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Economic Analysis of British ColumbiVolume 33 Issue 1 February 2013 | ISSN: 0834-3980
1
Highlights Another year of moderate growth in 2013,
higher growth prospects in 2014 and
through 2017
U.S. economy poised to break out of its
subpar recovery lifting B.C. exports
Business investment spending will kick into
higher gear after 2014
Declining government spending pulls down
growth
Housing slowdown in 2013 will reduce
residential investment
Consumer spending receives lift from switch
to PST but adds costs to businesses
Export-oriented industries to lead growth
upturn
Construction industry tops growth ladder
among domestic industries
Low population growth until later in forecast
Labour market tightens, unemployment ratebelow 4% in 2017
Forecast summary
Slow growth condions in 2012 will extend into 2013
but will transion to firmer growth later in 2013 and
beyond. A growth up-shiin the U.S. economy during
2014 to 2017 will help li
B.C.s economy to highergrowth rates aer 2013. Other key players in the
global economy will also perform beer during that
me and provide a boost to the provinces exports
and investment spending.
Domesc developments will also shape the provinces
economy and in parcular, the reversion to the PST
tax system from the HST will liconsumer spending
and provide some price inflaon relief though this will
add business costs. The upcoming provincial elecon
this year is expected to bring some policy changes.
During the next five years, government decisions on
large energy, pipeline, and mining projects will be
made and impact the economy.
Real GDP growth is forecast to inch ahead to 2.2% in
2013 following 2012s slowdown to 1.9%, before ac-
celerang to 2.8% in 2014 and averaging 3.7% in 2015
to 2017. Without the presumed upturn in U.S. growth
during this period, B.C.s growth would languish
around 2.0% annually. There is a risk that the U.S. or
other major economies may not perform as expected
or an unforeseen shock event or developments may
unfold causing sluggish growth or a recession. For
example, the U.S. government deficit and debt issue
may prove a stumbling block.
Economic condions in the U.S. are improving and
aer four years of subpar economic recovery, pent-up
Forecast Summary, British Columbia2011 2012 2013 2014 2015 2016 2017
Real GDP, % change 2.7 1.9 2.2 2.7 3.3 3.9 3.9
Nominal GDP, % change 4.6 4.0 4.0 5.7 6.8 7.3 7.3
Employment, % change 0.8 1.7 1.3 1.7 2.2 2.5 2.9
Unemployment Rate, % 7.5 6.8 6.5 6.0 5.4 4.7 4.0
Population, % change 1.0 1.0 0.8 0.9 1.0 1.2 1.6
Housing Starts, units, 000s 26.4 27.5 24.8 26.6 30.0 33.8 37.6
Retail Sales, % change 3.1 2.5 4.2 4.2 5.4 5.8 7.3
Personal Income, % change 4.6 3.4 2.8 2.9 4.3 5.7 7.2
Corporate Pre-tax profits, % change 0.4 2.1 11.3 15.3 19.6 17.7 9.7
Consumer Price Index, % change 2.4 1.1 1.2 1.8 2.2 2.2 2.8
Forecast commences 2013. Source: Statistics Canada
B.C. Economic Forecast 2013 - 2017
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consumer and business spending is set to unleash
during the next five years. Several key consumer
spending sectors have risen on a sustained basis
during 2012 and that momentum looks to connue.
Business investment spending will expand with rising
consumer demand and exports.
While B.C. exports benefit from improving external
demand sending posive spinoffs throughout the
domesc economy, some sectors will underperform.
Government spending on goods and services and
on capital spending will slow and in some instances
decline. Another sector with near term weakness is
residenal investment spending as the housing market
correcon plays out into 2013.
Business investment spending will post higher growth
rates in the second half of this five-year forecast on
natural resource and related infrastructure develop-
ments. Investment spending also picks up to meet
rising domesc demand for commercial real estate
and for machinery and equipment to realize produc-
vity gains.
The downshiin populaon growth to 1% annually
since the recession will connue to restrain growth in
the domesc economy for another two to three years.
Net interprovincial out-migraon is not predicted to
end unl 2015 when B.C.s unemployment rate is well
below 6% and faster wage gains materialize. There isa risk this turnaround may occur later.
Lower forecast job growth this year is an extension
of the flat monthly trend that played out for most of
2012. While the 1.3% growth forecast is lower than
2012 average annual growth, the monthly trend will
turn posive in the second half of 2013. Net employ-
ment growth above 2% annually aer 2014 will pull
down the unemployment rate to below 5% in 2016.
The ghter labour market will spawn faster wage
gains liing labour income growth during the forecast.
Labour income per employed person will consistently
outpace inflaon. Personal income will follow labour
income higher and receives a boost from investment
income when interest rates and bond yields rise,
closing in on normal levels in 2017.
The Consumer Price Index (CPI) increased only 1.1%
in 2012 due to lower energy prices. Consumer price
inflaon will remain low in 2013 in part to subdued
energy prices but also to the tax shito the PST when
a number of services are no longer subject to tax.
However, during when higher energy and commodity
prices prevail and the labour marketghtens the CPI
inflaon rate will rise well above 2%.
Corporate profits flat-lined in 2011 and 2012 follow-
ing a large gain in the first recovery year. Profits will
increase 11% in 2013 and post larger percentage gains
in subsequent years when stronger domesc and
export growth materializes.
Industries that are forecast to grow faster than the
economys overall rate are mining, forestry and
wood-products manufacturing, primary metal manu-
facturing, andconstrucon. Growth laggards will be
public administraon, pulp and paper manufacturing,
educaon, and accommodaon-food services.
Labour market
The unemployment rate will decline fairly steadily
and fall below 5% in 2016 averaging 4.0% in 2017.
The rather large decline in 2012 to 6.7% from 7.5% in
2011 is somewhat misleading since the labour force
expanded at a low pace and employment growth
slowed during the year. Since mid-2012, no net em-
ployment growth has occurred. This period extends
into 2013 but is expected to end by mid-2013 with a
positive trend into 2014.
Another trend in the labour market is an increase in
hours worked, which emerged tentatively in 2012.
Average actual weekly hours worked rose to 32.0 in
2012 from 31.6 in 2011 will edge steadily higher to
32.4 hours in 2017. This reflects an ongoing shift to
full-time employment from part-time employment.
1987 1992 1997 2002 2007 2012 20172
4
6
8
10
12
14
Per cent of labour force
Source: Statistics Canada, C1CU. Forecast 2013-17.
Unemployment Rate, B.C.
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is already evident in the most recent monthly housing
starts data.
Housing starts are forecast to fall about 10% in 2013
to around 25,000 units from 27,465 units in 2012.Most of this adjustment will occur in Metro Vancou-
ver multi-unit starts. Housing sales are expected to
turn higher in the second half of 2013 and higher
prices will follow.
The housing cycle is poised for another up-leg
when the economy grows at a faster pace. Since
interest rates will be rising from a period of record
lows, a more muted than normal cyclical increase in
sales and starts is expected. In past cycle upturns,
declining interest rates were a significant catalyst.
Nonetheless, a cyclical upturn in demand is predictedto pull housing starts above 30,000 units annually in
2015 and to continue rising through 2017.
Renovation spending steadily declined during 2012
and will end the year down 2% in current dollars and
4% after construction cost inflation. The economic
and housing slowdown played a role in this decline
and possibly the looming switch to the PST could
postpone some spending, particularly as the switch-
over date approaches. Renovation spending will
bump up during 2013 and into 2014 before gaining
significant strength in 2016 and 2017.
Inflation
Consumer price inflation receded more quickly than
expected closing 2012 with a 1.1% increase. Similar
to other main economic indicators, the CPI index
leveled out during the course of the year under lower
gasoline and natural gas prices. Under the assump-
tion that energy prices are at their lows, no relief will
come from this sector in 2013. However, the switch
Employment growth will increasingly become
constrained by lower labour force growth with aging
demographics. This longer-term trend will be par-
tially offset by the upcoming cyclical growth upturn
inducing more labour force growth in response
to more employment opportunities later in the
forecast period. The labour force participation rate
is expected to rise to 66.7% in 2017 from 65.0% in
2012. Should this not transpire, the unemployment
rate could fall below 4% and result in more upward
pressure on wages and salaries.
Population
Total population growth will slide below 1% this
year and remain this low into 2014. Negative net
interprovincial migration emerged in 2011 and will
continue until the job market becomes more attrac-
tive. Relatively faster economic growth in Alberta
and Saskatchewan is attracting workers from B.C.,
contributing to weaker labour force growth. Fewer
net nonpermanent residents as well as lower net
natural increase contribute to the slowdown.
Higher economic growth in the province after 2014
will lead to a reversal in the interprovincial migration
flow. Population growth is predicted to rise to 1.4%
in 2017 aided by immigration gains.
Housing market
The mild correction phase in the housing marketwill pull down economic growth in 2013 and 2014.
Fewer housing starts in 2013 are a near certainty in
an environment of declining housing sales and prices.
Residential investment spending in 2013 will decline
as a result and underperform in 2014. It is possible
this housing correction could qualify as a mild reces-
sion when all the data is in.
Housing sales began a gentle decline in the first
half of 2012 in response to the slower economy,
but downshifted about 10% when tighter federal
mortgage insurance rules came into effect in July.Housing prices peaked in May 2012 and are down
roughly 3% since.
Less housing supply is coming onto the existing home
market as some potential sellers choose to wait for
better market conditions. Fewer listings on the mar-
ket are a critical part of the adjustment process under
declining prices and necessary to stabilize prices.
Reducing the supply of new housing takes longer but
1987 1992 1997 2002 2007 2012 20170.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Per cent
Source: Statistics Canada, C1CU. Note: As of July 1. Forecast 2013-17.
Population Growth, B.C.
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respectively, roughly the same as in 2012. The
economy is forecast to expand at a faster pace in
2014 to 2017, averaging 3.4% in real terms and 6.8%
in current dollars. Domestic spending will remain the
primary source of growth with the trade sector stuck
in a large deficit since imports will keep pace with
exports.
Consumer spending will undergo a mild resurgence
in the next five years though in the near term growth
in 2013 and 2014 will remain modest. The return
to the PST will likely prompt a pickup in spending on
some consumer services such as restaurant meals,
entertainment, and travel during 2013.
Retail sales declined during 2012 and will enter 2013
at a lower level than one year ago. The weakening
trend in 2012 was due to a number of factors includ-
ing the broad economic slowdown, a slowing housing
market, and still fragile consumer confidence in
addition to the tax system shift. Retail sale growth
pops up to 4.2% in 2013 from 2.5% in 2012.
back to the PST will provide some downward pressure
on the CPI in 2013 of a one-time drop around 0.3%.
Inflation will gain momentum after 2013 rising to
1.8% in 2014 and 2.8% in 2017. Higher energy, com-
modity, food, and shelter prices are expected when
the provincial and global economies are growing
faster and operating with less excess capacity.
Incomes
Personal income growth will remain moderate until
labour market conditions generate faster wage
growth and higher interest rates lift investment
income. Personal income is forecast to increase 3.2%
in 2013 following estimated gains of 3.5% in 2012
and 4.6% in 2011. Only late in the five-year forecast
does income growth rise to 6% annually.
While labour income increased in 2012, investmentand interest income declined due to record low
interest rates since the recession. Another decline is
expected in 2013 and possibly in 2014 since interest
rates will begin to climb in late 2013 and early 2014.
It takes considerable time for interest investment
products such as GICs to reset at higher rates.
Real personal income growth, personal income
deflated by the CPI, received a minor lift in 2012
when the inflation rate eased. Growth is estimated at
2.4% in 2012 up from 2.2% in 2011. However, exclud-
ing the investment and income decline and focusingon labour income, real labour income growth rose a
heftier 3.2% in 2012 compared to 2.6% in 2011. In
2013, real labour income growth will fall back to
2.8%.
Personal disposable income growth, personal income
less taxes and fees, slowed to 3.4% in 2012 and is
expected to slow to 2.7% in 2013. Thereafter though,
the growth rate will rise to 3.0% in 2014 and in
subsequent years to reach 6.5% in 2017.
Corporate profits before taxes eked out a small gain
in 2011 and likely another in 2012. These estimates
are close to zero and a small revision could put them
into negative territory. Profit growth is forecast to
climb in 2014 and beyond when economic growth
and commodity prices improve. The shift to the PST
raises costs and cuts into profits.
Expenditures
Total spending in the economy will increase 4.0% in
current dollars and 2.2% inflation-adjusted in 2013,
1987 1992 1997 2002 2007 2012 2017
-5
0
5
10
15
Per cent
Nominal Real
Source: Statist ics Canada, C1CU. Note: Deflated by CPI. Forecast 2013-17.
Personal Income Growth, B.C.
1987 1992 1997 2002 2007 2012 2017-6
-3
0
3
6
9
12Percentage change in expenditures
Nominal Real
Source: Statistics Canada, C1CU. 2012 estimated. Forecast 2013-17.
Economic Growth, B.C.
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faster import growth in the last decade contributed
to the rapid drop in the trade deficit. The rise in the
Canadian dollar played a major role in these trade
developments along with globalization.
Industries
Industry GDP growth in 2013 is forecast at 2.1%, up
slightly from an estimated 2.0% in 2012. Growth will
improve to 2.6% in 2014 and reach 3.9% in 2017.
Slower spending on residential investment is another
sector, in addition to government, contributing to
below-normal overall economic growth in 2013 and
2014. Spending in 2013, adjusted for construction
prices, is forecast slightly lower than in 2012, which
grew an estimated 4.0%. The main source of this
weaker performance in 2013 is the expected decline
in new construction, which spills over into lower
spending on apartment buildings in 2014. After
2014, housing will commence another expansion
phase and residential spending becomes a significant
contributor to provincial growth.
Business spending on plant and equipment slowed
in 2012 and is expected to remain subdued in 2013
owing to weak corporate profit growth. A significant
upturn in spending is slated to occur in 2015. Some
major projects such as a LNG plant in Kitimat and
associated pipeline along with new mining projects
are likely to commence construction. B.C. has a large
number of proposed major projects in energy, min-
ing, transportation, and other major non-residential
projects that could boost future investment spend-
ing. However, various factors such as favourable
market conditions, environmental assessments, and
government approval are needed.
Government fiscal policy will remain in a deficit
reduction mode in the near term. Less capital spend-
ing and restrained spending on current goods and
services will cut into the provinces overall growth.
Capital spending in 2002 dollars will decline through2014 while spending on goods and services will be
largely unchanged until 2015. Spending on a real per
capita basis will contract for a period comparable to
the early 1990s.
Whether B.C.s economy grows at a low or high
pace is usually dependent on exports. In 2012, real
exports are estimated to have expanded only 1.6%
compared to 6.0% in 2010 and 5.1% in 2011. Looking
ahead, prospects are slightly better in 2013 with a
projected increase of nearly 3% rising to nearly 5% in
2015. The faster growing U.S. economy after 2014will give a considerable boost to B.C. exports of wood
products and the strengthening global economy
lifting mining and energy exports. Service exports,
notably tourism and transportation, will also benefit
from this external demand expansion.
Despite an expected export upturn, the trade deficit
will rise since imports expand more than exports.
The last year the province ran a trade surplus was
1989. Weaker international export growth and
1987 1992 1997 2002 2007 2012 20174
6
8
10
12
14
16
18
Dollars 2002 chained - billions
Source: Statistics Canada, C1CU. 2012 estimated. Forecast 2013-17.
Residential Investment, B.C.
1987 1992 1997 2002 2007 20120
5
10
15
20
Dollars 2002 chained - billions
Source: Statistics Canada, C1CU. 2012 estimated. Forecast 2013-17.
Non-residential ConstructionInvestment, B.C.
1987 1992 1997 2002 2007 2012 2017-6
-3
0
3
6
Percentage change
Source: Statistics Canada, C1CU. 2012 estimated. Forecast 2013-17.
Real Per Capita Total Government
Spending in B.C.
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reserves. This could keep prices down especially if
demand does not increase.
Oil and gas extraction GDP will hold near recent
levels this year and expands at a slightly faster pace
in 2015 and beyond when exports grow on higher
U.S. demand. The large run up in output seen during
the last two decades is subsiding. Liquefied natural
gas (LNG) exports to Asia offer longer term growth
potential as evidenced by the likely construction of
an LNG plant in the near future to take advantage of
higher prices in Asia.
Primary metals manufacturing will receive a signifi-cant boost in 2015 when the Rio Tinto Alcan mod-
ernization and expansion of the aluminum smelter in
Kitimat is completed. Real GDP in this industry will
jump about 25% in 2015. The $3.3 billion investment
will increase the smelters capacity by 48%, gener-
ate several hundred construction jobs, and boost
spending on machinery and equipment as well as
non-residential industrial building construction.
The fastest growing industries in the five years ending
2017 will be forestry, wood products manufactur-
ing, mining, primary metals manufacturing, and
professional-technical-business-support. Domestic-
oriented industries will grow at a slower pace but
led by construction, retail-wholesale trade, and
other services (largely personal). The slowest grow-
ing industries will be government services, oil-gas,
education, and utilities. Industries in the middle of
the growth pack will be most manufacturing sectors,
accommodation-food, agriculture, transportation-
warehousing, health, and finance-insurance.
Forestry and wood products manufacturing output is
forecast to grow more than 20% between 2012 and
2017 driven by a recovery in U.S. housing starts. Ex-
pansion into China will resume after its construction
slowdown in 2012. The accelerated harvest of pine
beetle trees is a contributing factor but this will begin
to wane as supply constraints materialize. Annual
growth in wood products manufacturing output will
slow in 2017 and beyond.
Pulp and paper manufacturing will fare poorly. GDP
output is predicted to contract in 2013 and through
2015 following declines in 2011 and 2012. The
outlook for the pulp sector is for ongoing weak pric-
ing conditions and low production. The decade long
decline in newsprint production fell to a new low
in 2011, down more than 70% from 2001, but that
appears to have ended in 2012.
The mining industry has a positive five-year outlook
tied to the faster growing global economy after 2013
and development of new mines. Mount Milligan
currently under construction and B.C.s first new mine
in many years, is slated for full commercial produc-
tion in 2014. The Northwest Transmission Line is
scheduled to be completed in 2013 and will facilitate
the development of new mines such as Red Chris,
Schaft Creek, and others in the longer term. In other
regions of the province, several mine projects are in
various stages of development although some need
to address environmental issues and obtain variousapprovals.
Natural gas production was slightly lower in 2012 fol-
lowing record high output in 2011. Prices remained
low and exports declined in 2012 B.C. along with
sales of natural gas land rights. Pricing is expected to
improve in 2013 according to both industry forecasts
and to the futures market. However, supply in the
U.S. is rapidly expanding due to plentiful shale gas
1987 1992 1997 2002 2007 2012 20175.5
6.0
6.5
7.0
7.58.0
8.5
9.0
9.5
Dollars 2002 chained - billions
Source: Statistics Canada, C1CU. 2012 estimated. Forecast 2013-17.
Forestry and Wood ProductsManufacturing GDP, B.C.
1987 1992 1997 2002 2007 2012 20170.8
1.0
1.2
1.4
1.6
1.8
Dollars 2002 chained - billions
Source: Statistics Canada, C1CU. 2012 estimated. Forecast 2013-17.
Mining GDP, B.C.
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The remaining main industries, notably health,
finance-insurance-real estate, transportation-
warehousing, other services, and utilities will grow at
roughly the same pace as the overall economy. These
industries mainly serve domestic markets and benefitindirectly from external economic growth.
External economic forecast
B.C.s forecast performance is dependent upon
external economic conditions. The expected upshift
in U.S. economic growth in 2014 and beyond will be
necessary to propel B.C.s growth rate to above 3%
annually. Notwithstanding faster growth coming in
the emerging economies, the global economy will
remain in a moderate growth mode until the worlds
largest economy breaks out of its subpar recovery.
An end to Europes recession will help global growth
but its weak recovery will not.
After four years of a subpar economic recovery, the
U.S. is poised to grow at a faster pace led initially
by housing and consumers and later increasingly by
business investment. Exports will also be a growth
contributor. A release of domestic pent-up demand
during the next five years will drive the current
business cycle into a long duration cycle the third
consecutive long cycle since 1990.
The more robust global economy will propel com-
modity prices higher especially later in the forecast
period. Commodity prices have been firmer in the
past three months in tandem with better economic
prospects. Supply issues in some cases will keep
prices diverging from the global macro growth trend.
Canadas economy will largely follow the U.S. growth
profile and commodity prices. Real GDP in 2013 is
forecast at 2.0% rising to 2.8% in 2014. When the U.S.
Port capacity expansions are planned in the Vancou-
ver and Prince Rupert areas to handle future traffic.
Oil pipelines from Alberta to the north coast are
too uncertain to include in the investment forecast.
However, the KSL natural gas pipeline looks likely to
proceed in conjunction with the Kitimat LNG plant.
On the domestic side, construction of the Evergreen
Transit Line has begun and will continue through
2016.
Transportation and warehousing industry GDP is
forecast to grow 2.2% in 2013 following a slowdown
to 1.3% in 2012. Annual growth is forecast to ap-
proach 4% in 2017.
Tourism, which encompasses several industries, will
see modest growth continue into 2013 and gain mo-
mentum each year. Broad measures of activity such
as traveler entries, hotel occupancy rates, and air
traffic data were slightly positive in 2012. Meaningfulgrowth depends on a better U.S. economy. Tourism
from Asia offers considerable long term potential
while European traffic will remain constrained by its
recession and its weak recovery. Domestic tourism
will experience more growth from the Prairies.
Professional-technical-business-support services are
a growing export sector with most services sold to
the rest of Canada followed by international markets.
This industry will benefit from the predicted upturn in
Canada and the global economy; growth will exceed
4% in 2015.
Construction will expand at the fastest rate among
the domestic-oriented industries. While GDP is
forecast to expand a modest 1% this year and next,
it will jump to nearly 6% annually in 2015 to 2017.
New project investments will boost engineering
and industrial building construction while housing
and government construction slips in the near term.
Non-residential construction will be the main growth
driver in this industry with moderate uplift from the
residential sector in the later part of the five-year
forecast.
Among the slowest growing industries, government
services or public administration will be constrained
by fiscal austerity measures aimed to eliminate
federal and provincial budget deficits. Another two
years of slight contraction is predicted.
Education is forecast to grow about 2% annually,
mainly due to slow growth in the student population,
particularly among the prime post-secondary age
group.
1987 1992 1997 2002 2007 2012 2017-6
-3
0
3
6
Percentage change in real GDP
Source: U.S. BEA, C1CU. Forecast 2013-17.
U.S. Economic Growth
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economy grows with more vigor after 2014, Canadas
economic growth rises above 3% annually.
Interest rates will remain low and rise moderately
later in the five-year forecast. The first Bank of
Canada rate increase is expected later in 2013 or
early 2014, though the futures market is not pricing
in an increase until mid-2014. It hinges on the pathof the overall economy and inflation as well as any
possible disruptions in financial markets.
The Canadian dollar will likely hover around parity
with the USD with an upward bias later in the fore-
cast when domestic interest rates rise and commod-
ity prices firm up. Under these circumstances, CAD
will trend higher against the euro and Japanese yen
as well.
This macroeconomic forecast scenario is considered
the most likely and used as a basis for the B.C.forecast. Other scenarios are possible since a policy
misstep or unexpected event could derail it. A sce-
nario with a weaker U.S. economy and longer period
of sub-par global growth with less robust commodity
prices and lower domestic interest rates is the next
most likely outcome. A macro recession scenario is
another possibility but difficult to accurately predict.
Helmut Pastrick
Chief Economist, Central1 Credit Unionhpastrick@central1.com
www.central1.com
604.737.5026
1987 1992 1997 2002 2007 2012 20170
3
6
9
12
15
Per cent
Long-term GoC Bond 3-mo. T-Bill
Source: Bnak of Canada, C1CU. Forecast 2013-17.
Interest Rates, Canada
Appendix TablesGross Domestic Expenditure ($millions) . . . . . . . . 9
Gross Domestic Expenditure ($2002 millions) . . 10Residential investment . . . . . . . . . . . . . . . . . . . . .11
Non-residential construction investment . . . . . . 11
Income Components . . . . . . . . . . . . . . . . . . . . . .12
GDP by Industry . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Employment by Industry . . . . . . . . . . . . . . . . . . .14
Labour market indicators . . . . . . . . . . . . . . . . . . .14
Population components . . . . . . . . . . . . . . . . . . . .15
External economic forecasts . . . . . . . . . . . . . . . .15
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Gross Domestic Expenditures, British ColumbiaMillions of dollars
2011 2012 2013 2014 2015 2016 2017
GDP, expenditure-based 212,458 221,015 229,915 242,923 259,333 278,281 298,553
% change 4.6 4.0 4.0 5.7 6.8 7.3 7.3
Consumer 139,817 145,912 152,465 159,236 167,491 177,219 188,792
% change 5.2 4.4 4.5 4.4 5.2 5.8 6.5
Durable Goods 14,022 14,724 15,395 15,874 16,604 17,318 18,224
% change 3.4 5.0 4.6 3.1 4.6 4.3 5.2
Semi-Durable Goods 9,201 9,434 9,657 9,938 10,311 10,741 11,266
% change 2.6 2.5 2.4 2.9 3.8 4.2 4.9
Non-Durable Goods 29,831 30,924 32,255 33,801 35,543 37,573 39,849
% change 6.2 3.7 4.3 4.8 5.2 5.7 6.1
Services 86,764 90,831 95,158 99,623 105,033 111,588 119,453
% change 5.4 4.7 4.8 4.7 5.4 6.2 7.0
Government Current 41,901 42,605 43,506 44,537 46,098 48,171 50,604
% change 3.4 1.7 2.1 2.4 3.5 4.5 5.0 Government Investment 6,743 6,969 6,973 6,889 7,119 7,680 8,320
% change -4.6 3.3 0.1 -1.2 3.3 7.9 8.3
Residential Construction 18,004 19,078 19,143 20,015 22,290 25,475 29,097
% change 4.8 6.0 0.3 4.6 11.4 14.3 14.2
Plant and Equipment 27,821 29,419 31,027 33,228 36,799 40,765 43,410
% change 14.6 5.7 5.5 7.1 10.7 10.8 6.5
Machinery & Equipment 9,575 10,164 10,600 10,911 11,365 11,655 12,735
% change 10.6 6.2 4.3 2.9 4.2 2.6 9.3
Non-Residential Construction 18,246 19,255 20,427 22,317 25,435 29,110 30,675
% change 16.8 5.5 6.1 9.3 14.0 14.4 5.4
Final Domestic Demand 234,287 243,983 253,114 263,904 279,797 299,310 320,223
% change 5.5 4.1 3.7 4.3 6.0 7.0 7.0
Exports 80,434 82,296 87,806 92,900 100,154 108,131 117,385
% change 5.9 2.3 6.7 5.8 7.8 8.0 8.6
Imports 101,669 108,251 110,921 115,415 122,231 130,829 140,216
% change 8.9 6.5 2.5 4.1 5.9 7.0 7.2
Net Exports -21,235 -25,955 -23,116 -22,515 -22,078 -22,699 -22,831
Inventory change -494 2,887 -83 1,534 1,514 1,670 1,260
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Residential Investment, British Columbia2011 2012 2013 2014 2015 2016 2017
Millions of dollars
Total Residential Investment 18,004 19,078 19,143 20,015 22,290 25,475 29,097
% change 4.8 6.0 0.3 4.6 11.4 14.3 14.2
New Dwellings 7,726 8,748 8,582 8,798 10,095 11,599 13,282
% change 3.6 16.9 -4.3 -0.7 16.5 16.4 14.9
Renovations 7,767 7,588 7,743 8,207 8,764 9,866 11,440
% change 4.1 -2.3 2.0 6.0 6.8 12.6 16.0
Total Acquisition Costs 2,309 2,531 2,601 2,783 3,189 3,751 4,091
% change 5.4 9.7 2.7 7.0 14.6 17.6 9.1
Other Residential Construction 203 211 217 227 241 259 284
% change 6.1 4.0 3.0 4.6 6.0 7.4 9.5
Millions of chained (2002) dollars
Total Residential Investment 12,079 12,560 12,482 12,677 13,536 14,747 15,908
% change 1.9 4.0 -0.6 1.6 6.8 8.9 7.9
New Dwellings 5,183 5,759 5,596 5,572 6,131 6,714 7,262 % change 2.4 11.1 -2.8 -0.4 10.0 9.5 8.2
Renovations 5,211 4,996 5,049 5,198 5,322 5,711 6,255
% change 1.2 -4.1 1.1 3.0 2.4 7.3 9.5
Total Acquisition Costs 1,549 1,667 1,696 1,763 1,937 2,171 2,236
% change 2.5 7.6 1.8 4.0 9.9 12.1 3.0
Other Residential Construction 136 139 142 144 146 150 155
% change 3.2 2.1 2.0 1.6 1.7 2.4 3.5
Housing Starts, units 26,400 27,550 24,799 26,586 29,966 33,796 37,559
% change -0.3 4.4 -10.0 7.2 12.7 12.8 11.1
Capital Investment by Type of Non-residential Construction: British Columbia2011 2012 2013 2014 2015 2016 2017
Millions 2002 dollars
Total Non-residential Construction 15,529 16,513 16,791 17,178 18,389 20,002 20,13
% change 12.9 6.3 1.7 2.3 7.0 8.8 0.
Building Construction 4,374 4,461 4,636 4,792 5,012 5,169 5,42
% change 3.6 2.0 3.9 3.4 4.6 3.1 4.
Commercial 1,627 1,589 1,729 1,831 2,022 2,017 2,12
% change 4.7 -2.4 8.8 5.9 10.4 -0.3 5.
Industrial 878 994 1,023 1,114 1,122 1,215 1,27
% change 26.3 13.2 2.9 8.9 0.7 8.3 4.
Institutional-Government 1,868 1,879 1,884 1,847 1,868 1,938 2,02
% change -5.4 0.6 0.3 -2.0 1.1 3.7 4.
Engineering Construction 11,155 12,051 12,155 12,386 13,377 14,833 14,71
%change 17.0 8.0 0.9 1.9 8.0 10.9 -0.
Note: based on flows and Stocks of Non-residential Capital
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Sources and Disposition of Personal Income: British ColumbiaMillions of dollars
2011 2012 2013 2014 2015 2016 2017
Personal Income 171,482 177,360 182,281 187,589 195,715 206,859 221,827
% change 4.6 3.4 2.8 2.9 4.3 5.7 7.2
Sources
Labour Income 109,849 114,464 118,826 123,396 129,276 136,565 146,632
% change 5.0 4.2 3.8 3.8 4.8 5.6 7.4
Unincorporated Business 18,542 19,310 20,032 20,886 22,144 23,689 25,344
% change 5.5 4.1 3.7 4.3 6.0 7.0 7.0
Investment Income 19,513 19,547 18,893 18,356 18,802 20,031 22,144
% change 4.3 0.2 -3.3 -2.8 2.4 6.5 10.5
Government Transfers 23,996 24,484 25,003 25,425 25,980 27,071 28,231
% change 2.6 2.0 2.1 1.7 2.2 4.2 4.3
Transfers From Business 264 271 275 311 348 398 456
% change -12.1 2.8 1.6 13.1 11.6 14.5 14.6
Transfers From Non-Residents 450 464 475 485 497 513 531 % change 2.6 3.1 2.6 1.9 2.5 3.3 3.5
Deductions
Direct Taxes 20,765 21,605 22,484 23,310 24,514 26,144 28,323
% change 4.9 4.0 4.1 3.7 5.2 6.7 8.3
Social Insurance 9,997 10,417 10,814 11,230 11,765 12,429 13,345
% change 5.1 4.2 3.8 3.8 4.8 5.6 7.4
Other Taxes 2,603 2,692 2,767 2,848 2,971 3,140 3,367
% change 4.5 3.4 2.8 2.9 4.3 5.7 7.2
Disposable Income 138,116 142,645 146,216 150,202 156,466 165,147 176,792
% change 4.5 3.3 2.5 2.7 4.2 5.5 7.1
Disposition
Consumer Expenditures 139,817 145,912 152,465 159,236 167,491 177,219 188,792
% change 5.2 4.4 4.5 4.4 5.2 5.8 6.5
Transfers to Business 2,241 1,858 1,703 1,740 1,889 2,098 2,353
% change -20.9 -17.1 -8.3 2.1 8.6 11.0 12.1
Transfers to Non-Residents 755 779 799 814 835 862 892
% change 2.6 3.1 2.6 1.9 2.5 3.3 3.5
Personal Savings -4,697 -5,904 -8,751 -11,588 -13,749 -15,032 -15,245
% change 7.4 25.7 48.2 32.4 18.7 9.3 1.4
Personal Savings Rate -3.4 -4.1 -6.0 -7.7 -8.8 -9.1 -8.6
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GDP by Industry: British ColumbiaMillions of chained (2002) dollars
2011 2012 2013 2014 2015 2016 2017
Total 157,065 160,151 163,561 167,861 173,298 179,652 186,614
% change 2.6 2.0 2.1 2.6 3.2 3.7 3.9
Agriculture 1,315 1,354 1,415 1,471 1,497 1,556 1,633
% change 2.5 2.9 4.6 3.9 1.8 4.0 4.9
Forestry & Logging 3,039 3,079 3,406 3,600 3,774 3,969 4,047% change 8.9 1.3 10.6 5.7 4.8 5.2 2.0
Oil & Gas Extraction 3,639 3,664 3,700 3,727 3,816 3,875 3,922
% change 7.6 0.7 1.0 0.7 2.4 1.5 1.2
Other Mining 1,200 1,225 1,247 1,367 1,364 1,441 1,637
% change -1.1 2.1 1.8 9.6 -0.2 5.7 13.6
Fish, Hunting & Trapping 99 99 104 100 101 110 11
% change 1.3 -0.2 5.0 -3.5 0.9 8.8 0.9
Utilities 3,225 3,258 3,301 3,362 3,449 3,537 3,635
% change 9.5 1.0 1.3 1.8 2.6 2.6 2.8
Construction 10,205 10,665 10,693 10,729 11,478 12,470 13,065
% change 5.5 4.5 0.3 0.3 7.0 8.6 4.8
Manufacturing 13,366 13,412 13,686 14,032 14,384 14,794 15,158
% change 1.6 0.3 2.0 2.5 2.5 2.8 2.5
Wood Products 3,978 4,122 4,327 4,638 4,756 4,942 4,940
% change 4.5 3.6 5.0 7.2 2.5 3.9 0.0
Pulp & Paper Products 1,249 1,165 1,120 1,082 1,059 1,080 1,096
% change -4.0 -6.7 -3.9 -3.3 -2.1 1.9 1.6
Primary & Fabricated Metals 1,459 1,342 1,350 1,382 1,553 1,623 1,685
% change 0.3 -8.0 0.6 2.4 12.3 4.5 3.8
Machinery 893 934 983 1,009 1,043 1,074 1,102
% change 21.0 4.6 5.2 2.6 3.4 3.0 2.6
Other Manufacturing 5,704 5,768 5,825 5,838 5,891 6,092 6,357
% change -1.4 1.1 1.0 0.2 0.9 3.4 4.4
Retail & Wholesale Trade 17,102 17,539 18,068 18,546 19,175 19,919 20,767
% change 1.6 2.6 3.0 2.6 3.4 3.9 4.3
Transportation & Warehousing 9,566 9,680 9,889 10,101 10,418 10,820 11,244
% change 3.6 1.2 2.2 2.1 3.1 3.9 3.9
FIREL* 38,835 39,846 40,914 42,344 43,693 45,216 47,192
% change 3.2 2.6 2.7 3.5 3.2 3.5 4.4
Owner-Occupied Housing 19,732 20,449 21,191 22,116 22,967 23,918 24,977
% change 4.1 3.6 3.6 4.4 3.8 4.1 4.4
Other FIREL 19,102 19,397 19,723 20,228 20,726 21,298 22,215
% change 2.3 1.5 1.7 2.6 2.5 2.8 4.3
Information, Professional, Scientific, Managerial 16,695 16,881 17,297 17,841 18,598 19,251 20,104
% change 1.0 1.1 2.5 3.1 4.2 3.5 4.4
Education Services 8,002 8,180 8,384 8,588 8,760 8,923 9,139
% change 2.4 2.2 2.5 2.4 2.0 1.9 2.4Health & Social Services 11,288 11,581 11,897 12,180 12,511 12,912 13,404
% change 2.2 2.6 2.7 2.4 2.7 3.2 3.8
Accommodation & Food Services 4,378 4,419 4,500 4,600 4,708 4,851 5,061
% change -0.8 0.9 1.8 2.2 2.3 3.0 4.3
Other Services 6,191 6,338 6,545 6,723 6,915 7,188 7,506
% change -0.3 2.4 3.3 2.7 2.9 3.9 4.4
Public Administration 8,476 8,371 8,305 8,248 8,326 8,488 8,699
% change 0.8 -1.2 -0.8 -0.7 0.9 2.0 2.5
*FIREL - Finance, insurance, real estate and leasing
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TermsPublished by the Economics Department of Central1 Credit Union, 1441 Creekside Drive, Vancouver, B.C. V6J 4S7 Central1 Credit Union, 2011.This work may not be reproduced in whole or part, by photocopy or other means, without permission of Central1 Credit Union.Economic Analysis of British Columbia (the Analysis) may have forward-looking statements about the future economic growth of the Province of Ontarioand its regions. These statements are subject to risk and uncertainty. Actual results may dif fer due to a variety of factors, including regulatory or legislativedevelopments, 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 carefullyand readers should not place undue reliance on the Analysis forward-lookingstatements.The Analysis and Central1 Credit Union disclaims any and all warranties, whether express or implied, including (without limitation) any implied warranties ofmerchantability or fitness for a particular purpose. The Analysis and Central1 Credit Union will not accept any responsibility for the readers use of the data and / oropinions presented in the Analysis, or any loss arising therefrom.
Chief Economist: Helmut Pastrick Economist: David Hobden Economist: Bryan Yu Production: Judy Wozencroft
Population Components: British Columbia2011 2012 2013 2014 2015 2016 2017
Population, 000s 4,573.3 4,617.5 4,656.7 4,696.8 4,744.6 4,802.1 4,878.5
% change 1.0 1.0 0.8 0.9 1.0 1.2 1.6
Births, 000s 43.8 43.7 43.6 43.8 44.0 44.3 44.7
Deaths, 000s 35.3 33.4 34.4 35.4 36.4 37.3 38.3
Natural Increase, 000s 8.5 10.3 9.2 8.4 7.7 7.0 6.4
Net Migration, 000s 35.1 33.9 29.9 31.7 40.1 50.6 70.0
Net International, 000s 31.7 39.4 34.5 35.4 38.2 42.8 48.2
Net Interprovincial, 000s 3.4 -5.4 -4.5 -3.7 1.9 7.7 21.9
Key External Economic Forecasts2011 2012 2013 2014 2015 2016 2017
Canada Real GDP, % change 2.6 2.0 2.0 2.8 3.1 3.3 3.1
U.S. Real GDP, % change. 1.8 2.2 2.4 2.9 3.2 3.5 3.3
China Real GDP, % change 9.4 7.5 8.0 8.3 8.0 7.5 7.2Japan Real GDP, % change. 0.2 1.8 0.7 1.0 1.1 1.3 1.6
European Union Real GDP, % change 1.4 -0.5 0.1 1.1 1.3 1.5 1.8
Canada 3-month T-Bill, % 1.00 0.94 1.05 1.50 2.25 3.15 3.75
Canada Long-term Bond, % 3.78 2.45 2.70 3.50 4.15 4.75 5.25
U.S.-Canada Exchange Rate 1.00 1.00 1.00 1.01 1.03 1.02 1.00
Wood Products Price Index, % change -1.3 4.9 6.1 6.1 12.0 13.7 13.4
Pulp and Paper Price Index, % change -1.6 0.3 -1.5 -0.5 -0.5 2.1 2.0
Metals & Minerals Price Index, % change 10.2 -6.4 3.6 5.5 6.0 4.8 3.9
Crude Oil, US$ per barrel 102.0 94.0 95.0 100.0 105.0 110.0 115.0
Natural Gas, US$ per MBTU 4.00 2.75 3.50 4.00 4.25 4.50 4.75
Coal Price per tonne,% change 22.5 -19.5 6.1 1.8 3.4 -1.6 10.3
The data used in these tables are drawn from a number of sources: Statistics Canada, U.S. Bureau of Economic Analysis,International Monetary Fund, B.C. Mines and Energy, Consensus Forecasts, Central 1 Credit Union for all B.C. Forecasts.