Private Sector Real GDP Forecasts
Newfoundland and Labrador, 2000
|
|
Growth |
Scotia Bank |
4.4% |
TD Bank |
4.5% |
Bank of Montreal |
4.0% |
Conference Board of Canada |
5.3% |
Royal Bank
|
3.5% |
CIBC |
5.0% |
Private Sector Average |
4.5% |
|
The Province’s real economic growth is expected to be 4.7% in 2000,
leading all provinces for a third year. Growth will be driven by increased
oil, newsprint and mineral production and higher manufacturing shipments.
Higher public sector spending on infrastructure, increased tourism and other
service sector activity, and expanding technology industries will also
contribute to growth. Employment growth of 2.8% is forecast, causing the
unemployment rate to decline to 15.9%. Federal and provincial tax cuts will
boost after-tax incomes in 2000. These cuts, combined with employment and
wage growth, will encourage further buying by consumers leading to an
increase of 5.1% in retail sales and 5.7% in housing investment.
Demographic Overview
Population began to stabilize in 1999 as net out-migration declined
sharply, continuing a trend begun in 1998 and paving the way for an expected
end to six years of population decline this year.
Net out-migration during the 1990s rose to high levels, triggered by
employment losses associated with the groundfish closures and exacerbated
by, among other things, major EI reforms and government expenditure
restraint. Falling natural increase (births minus deaths) compounded the
effects of net out-migration, and population decline ensued.
Declining net out-migration over the past year or more reflects three
years of increasingly stronger economic and employment growth as well as a
substantially completed demographic adjustment to structural changes in the
fishing industry and reform of the EI program.
The third quarter of 1999 was particularly noteworthy (data for the
fourth quarter of 1999 is not yet available). It marked the fifth
consecutive quarter that year-over-year net out-migration declined, and
brought interprovincial net out-migration to its lowest third-quarter level
in almost two decades. It also brought an end to six and a half years of
quarter-to-quarter population decline as the natural increase was just
enough to offset net out-migration, leaving population virtually unchanged
from the second quarter of 1999.
The population is expected to stabilize in 2000 and beyond as net
out-migration continues to moderate, reflecting expectations for strong
economic and employment growth. While population decline is not expected to
be an issue in the current decade, population aging and regional population
shifts will continue to present significant challenges for all provinces.
Labour Market Performance
Labour market performance in 1999 was the strongest in a decade.
Employment averaged 204,900, an increase of 5.5% from 1998. This was the
highest growth rate of all provinces, and double the Canadian growth rate.
The unemployment rate declined to 16.9% from 18.0% in 1998. Job gains were
broadly-based, both on a regional and industry basis. Increases were
recorded in the fisheries, retail trade, construction, tourism and
transportation industries. Employment growth outside of the St. John’s
area was particularly strong at 8.1%.
The labour force grew by 4.1% in 1999 reflecting growth in job
opportunities. The labour market participation rate, which measures the
labour force as a percent of the working age population, increased to 56.3%
from 53.9% in 1998.
Strong employment growth, coupled with increased demand for skilled
trades and occupations, resulted in growth in average weekly earnings of
2.8% in 1999 and by 1.3% after adjusting for inflation. This was the
strongest growth of all provinces and reflected higher public and private
sector wage settlements, an increased minimum wage and employers’ need to
attract and retain skilled workers in the face of lower unemployment rates
and relatively higher wages in other parts of Canada and the United States.
Labour force and employment growth trends are influencing the composition
of the labour force. For example, in 1999, 52.2% of the labour force had
completed post secondary studies, an increase from 43.1% in 1991.
Educational attainment can be expected to increase further as youth now
entering the labour market tend to have more education than older workers
retiring from the labour market. Furthermore, the demand by employers for
highly skilled labour is expected to increase over time. As well, 31.6% of
the labour force was age 45 and over in 1999, as compared to 22.3% in 1991.
This may mean that over the next 15 years more job opportunities will be
available for youth, as up to one-third of today’s labour force reaches
retirement age.
Photo: Paul Chafe, The Muse. (Click on photo to visit The
Muse)
University Centre, Memorial University of Newfoundland - St. John’s Campus.