Stable Canadian economy propped up by Alberta boom

OTTAWA — Canadians’ ability to adapt to changing market conditions helped maintain a robust economy in 2006, according to a new year-end economic review by Stats Canada.

The study, published today in the online edition of Canadian Economic Observer, concludes the most surprising development in Canada’s economy last year was not so much the surge in oil prices or that the bursting of the American housing bubble failed to dampen growth, but ” the theme that really stands out is the adaptability of Canadians faced with rapid changes in their economy.”

The most dramatic example, says StatsCan, was the migration of people to oil-rich Alberta in 2006.

The economy, points out the study, has been hit with a number of shocks in the past year which could have triggered a slowdown or even recession. “Instead, growth has been remarkably stable since 2003.”

Real gross domestic product expanded 2.7 percent, only marginally less than the 2.9 percent gain in 2005, despite a mid-year slowdown.

The Resource Boom:

The economic impact of the development of the oil sands rippled across Alberta, which had a litany of record-setting performances. They include fastest increase ever in retail sales (+16.2%), biggest hike in building permits and in non-residential construction ($3.6 billion and $1.1 billion respectively), the lowest unemployment rate (3.4%) and largest net inter-provincial migration on record.

Alberta by itself accounted for the faster gain in employment and retail sales in Canada than in the United States. “In fact, without Alberta, growth in the rest of Canada lagged slightly behind the United States on both accounts.”

However, metals also backed the resource boom. So-called “blue-collar” metals such as copper, nickel, zinc and iron ore spearheaded the advance, overshadowing their more illustrious precious metal cousins, such as silver and gold. “The development of the oil sands in northern Alberta remained the dominant trend in the energy sector, reshaping Canada’s economic geography.”

Trek Westward:

Alberta received a net inflow of 57,105 people from other provinces, the largest inter-provincial movement of people to one province on record back to 1972.

In any other year, note the study, British Columbia would have been the provincial success story. Employment in British Columbia grew 3.1 percent in 2006, on the heels of a 3.3 percent gain in 2005. Job growth was again led by mining.

Consumers Unfazed by Energy Costs:

Consumer spending continued to expand briskly last year, underpinned by strong labour, housing, and stock markets.

“Not even record high energy prices deterred consumers. Consumers in Canada mostly shrugged off the effect of rising gasoline prices on their driving habits, never mind their overall behavior.”

For the fifth straight year, purchases of trucks rose faster than car sales. In fact, the strength of truck sales pushed the share of cars in all vehicle sales to a record low of 51.7 percent last year.