New Brunswick is picking up the pace. Last year started slowly, but the economy gained traction over the course of 2015. That momentum is expected to continue into 2016.
Toronto-Dominion Bank‘s (TD) latest forecast notes that, in contrast to the recent woes of the petroleum refining industry, the province’s forestry sector has been enjoying robust growth. As well, lumber shipments shot up by 17% in 2014 and rose by 22% in the first half of 2015, thanks to a U.S. housing boom.
The forestry sector is projected to remain a top performer over the next fiscal year, thanks to a lower Canadian dollar and ongoing demand from the U.S.
Another natural resource, mining, will benefit as new mines are commissioned. Indeed, estimates for the mining sector improved in 2015 despite low commodity prices worldwide. Increased activity at the Caribou zinc mine and the Picadilly potash mine, the latter of which is ramping up to full production, are expected to boost employment in the province this year. New Brunswick’s key economic drivers will be exports and investment in export-oriented industries.
The good news needs to be put into context. New Brunswick’s economy is expected to grow by only 1.0% in 2015 and 1.2% in 2016, placing it well down in the provincial growth rankings in both years – 8th and 7th, respectively, says Gerard Walsh, an economist with Royal Bank of Canada in Toronto.
The future is not much brighter, he adds: “Our growth forecast for 2017 is 1.3%, which is well below our 2.7% call for Canada.”
Economic highlights last year included the $200-million Saint John refinery upgrade, which created thousands of jobs, albeit temporarily. Plans to increase spending on road construction are also on the books for this year.
On the downside, however, is manufacturing, which continued to struggle in 2015. Shipments were down by 6.6% in October over the previous year, according to the TD report. This weakness is tied to lower activity in the refining industry, in which nominal export receipts have dropped by more than 13%.
However, there is room for optimism, states the TD report: “Looking forward, our expectation of a bounce-back in refinery production, rising U.S. demand and a weaker loonie bode well for renewed growth in manufacturing over the 2016-17 period.”
New Brunswick is struggling with an aging population. The province has the highest proportion of residents aged 65 years and older, at 19%. This reality is unlikely to change in the near term; indeed, it may worsen. “The population of working-age adults is set to contract again in 2016,” says Walsh.
NEW BRUNSWICK
Population: 754,306
GDP, 2014 ($bil.): 32
GDP, % change: 0.6
2015-16 deficit ($mil.): 453
Estimated net debt ($bil.):12.8
per capita wage growth, % change, 2015: 2.4
Household disposable income, per capita: $28,266
Figures from latest available reports/estimates
Sources: Conference Board of Canada; Province
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