June 23, 2009
Economic Snapshot — June 24, 2009
Vancouver Island’s prospects are not as bleak as they first appear
By John Clinkard, Consulting Economist, CanaData
After having outperformed the country as a whole for more than a year, there is clear evidence that most of Vancouver Island’s key industrial drivers have been effectively knee-capped by the direct and indirect effects of the global recession.
Consequently, it is not surprising that the Vancouver Island economy is stumbling badly as it heads into the second half of 2009.
Indeed job growth which peaked at +5% year over year in April of 2008 is at a virtual standstill (+0.1%) in March of 2009 and it will likely contract over the next two to three quarters.
One of the hardest hit sectors in the region has been forestry, fishing, mining and oil and gas where employment has fallen by 41% year over year due in part to layoffs in April and again in June of 2008 by Western Forest Products and by the closure of the Myra Falls Mine in October of 2008.
In addition, employment in business services is down by -16.9% year over year; professional, scientific and technical services by -14.4%; health services by -11.5%; construction by -10.7%; and accommodation and food services by -4.4%.
Sectors which are continuing to support the region’s economy include manufacturing (+16.5%), education services (+15.5%), transportation (+12.1%); and wholesale and retail trade (+9.2%).
This sharp slowdown in employment and the concomitant weakening of income growth, have exacerbated a downtrend in new construction in the region which started in mid 2007.
Home sales in Victoria are down by 28% year over year in the first quarter while prices have fallen by 18%. For the region as a whole, housing starts have dropped by over 60%.
Despite the collapse of residential construction, non-residential construction is continuing to exhibit very solid growth, due in part to the recently announced “Uptown” project by Morguard Corporation in Saanich as well as by Royal Jubilee Hospital’s New Patient Care Centre due to open in 2011.
Although non-residential spending will probably slow somewhat later in the year, it will still help to offset weakness in housing demand and underpin the region’s growth heading into 2010.
John Clinkard has over 30 years experience as an Economist in international, national and regional research and analysis with leading financial institutions and media outlets in Canada.
Data source: Statistics Canada
Chart: Reed Construction Data – CanaData.
