment . . . . . . . . . . . . . . . . . . . . . . . 14 Population components . . . . . . . . . . . . . . . . . . . . . . 14 External economic forecasts . . . . . . . . . . . . . . . . . . 15 Alternative forecast scenario . . . . . . . . . . . . . . . . . . 15
7
Central 1 Credit Union
Gross Domestic Expenditures ($2007 Millions): British Columbia GDE % Change Household Final Consumption % Change Durable Goods % Change Semi-Durable Goods % Change Non-Durable Goods % Change Services % Change NPISH Consumption % change Government Current % Change Government Investment % Change Business Gross Fixed Capital % change Residential Construction % Change Machinery & Equipment % Change Non-Residential Structures % Change Intellectual Property
2014
2015
2016
2017
2018
2019
222,868
230,364
237,323
244,822
253,261
260,446
3.2
3.4
3.0
3.2
3.4
2.8
140,428
145,587
150,330
154,390
159,183
164,099
3.5
3.7
3.3
2.7
3.1
3.1
17,881
18,539
19,137
19,803
20,613
21,374
6.7
3.7
3.2
3.5
4.1
3.7
10,295
10,629
11,063
11,421
11,852
12,322
4.8
3.2
4.1
3.2
3.8
4.0
28,571
29,707
30,549
31,447
32,550
33,589
2.8
4.0
2.8
2.9
3.5
3.2
83,814
86,841
89,729
91,903
94,405
97,101
3.1
3.6
3.3
2.4
2.7
2.9
3,351
3,434
3,540
3,638
3,748
3,856
0.1
2.5
3.1
2.8
3.0
2.9
39,141
39,514
40,010
40,344
41,081
41,833
-0.3
1.0
1.3
0.8
1.8
1.8
6,288
6,552
6,371
6,434
6,776
7,138
11.2
4.2
-2.8
1.0
5.3
5.3
44,204
45,945
47,781
51,612
55,110
55,977
5.7
3.9
4.0
8.0
6.8
1.6
19,864
21,603
23,125
23,825
24,184
24,287
7.6
8.8
7.0
3.0
1.5
0.4
7,863
7,784
7,393
7,890
8,393
8,684
10.7
-1.0
-5.0
6.7
6.4
3.5
12,460
12,381
13,008
15,231
17,616
17,851
-0.6
-0.6
5.1
17.1
15.7
1.3
4,017
4,177
4,255
4,665
4,916
5,155
% change
8.7
4.0
1.9
9.6
5.4
4.9
NPISH Investment
341
349
359
369
380
391
% change Domestic Demand % Change Exports % Change Imports % Change Net Exports
14.4
2.4
2.8
2.9
2.9
2.9
233,645
241,130
248,054
256,535
266,159
273,076
3.4
3.2
2.9
3.4
3.8
2.6
90,294
92,590
95,078
97,943
100,696
104,033
2.7
2.5
2.7
3.0
2.8
3.3
101,446
104,205
106,315
109,550
113,823
116,947
4.7
2.7
2.0
3.0
3.9
2.7
-11,152
-11,615
-11,237
-11,607
-13,126
-12,915
Source: Statistics Canada, Central 1 Credit Union
Economic Analysis of British Columbia
8
Central 1 Credit Union
Gross Domestic Expenditures ($ Millions): British Columbia 2014
2015
2016
2017
2018
2019
Nominal (Millions) GDE % Change Household Final Consumption % Change Durable Goods % Change Semi-Durable Goods % Change Non-Durable Goods % Change Services % Change NPISH Consumption % change Government Current % Change Government Investment % Change Business Gross Fixed Capital % change Residential Construction % Change Machinery & Equipment % Change Non-Residential Structures % Change
237,206
245,272
254,505
267,810
284,145
301,887
4.7
3.4
3.8
5.2
6.1
6.2
153,281
161,416
169,629
177,197
186,182
196,401
5.0
5.3
5.1
4.5
5.1
5.5
16,795
17,762
18,597
19,395
20,378
21,497
6.9
5.8
4.7
4.3
5.1
5.5
9,796
10,360
10,847
11,312
11,886
12,538
5.4
5.8
4.7
4.3
5.1
5.5
33,131
34,345
36,068
37,690
39,601
41,774
4.6
3.7
5.0
4.5
5.1
5.5
93,559
98,948
104,117
108,800
114,317
120,591
4.8
5.8
5.2
4.5
5.1
5.5
3,635
3,802
3,992
4,186
4,410
4,653
2.2
4.6
5.0
4.8
5.4
5.5
45,489
46,867
48,484
50,114
52,472
54,639
1.8
3.0
3.4
3.4
4.7
4.1
7,343
7,771
7,703
7,984
8,646
9,372
14.4
5.8
-0.9
3.6
8.3
8.4
48,378
52,005
55,471
61,903
68,599
72,003
7.7
7.5
6.7
11.6
10.8
5.0
21,105
23,624
25,856
27,334
28,629
29,768
8.6
11.9
9.4
5.7
4.7
4.0
7,547
8,134
7,960
8,790
9,635
10,221
14.4
7.8
-2.1
10.4
9.6
6.1
15,069
15,209
16,368
19,775
23,759
24,905
2.4
0.9
7.6
20.8
20.1
4.8
4,657
5,037
5,287
6,004
6,575
7,109
12.2
8.2
5.0
13.6
9.5
8.1
NPISH Investment
360
383
406
433
463
491
% change
16.9
6.5
5.9
6.6
6.9
6.1
258,486
272,244
285,685
301,817
320,771
337,558
5.1
5.3
4.9
5.6
6.3
5.2
93,215
93,191
98,154
104,840
110,077
117,524
Intellectual Property % change
Domestic Demand % Change Exports % Change Imports % Change Net Exports
6.0
0.0
5.3
6.8
5.0
6.8
116,444
122,861
131,940
141,473
149,516
156,131
7.5
5.5
7.4
7.2
5.7
4.4
-23,229
-29,670
-33,786
-36,633
-39,440
-38,607
Source: Statistics Canada, Central 1 Credit Union
Economic Analysis of British Columbia
9
Central 1 Credit Union
Gross Domestic Product by Industry ($2007 Millions) British Columbia: All Industries % change Agriculture % change Forestry % change Oil and Gas Mining % change Other Mining % change Support activities for Primary Industries* % change Utilities % change Construction % change Manufacturing % change Food Products % change Wood Products % change Paper and Allied Product % change Primary Metals % change Fabricated Metals
2014
2015
2016
2017
2018
2019
203,067
209,898
216,238
223,070
230,760
237,307
2.9
3.4
3.0
3.2
3.4
2.8
1,194
1,239
1,294
1,342
1,375
1,391
-0.9
3.7
4.4
3.8
2.4
1.2
1,819
1,836
1,861
1,890
1,937
1,974
-9.4
0.9
1.4
1.5
2.5
1.9
6,765
7,280
7,410
7,511
7,672
7,947
5.6
7.6
1.8
1.4
2.1
3.6
4,349
4,354
4,464
4,534
4,565
4,664
7.5
0.1
2.5
1.6
0.7
2.2
1,886
1,845
1,926
2,178
2,451
2,585
4.6
-2.2
4.4
13.0
12.5
5.5
3,493
3,625
3,738
3,862
3,992
4,112
-1.8
3.8
3.1
3.3
3.4
3.0
17,039
17,891
18,843
19,800
20,844
21,006
5.4
5.0
5.3
5.1
5.3
0.8
14,625
15,096
15,608
16,204
16,842
17,483
3.6
3.2
3.4
3.8
3.9
3.8
1,816
1,872
1,927
1,996
2,070
2,132
5.8
3.1
2.9
3.6
3.7
3.0
3,246
3,315
3,382
3,461
3,557
3,638
3.1
2.1
2.0
2.3
2.8
2.3
1,200
1,229
1,239
1,263
1,286
1,302
8.5
2.4
0.8
1.9
1.8
1.3
792
851
946
968
991
1,008
-14.6
7.5
11.1
2.4
2.3
1.7
967
969
1,012
1,067
1,125
1,227
% change
3.1
0.2
4.4
5.5
5.5
9.1
Machinery
994
1,041
1,075
1,115
1,158
1,271
% change Other Manufacturing % change Wholesale trade % change Retail trade % change Transportation And Warehousing % change Pipelines % change Other Transportation & Warehousing % change Finance, Insurance & Real Estate % change
Economic Analysis of British Columbia
8.0
4.6
3.3
3.7
3.9
9.7
5,609
5,818
6,028
6,333
6,655
6,904
4.5
3.7
3.6
5.1
5.1
3.8
9,225
9,525
9,805
10,209
10,652
10,994
4.8
3.3
2.9
4.1
4.3
3.2
12,010
12,706
13,088
13,499
13,990
14,440
4.5
5.8
3.0
3.1
3.6
3.2
11,044
11,296
11,538
11,851
12,191
12,681
4.0
2.3
2.1
2.7
2.9
4.0
478
486
499
513
529
738
4.4
1.8
2.6
2.9
3.1
39.4
10,567
10,810
11,039
11,337
11,662
11,942
4.0
2.3
2.1
2.7
2.9
2.4
24,888
25,869
26,739
27,522
28,360
29,133
3.8
3.9
3.4
2.9
3.0
2.7
10
Central 1 Credit Union
Gross Domestic Product by Industry ($2007 Millions) British Columbia (continued) Owner-Occupied Housing % change Professional, scientific and technical services % change Administrative and support, waste management and remediation services % change Other services (except public administration) % change Arts, entertainment and recreation % change Information and cultural industries % change Educational services % change Health care and social assistance % change Government Services % change Accommodation and food services % change
2014
2015
2016
2017
2018
2019
23,387
24,253
25,205
26,199
27,253
28,310
3.8
3.7
3.9
3.9
4.0
3.9
11,282
11,739
12,002
12,470
12,968
13,373
3.0
4.1
2.2
3.9
4.0
3.1
6,154
6,364
6,573
6,809
7,059
7,261
4.6
3.4
3.3
3.6
3.7
2.9
4,444
4,597
4,744
4,889
5,048
5,193
2.2
3.4
3.2
3.0
3.3
2.9
1,906
1,977
2,046
2,110
2,181
2,245
2.1
3.7
3.5
3.1
3.3
2.9
6,876
7,127
7,364
7,616
7,892
8,136
0.5
3.7
3.3
3.4
3.6
3.1
10,409
10,515
10,616
10,718
10,809
10,873
-4.1
1.0
1.0
1.0
0.9
0.6
13,689
13,909
14,173
14,424
14,843
15,255
2.0
1.6
1.9
1.8
2.9
2.8
11,247
11,313
11,430
11,465
11,654
11,865
0.1
0.6
1.0
0.3
1.6
1.8
5,682
5,903
6,143
6,353
6,579
6,793
5.1
3.9
4.1
3.4
3.6
3.3
* includes direct hunting, fishing and trapping Source: Statistics Canada, Central 1 Credit Union
Economic Analysis of British Columbia
11
Central 1 Credit Union
GDP, Income Based ($Millions): British Columbia GDP at Market Prices % Change Employee Compensation % Change Net Operating Surplus: Corporations % Change Net Operating Surplus: Mixed Income % Change Fixed Capital Consumption % Change Indirect Taxes Less Subsidies % Change Net Domestic Income (Factor Cost) % Change Personal Income % Change Total Primary Income % Change Labour Income % Change Net Operating Surplus: Mixed Income % Change Net Property Income % Change Transfer Payments Received % Change Transfer Payments Paid % Change Disposable Income % Change
2014
2015
2016
2017
2018
2019
237,206
245,272
254,505
267,810
284,145
301,887
4.7
3.4
3.8
5.2
6.1
6.2
118,947
124,743
130,266
136,812
145,470
153,922
3.9
4.9
4.4
5.0
6.3
5.8
22,393
18,882
17,061
17,675
17,712
18,852
8.7
-15.7
-9.6
3.6
0.2
6.4
32,120
33,770
35,718
37,809
40,181
42,611
5.7
5.1
5.8
5.9
6.3
6.0
37,751
39,488
41,629
44,055
47,405
51,250
3.6
4.6
5.4
5.8
7.6
8.1
26,179
28,573
30,016
31,643
33,561
35,436
6.6
9.1
5.0
5.4
6.1
5.6
173,276
177,211
182,861
192,112
203,179
215,201
4.7
2.3
3.2
5.1
5.8
5.9
193,241
201,971
211,258
221,371
233,641
246,332
3.6
4.5
4.6
4.8
5.5
5.4
170,964
178,735
186,912
196,264
207,706
219,290
3.8
4.5
4.6
5.0
5.8
5.6
122,584
128,557
134,249
140,995
149,918
158,628
3.9
4.9
4.4
5.0
6.3
5.8
32,120
33,770
35,718
37,809
40,181
42,611
5.7
5.1
5.8
5.9
6.3
6.0
16,260
16,408
16,945
17,459
17,608
18,051
-0.5
0.9
3.3
3.0
0.9
2.5
22,277
23,236
24,347
25,107
25,934
27,042
2.3
4.3
4.8
3.1
3.3
4.3
42,672
43,260
45,503
47,968
51,009
54,153
6.8
1.4
5.2
5.4
6.3
6.2
150,569
158,711
165,755
173,402
182,632
192,180
2.8
5.4
4.4
4.6
5.3
5.2
Source: Statistics Canada, Central 1 Credit Union
Economic Analysis of British Columbia
12
Central 1 Credit Union
Employment by Industry: British Columbia 2014 Total % Change
2,278.4
2015
2016
2017
2,305.8
2,343.9
2,390.5
2018 2,449.7
2019 2,489.8
0.6
1.2
1.7
2.0
2.5
1.6
Agriculture
24.3
22.2
22.5
22.9
23.1
23.0
% Change
-13.2
-8.6
1.2
1.7
1.2
-0.4
Other Primary
50.0
48.2
48.5
48.5
48.9
49.2
6.8
-3.6
0.6
0.1
0.8
0.6
161.4
172.6
175.9
178.1
181.1
183.2
6.4
6.9
1.9
1.3
1.7
1.2
Utilities
13.7
14.5
14.6
14.7
14.9
15.1
% Change
22.3
5.8
0.4
1.2
1.5
1.0
200.5
201.5
207.2
215.1
222.9
225.3
-1.9
0.5
2.8
3.8
3.6
1.1
133.8
140.1
140.8
142.3
144.8
146.3
5.1
4.7
0.5
1.1
1.7
1.1
358.0
352.9
359.1
367.8
378.8
386.4
% Change Manufacturing % Change
Construction % Change Transportation & Warehousing % Change Trade % Change FIRE % Change Professional, Scientific, Managerial % Change Accomodation & Food Services % Change
-0.7
-1.4
1.8
2.4
3.0
2.0
137.2
128.7
131.2
133.6
136.4
138.2
-1.7
-6.2
1.9
1.8
2.1
1.3
270.2
282.0
285.8
293.2
301.8
307.4
-2.5
4.4
1.4
2.6
3.0
1.8
185.3
177.8
182.2
186.7
192.6
196.8
3.2
-4.0
2.5
2.5
3.1
2.2
166.3
163.7
165.1
166.5
167.8
168.6
-0.2
-1.6
0.9
0.9
0.8
0.5
269.8
287.1
292.2
297.1
305.4
313.6
1.0
6.4
1.8
1.7
2.8
2.7
210.1
218.7
222.2
227.1
232.9
236.9
1.6
4.1
1.6
2.2
2.6
1.7
Government Services
97.9
96.0
96.8
96.9
98.3
99.9
% Change
-0.8
-1.9
0.8
0.1
1.4
1.6
Education Services % Change Health & Welfare Services % Change Other Services % Change
Labour Market Indicators: British Columbia 2014 Source Population % Change Participation Rate Labour Force % Change Employment % Change Unemployment % Change Unemployment Rate Average Weekly Hours Hourly Wage Rate (%ch.)
3,829.6
2015 3,870.2
2016 3,912.1
2017 3,958.6
2018 4,011.9
2019 4,062.2
1.1
1.1
1.1
1.2
1.3
1.3
63.3
63.4
64.0
63.8
63.9
63.8
2,425.4
2,454.4
2,502.4
2,526.5
2,563.5
2,593.7
0.0
1.2
2.0
1.0
1.5
1.2
2,278.4
2,305.8
2,343.9
2,390.5
2,449.7
2,489.8
0.6
1.2
1.7
2.0
2.5
1.6
147.0
148.6
158.5
136.0
113.8
103.9
-8.0
1.1
6.7
-14.2
-16.4
-8.7
6.1
6.1
6.3
5.4
4.4
4.0
32.0
32.1
32.2
32.3
32.3
32.2
5.2
3.2
2.5
2.8
3.6
4.3
Source: Statistics Canada, Central 1 Credit Union
Economic Analysis of British Columbia
13
Central 1 Credit Union
Residential Investment ($2007 Millions): British Columbia Real Residential Investment (Millions)
2014
2015
2016
2017
2018
2019
19,864
21,603
23,125
23,825
24,184
24,287
7.6
8.8
7.0
3.0
1.5
0.4
9,305.3
10,341.2
11,307.6
11,656.2
11,671.0
11,399.1
11.8
11.1
9.3
3.1
0.1
-2.3
8,033.3
8,572.7
8,995.5
9,269.4
9,549.6
9,849.5
8.2
6.7
4.9
3.0
3.0
3.1
2,297.2
2,454.3
2,579.5
2,650.1
2,706.6
2,773.6
-8.2
6.8
5.1
2.7
2.1
2.5
228.2
234.9
242.5
249.3
256.8
264.7
% Change Total New Dwellings % Change Renovations % Change Total Acquisition Costs % Change Other Residential Construction % Change Housing Starts (000s)
5.4
2.9
3.3
2.8
3.0
3.1
28.4
31.1
33.8
34.7
34.7
33.9
4.8
9.8
8.7
2.4
0.1
-2.3
% Change
Source: Statistics Canada, Central 1 Credit Union
Population and Factors of Growth 2014 Population (000s) % Change
4,638.4
2015
2016
2017
4,683.1
4,729.4
4,783.2
2018 4,845.6
2019 4,905.1
1.2
1.0
1.0
1.1
1.3
1.2
Births (000s)
43.8
44.3
44.6
45.2
45.8
46.5
Deaths (000s)
33.0
34.6
35.3
36.1
37.0
38.0
Natural Growth Rate (%) Net In Migration (000s) Net International(000s) Net Interprovincial (000s)
0.2
0.2
0.2
0.2
0.2
0.2
45.0
35.0
36.9
44.8
53.6
50.9
35.5
22.6
22.0
26.4
29.2
32.3
9.5
12.4
14.9
18.4
24.4
18.6
Source: Statistics Canada, Central 1 Credit Union
Economic Analysis of British Columbia
14
Central 1 Credit Union
External Economic Forecasts 2014
2015
2016
2017
2018
2019
U.S. Real GDP, %chg.
2.4
2.2
2.6
2.5
2.6
2.5
Japan Real GDP, %chg.
-0.1
1.0
1.7
0.7
1.0
1.1
European Union Real GDP, %chg.
1.3
1.7
1.9
1.8
1.7
1.9
China Real GDP, %chg.
7.4
6.8
6.5
6.3
6.1
6.0
Canada Real GDP, %chg.
2.5
1.0
1.8
2.2
2.7
2.3
Canada 3-month T-Bill, %
0.91
0.55
0.50
0.70
1.10
1.50
Canada GoC Long-term Bond, %
2.77
2.15
2.30
2.65
3.20
3.60
U.S.-Canada Exchange Rate, cents/dollar
90.5
78.0
71.5
72.2
75.0
77.0
Henry Hub Natural Gas Price, USD/mmbtu
4.39
2.60
2.40
2.75
3.05
3.30
93
48
35
40
47
52
WTI USD/barrel
Source: Statistics Canada, BEA, EIA, Central 1 Credit Union
Alternative Forecast Scenario: Excludes LNG Export Sector Development 2014
2015
2016
2017
2018
2019
Real GDP, % Change
3.2
3.4
3.0
2.6
2.6
2.2
Nominal GDP, % Change
4.7
3.4
3.8
4.7
5.3
5.4
Employment, % Change
0.6
1.2
1.7
1.7
1.9
1.2
Unemployment Rate, (%)
6.1
6.1
6.3
5.5
4.8
4.5
Population, % Change
1.2
1.0
1.0
1.1
1.2
1.0
Housing Starts (000s)
28.4
31.1
33.8
34.2
33.1
31.0
Retail Sales, % Change
5.6
6.4
4.3
4.7
4.6
4.3
Personal Income, % Change
3.6
4.5
4.6
4.3
4.6
4.6
Net Operating Surplus Corporations, % Change
8.7
-15.7
-9.6
4.5
4.8
11.6
Consumer Price Index, % Change
1.0
1.1
1.8
1.7
1.8
2.2
Source: Statistics Canada, Central 1 Credit Union
Terms Published by the Economics Department of Central 1 Credit Union, 1441 Creekside Drive, Vancouver, B.C. V6J 4S7
© Central 1 Credit Union, 2011.
This work may not be reproduced in whole or part, by photocopy or other means, without permission of Central 1 Credit Union. Economic Analysis of British Columbia (the “Analysis”) may have forward-looking statements about the future economic growth of the Province of Ontario and its regions. These statements are subject to risk and uncertainty. Actual results may differ due to a variety of factors, including regulatory or legislative developments, competition, technological change, global capital market activity and general economic conditions in Canada, North America or internationally. This list is not exhaustive of the factors that may affect any of the Analysis’ forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on the Analysis’ forward-looking statements. The Analysis and Central 1 Credit Union disclaims any and all warranties, whether express or implied, including (without limitation) any implied warranties of merchantability or fitness for a particular purpose. The Analysis and Central 1 Credit Union will not accept any responsibility for the reader’s use of the data and / or opinions presented in the Analysis, or any loss arising therefrom. Chief Economist: Helmut Pastrick Senior Financial Economist: David Hobden Production: Judy Wozencroft
Economic Analysis of British Columbia
Senior Economist, BC: Bryan Yu
Senior Economist, Ontario: Steve Stinson
15
