GDP growth stronger than anticipated in 2000

The New Brunswick economy showed a better performance than anticipated in 2000 as major construction projects in the transportation, manufacturing and energy sectors fueled growth.
Private sector forecasters pegged New Brunswick’s real GDP growth in the 2.9% to 5.5% range. The Department of Finance estimated growth of 3.5%.
There was strong growth in the construction, manufacturing, transportation, trade, and finance and insurance sectors. Some sectors of the traditional resource industries benefited from higher commodity prices.
In general, goods producing industries posted higher growth than the service producing industries. The public sector also showed positive growth.
Personal income increased 5.2% due to solid labour income and unincorporated business income growth. Corporate profits also registered significant growth.
On the expenditure side, there was strong growth in personal expenditures on goods and services. Net government current expenditures on goods and services also increased. With major investment projects either completed or near completion, capital expenditures declined to the second highest level on record.

Private sector forecasters are anticipating real GDP growth for New Brunswick in the range of 1.1% to 2.8% for 2001.
Economic activity is expected to slow, as construction activity declines to a level seen prior to the major investment projects of the last two years. Capital investment in the utilities; retail trade; information and culture; finance and insurance; and real estate industries will assist in maintaining that level.
Most industries, excluding construction, should see positive growth in New Brunswick.
Slower growth in the US and Canada is expected to have a downward effect in New Brunswick in the form of decreased demand for manufactured and natural resource products.
Helping to offset decreased demand will be increased consumer demand through lower income taxes and interest rates. The New Brunswick economy is forecast to increase 2.1%.

In 2000, the value of New Brunswick’s exports to foreign markets increased by 21.6% to over $7.4 billion. Higher commodity prices had an impact on the outcome, most notably for refined petroleum products, pulp, newsprint and zinc. The national increase was 16.0%.
Most of the gain can be attributed to increases in energy (+57.9%) and forestry (+8.9%) products. Machinery and equipment (+34.7%) and food products (+9.0%) also had significant increases.
Three sectors represent over 85% of exports from the province: forestry products (37%), energy products (32%) and food products (17%).
About 87% of New Brunswick’s exports are destined for the US market. Japan is next at 3%, followed by the United Kingdom, Germany and Brazil at 1% each.

The Consumer Price Index (CPI) for New Brunswick rose 3.3% in 2000, the largest annual increase since the introduction of the Goods and Services Tax (GST) in 1991, and more than double last year’s rate of 1.6%. Higher energy prices exerted the greatest influence on the increase.
New Brunswick’s inflation rate was above the Canadian average for the first time since 1997.
Consumer prices in the province rose in seven of the eight major components of the CPI. Transportation and shelter costs registered the largest gains, up 6.4% and 5.0% respectively. Clothing and footwear prices declined for the first time since 1995.
In 2001, the New Brunswick CPI is expected to increase at a rate similar to the national average of about 2.5%.

New Brunswick retail trade increased 4.6% in 2000 following near record growth in 1999. Retail sales per capita in the province were $9,133 in 2000, above the national average of $9,013.
Double-digit sales growth was recorded for New Brunswick gasoline service stations, household furniture and appliance stores, and specialty clothing stores. There were sales declines for motor and recreational vehicle dealers, men’s clothing stores, women’s clothing stores, shoe stores and specialty food stores.
New motor vehicle sales declined slightly after a strong performance last year. In 2000, the value of new vehicle sales decreased 1.3% while the number of new vehicles sold was down 2.0%.
Wholesale trade increased 6.6% in 2000 following growth of 12.3% the previous year.
The retail trade sector represents over 7% of New Brunswick’s GDP and wholesale trade makes up another 6%.
Developments for 2000 include new stores for Sobeys, The Future Shop and Staples. Projects to be completed or started in 2001 involve Canadian Tire, Home Depot, Kent Home Improvement, Sears Furniture and Appliance and another Sobeys store.

For 2000, New Brunswick wages and salaries rose 6.3%, below the national increase of 7.1%. Changes in earnings, as well as employment, contribute to wages and salaries growth.
Growth was higher for the service sector (+6.5%) than the goods producing sector (+5.7%).
While all 11 major industry categories reported increases, four had growth over 10%: public administration; finance, insurance and real estate; utilities; and mines, quarries and oil wells. There was a significant increase in federal administration (+29.3%) due to pay equity payments in April 2000.
Over 70% of wages and salaries are captured in four industry categories: community, business and personal services (30.1%), manufacturing (14.7%), trade (14.5%) and public administration (11.6%).
For 2000, average weekly earnings for these categories ranged from $417.87 in trade, $478.65 in community, business and personal services, $667.22 in manufacturing, to $693.97 in public administration. Overall average weekly earnings were $553.77.