A revival in consumer spending in the first half of the year boosted provincial economic fortunes, with all provinces experiencing a lift in performance so far in 2002, according to a provincial economic scorecard released today by RBC Financial Group.

The RBC economics report, Provincial Trends, ranks the provinces according to seven economic indicators: employment, unemployment rate, retail sales, housing starts, residential unit sales, manufacturing shipments and international exports. “Canada’s economy bounced back strongly in the first half of 2002, fuelled by healthy consumer spending,” said Carlos Leitao, RBC senior economist and the report’s author, in a release. “Consumers were opening their wallets more widely in all the provinces, be it in the stores in Alberta and Saskatchewan or in the housing market in Newfoundland and Quebec.”

“But, if consumer spending was the bright spot in the provincial forecast, the dark cloud on the horizon is the health of the U.S. economy, which overshadows the outlook for Canadian merchandise exports,” says Leitao. “Manufacturing shipments and merchandise exports are still down for the year in Canada and further declines are a real risk to the health of our upturn.”

In the West, Alberta continues to be an economic star, though it slipped slightly to the No. 2 position in the RBC provincial rankings for the first time in 18 months. Alberta’s ranking was hurt by sharp drops in manufacturing shipments and exports in the first six months of the year. B.C. and Saskatchewan continue to struggle, though there has been some improvement. B.C. is hampered by a weak natural resource sector and Saskatchewan by renewed drought conditions that are striking another blow to its already weakened agricultural sector. Manitoba has held its own so far this year, helped by a diversified economy. It had a relatively better 2001 than most provinces and had less ground to make up in 2002.

Quebec has taken the economic lead in central Canada, with surprisingly strong job creation, a red-hot housing market and sharply increased public sector non-residential investment. Ontario is finding its footing and the recovery should take even firmer hold in the second half of 2002. However, the instability currently plaguing financial markets is a significant downside risk.

Newfoundland and Labrador is the rankings’ leader among all provinces. It is enjoying the benefits of oil-induced economic expansion. Prince Edward Island improved its economic ranking more than any other province in Canada by going from the bottom of the list six months ago to a tie for second place. A rebound in agriculture and food processing is responsible for P.E.I.’s forward momentum. Nova Scotia and New Brunswick’s economies remain little changed from six months ago, but should see more of a boost later this year. Nova Scotia will get a lift from development on phase two of the Sable Island natural gas project when it begins and New Brunswick will get a lift from construction activity — including a $500-million upgrade of Irving Oil’s Canaport terminal — as well as rebounding exports to the United States.