The New Brunswick Economy 2002 Published by: Department of Finance Province of New Brunswick P.O. Box 6000 Fredericton, New Brunswick E3B 5H1 Canada Internet: www.gnb.ca/fin March 2002 Cover: Communications New Brunswick (CNB 1199) Translation: Translation Bureau, Supply and Services Typesetting: Queen's Printer for New Brunswick Printing and Binding: Printing Services, Supply and Services ISBN 1-55236-803-3 ISSN 0548-4073 Printed in New Brunswick Table of Contents Page Overview 5 International economy weakens 6 Canadian economy slower 8 Monetary policy active in 2001 10 New Brunswick economy GDP growth slows in 2001 12 GDP growth similar in 2002 13 Exports growth strong 14 Inflation down 15 Retail trade growth slows 16 Wages and salaries continue to increase 17 Labour force Employment steady 18 Service sector employment higher 19 Unemployment rate at 11.2% 20 Employment gains concentrated in two regions 21 Population Population growth increases 22 Population continues to age 23 Construction Capital investment third highest ever 24 Manufacturing Manufacturing shipments influenced by petroleum prices 25 Forestry Wood products remain sluggish 26 Paper and allied products decline 27 Mining Mining production steady 28 Utilities and service industries Utilities stronger 29 Technology and communication strengthen 30 Transportation sector still strong 31 Food services growth slows 32 Agriculture, fisheries and aquaculture Primary food production strong 33 Statistical tables 35 Based on data available as of March 1, 2002. Data will be updated on the Finance web site at http://www.gnb.ca/0024/index-e.asp. 2001 Statistical Summary Bilan statistique de 2001 New Brunswick % Change ($ Million) 2001/2000 (unless otherwise stated) N.B. Canada Nouveau-Brunswick Écart (en %) (en millions de entre dollars, sauf 2001 et 2000 indication contraire) N.-B. Canada Output and Income / Production et revenus GDP / PIB Current $ / (en dollars courants) 20,069.0 1.8 2.7 Constant $ (1997) / (en dollars constants de 1997) 18,714.0 0.6 1.5 Personal Income / Revenu personnel 18,046.0 3.3 3.8 Capital Formation / Formation de capital 3,734.0 -7.5 2.7 Exports / Exportations 8,263.8 11.6 -3.1 Retail Trade / Commerce de détail 7,070.3 2.4 4.5 Population and Labour Force / Population et population active Total Population (July 1) ('000) / Population totale au 1er juillet ('000) 757.1 0.2 1.0 Labour Force / Population active ('000) 376.7 1.3 1.5 Employment / Emploi ('000) 334.4 0.0 1.1 Unemployment / Chômage ('000) 42.2 13.1 7.3 Unemployment Rate / Taux de chômage (%) 11.2 .. .. Participation Rate / Taux d'activité (%) 62.2 .. .. Industrial / Secteurs d'activité Farm Cash Receipts / Recettes monétaires agricoles 401.7 10.2 9.7 Housing Starts (number) / Mises en chantier (nombre) 3,462 12.4 7.3 Manufacturing Shipments / Livraisons de biens de fabrication 12,255.4 7.3 -5.2 CPI (1992 = 100) / IPC (1992 = 100) 114.7 1.7 2.6 Sawn Lumber Production ('000m3) / Production de bois d'œuvre ('000m3) 3,549.6 4.9 -5.4 Overview • The North American economies slowed in 2001 with the US experiencing a recession. Canada reported real Gross Domestic Product (GDP) growth of 1.5%, down from 4.6% last year. While the manufacturing sector struggled, monetary and fiscal policy helped to avoid a technical recession in Canada as consumer spending remained strong. In New Brunswick, economic growth also slowed to 0.6% due to the completion of major construction projects and the status of the US. • Increases in New Brunswick manufacturing shipments, exports, housing starts, farm cash receipts and sawmill production surpassed national rates. Higher commodity prices for petroleum products influenced manufacturing shipments and exports. Housing starts reached their highest level since 1993. • Retail trade growth slowed in the province although sales per capita remained above the national average. The inflation rate dropped and was well below Canada's rate. Capital investment decreased but still registered as the third highest level on record. Population growth was double that of 2000. • New Brunswick employment remained at last year's record level of 334,400. Gains in full-time employment were offset by losses in part-time jobs. Stable employment combined with strong labour force growth resulted in the unemployment rate increasing to 11.2%. The participation rate rose for the fifth year in a row to 62.2%. Wages and salaries growth of 4.2% was lower than in 2000 but matched the national increase for the second year in a row. • The service industries fared better than the goods producing industries in 2001. • For 2002, economic growth in North America is expected to strengthen in the second half of the year and real GDP in New Brunswick is projected to increase by 1.2%. Capital investment is anticipated to be relatively strong. The provincial unemployment rate could show a slight increase due to stronger labour force growth than employment growth. Consumer inflation is expected to be comparable to the national average. International Economy Weakens • The global economy weakened considerably in 2001, with a marked slowdown in the US, a stalled recovery in Japan and moderate growth in Europe and most emerging countries. The International Monetary Fund (IMF) now forecasts global growth for 2001 at 2.4%, down from the 4.7% increase in the previous year. A unique feature of the current slowdown is its global synchronicity, brought on by common shocks including increased oil prices; tight monetary policy that served to restrain capital investment; the bursting of the high tech bubble; and decreasing world trade, corporate profits, final domestic demand and consumer confidence. • Preliminary estimates show the US economy grew by 1.2% in 2001. The National Bureau of Economic Research determined that a US recession started in March, characterized by sharp decreases in business investment and inventories and compounded by the economic difficulties of its trading partners. The slowdown was intensified with the attacks of September 11th, quickening the pace of layoffs especially in the airline and travel sectors. Despite the softness in the job market, households remained a stabilizing force by taking advantage of favourable interest rates with housing and auto purchases. • In an effort to increase economic activity, the US Federal Reserve decreased rates 11 times in 2001, starting the year at 6.5% and ending off at 1.75%. This was complemented by fiscal policy that included tax cuts and a substantial spending package. • The Japanese economy contracted an estimated 0.4% in 2001. Weighed down by the global slowdown in IT, weak consumer confidence, slowing business investment and weak external demand - deflation continued to persist. Due to the high public debt and deflation, traditional fiscal and monetary policy levers were not accessible to alleviate Japan's difficulties. Instead, efforts to stimulate the economy focused on improving the efficiency of the public expenditure system and a continuance of structural reforms in corporations, credit cooperatives, regional banks and the insurance sector. Non-performing loans continue to hamper the financial sector. With a decade of sustained weak and negative growth, the patience of the other G7 economies is wearing thin. Concerns about Japanese authorities' ability and indeed desire to stimulate their lagging economy are growing. • Activity in the European Union (EU) waned in 2001 with modest growth of 1.6% anticipated, but still in advance of the growth rate expected in the US. With business confidence weakened, consumer spending was the mainstay of the economy, reflecting both continued employment growth and tax cuts in some countries. The European Central Bank eased monetary policy, but significant government budget deficits in many EU countries limited the scope of fiscal policy initiatives. The EU, originally thought to be somewhat isolated from the global economy, may prove to be more interconnected and therefore vulnerable to slowing economic conditions in other parts of the world. • Prospects for the global economy in 2002 are improving, but are heavily dependent upon an American recovery. In the US, the effects of expansionary monetary and fiscal policies are expected to encourage growth in the first half of 2002 and aid in a strong recovery in the latter half of the year. This will benefit world output through stronger exports and higher confidence. The IMF is calling for global growth of 2.4% in 2002. Economic growth is projected to increase in the US by 1.6% and the EU by 1.3%, and fall in Japan by 1.1%. Canadian Economy Slower • The combination of a faltering US economy and lagging high tech sector brought the Canadian economic engine to a halt in 2001, slowing to 1.5% real growth from the 4.6% posted in 2000 (on a provincial accounts basis). The events of September 11th served to confirm a global economic slowdown, with the manufacturing sector and specifically IT sectors leading the decline. Preliminary figures show that Canada avoided a technical recession in 2001, aided by monetary and fiscal stimulus. • In 2001, corporate profits before taxes declined 6.0%. Falling against the strengthening US currency, the Canadian dollar set record lows. Inflation in 2001 increased 2.6%, comparable to the 2.7% rise in 2000, and within the Bank of Canada's target range of one to three per cent. Excluding energy prices, the CPI rose 2.4%. The Bank of Canada, in concert with the US Federal Reserve, continued its easing stance by aggressively cutting its key policy interest rate target nine times in 2001, from 5.75% in January to 2.25% by the end of December. • Residential and non-residential building intentions were buoyed by the lower interest rates, as were existing housing sales and new construction. Builders took out $39.2 billion in building permits in 2001, just shy of the all-time high set in 1989. Construction intentions for housing broke an annual record, and non-residential permits hit a 12-year peak. • The pace of exports in 2001 continued its slowing trend from 2000 with declines in the auto and wood sectors due to a slower US economy. Energy and agriculture and fishing products advanced. Growth in merchandise exports continued to outstrip growth in imports. Fueling the economy was domestic consumer spending, supported by decreased income and capital taxes, pay equity settlements, health transfers and the medical equipment fund. • Employment increased 1.1% (or 167,100 jobs) in 2001, composed mainly of full-time jobs as part-time employment grew by only 30,000. The unemployment rate increased to 7.2% from 6.8% the previous year. • The extent of Canada's current economic weakness is expected to be short and shallow. The US recovery will be a primary factor in pulling Canada's economy out of its slowdown, along with stimulative monetary and fiscal policies offered up by the Bank of Canada and the federal and some provincial governments. Slightly positive growth is expected to appear early in 2002, gaining strength in the second half, with the year averaging about 1.8%. As the excess capacity in the economy disappears, the Bank of Canada will shift to a tighter monetary policy, likely by the summer. • Employment for 2002 is forecast to grow at a slower rate (+0.6%) than last year, with the unemployment rate increasing to 7.9%. Canada Economic Indicators Growth Rates, 2000 to 2002 Indicateurs économiques du Canada Taux de croissance de 2000 à 2002 2000 2001 20021 (percent change unless otherwise indicated) / (écart en pourcentage, à moins d'indication contraire) Gross Domestic Product (GDP) / Produit intérieur brut (PIB) 8.3 2.7 1.8 GDP (real) / PIB (réel) 4.6 1.5 1.8 Personal Income / Revenu personnel 6.1 3.8 2.6 Corporate Profits Before Taxes / Bénéfices des sociétés avant impôts 21.8 -6.0 -6.8 Employment / Emploi 2.6 1.1 0.6 Unemployment Rate (%) / Taux de chômage (%) 6.8 7.2 7.9 CPI / IPC 2.7 2.6 1.3 ______________ 1Projections / Prévisions Monetary Policy Active in 2001 • The Bank of Canada and US Federal Reserve took a very active stance regarding monetary policy in 2001. • With inflation in Canada falling, the Bank had room to cut its key policy rate nine times for a total drop of 350 basis points from January to December. • The events of September 11th led the Bank to take the unusual step of lowering its target for the overnight rate between scheduled announcement dates by 50 basis points in an effort to support consumer and business confidence after the attacks. • The Bank anticipates that the slack in the economy will dissipate by the second half of 2002 and will return to a rate of growth above potential. • The Canadian dollar had a difficult road in 2001. With a slowing world economy and dropping commodity prices, a flight to safety and liquidity by international investors favoured the US economy. The events of September 11th further burdened Canada's currency, as did the problems in Argentina. • The international opinion that the dollar is undervalued given Canada's fiscal and monetary health was a concern to both the Governor of the Bank of Canada and the federal Minister of Finance. Both visited the US investment community early in 2002 to promote Canada's positive economic and fiscal record in an effort to boost the lagging dollar. New Brunswick Economic Indicators Growth Rates, 1998 to 2002 Indicateurs économiques du Nouveau-Brunswick Taux de croissance de 1998 à 2002 1998 1999 2000 2001 20021 (percent change unless otherwise indicated) / (écart en pourcentage, à moins d'indication contraire) Economic Accounts / Comptes économiques Gross Domestic Product (GDP) / Produit intérieur brut (PIB) 4.1 6.3 5.5 1.8 1.6 Personal Expenditures / Dépenses de consommation 4.2 4.8 4.9 4.7 3.2 Government Current Expenditures / Dépenses publiques courantes 4.8 5.2 9.2 0.5 2.3 Capital Formation / Formation de capital 16.0 29.8 -3.4 -7.5 -0.3 GDP (real) / PIB (réel) 3.5 4.6 1.8 0.6 1.2 Income / Revenus Personal Income / Revenu personnel 4.4 5.3 5.2 3.3 1.0 Labour Income / Revenu du travail 4.6 6.9 6.8 4.4 1.0 Corporate Profits Before Taxes / Bénéfices des sociétés avant impôts -2.4 21.7 5.3 -23.4 4.2 Population and Labour Market / Population et marché du travail Population, Total2 / Population totale2 -0.1 0.1 0.1 0.2 0.1 Labour Force / Population active 1.7 1.1 1.6 1.3 0.8 Employment / Emploi 2.3 3.3 1.8 0.0 0.5 Unemployment Rate (%) / Taux de chômage (%) 12.2 10.2 10.0 11.2 11.5 Participation Rate (%) / Taux d'activité (%) 60.7 61.0 61.6 62.2 62.4 Other / Autre CPI / IPC 0.6 1.6 3.3 1.7 1.0 ______________ 1Projections / Prévisions 2As of July 1 / Au 1er juillet GDP Growth Slows in 2001 • The New Brunswick economy slowed markedly in 2001 due to the completion of major construction projects over the 1998 to 2000 period and the economic recession in the US, the province's main export destination. • Private sector forecasters estimated New Brunswick's real GDP growth in the 0.4% to 1.4% range. The Department of Finance estimated growth of 0.6%. • Business non-residential construction declined by an estimated 57.8%. Residential construction on the other hand, fuelled by low interest rates, had a strong year with housing starts increasing by 12.4%. • In general, service industries fared better than goods producing industries with the paper and allied, construction and mining sectors all reporting declines in 2001. The public sector also showed no growth. • World commodity prices started strong but declined throughout the year because of weakening demand, particularly in the US. Lumber prices, however, were already weak at the beginning of the year and surged momentarily when the US Department of Commerce announced countervailing and anti-dumping duties on Canadian imports of softwood lumber. • On the expenditure side, despite the end of major construction projects, the level of capital investment in New Brunswick is still the third highest on record. Wages and salaries growth led to an increase of personal expenditures on goods and services. See tables 4, 6, 7 and 8. GDP Growth Similar in 2002 • Private sector forecasters are expecting New Brunswick's real GDP growth in 2002 to be in the 0.7% to 2.0% range. The Department of Finance is forecasting growth of 1.2%. • Capital investment is anticipated to be similar to last year, with other major investment projects, such as the Irving deepwater liquid natural gas storage facilities at the Saint John port, the Coleson Cove power plant conversion to orimulsion and the Point Lepreau nuclear power plant refurbishment, still at least a year away. • With the uncertainty linked to the ongoing weakness of the US, economic activity is expected to progress at a snail's pace in the first half of 2002. The service sector is again expected to outperform the goods producing sector. • Slow growth in the US and Canada will serve to dampen growth in New Brunswick in the form of decreased demand for manufactured and natural resource products. An economic recovery, brought forth by multiple interest rate cuts from the Bank of Canada and the US Federal Reserve and tax cuts in 2001, is expected in the second half of 2002. Exports Growth Strong • In 2001, the value of New Brunswick's exports to foreign markets increased by 11.6%, mostly on the strength of refined petroleum in the first three quarters of the year. • While most sectors registered strong gains in 2001, the bulk of the increase can be attributed to energy products (+43.8%) where sales jumped by more than $1 billion to reach $3.4 billion, thus replacing forestry products as the main export commodity of New Brunswick. • Strong gains in industrial goods (+24.5%), machinery and equipment (+12.7%) and agriculture and fishing products (+8.7%) also contributed to the increase, which was partially offset by a 16.1% decline in forestry products. • Energy products (40.9%), forestry products (28.1%) and food products (16.4%) sectors constitute more than 85% of exports from the province. • Following the expiration of the Softwood Lumber Agreement, the US Department of Commerce launched two separate investigations to evaluate allegations by the US forest industry of government subsidies to Canadian forest companies and dumping on the US market. The Maritime Provinces were exempt from a 19.3% preliminary countervailing duty but not from a 12.6% anti-dumping duty imposed on Canadian exports of softwood lumber to the US. • About 89% of the total value of New Brunswick's exports is destined for the US market. Japan and the United Kingdom follow at 2% and 1%, respectively. See tables 34 and 35. Inflation Down • The consumer price index (CPI) for New Brunswick rose 1.7% in 2001, significantly below the previous year's increase of 3.3%. Rising energy prices, which greatly impacted the index in 2000, had less of an influence last year. • New Brunswick's inflation rate was well below the national average of 2.6%. • Consumer prices in the province rose in seven of the eight major components of the CPI. The greatest impact came from alcoholic beverages and tobacco products, which registered double-digit growth (+10.3%) due to increases in federal and provincial tobacco taxes. Transportation was the only component to report a decline from the previous year, down a slight 0.2%. The remaining components posted increases between 1.3% and 2.4%. • In 2002, the New Brunswick CPI is expected to increase 1%, comparable to the national average. See table 31. Retail Trade Growth Slows • Growth in retail trade slowed in 2001, increasing by 2.4% in New Brunswick. Retail sales per capita in the province were $9,339 in 2001, above the national average of $9,313. • Double-digit sales growth was recorded for New Brunswick's specialty food stores and household furniture and appliance stores. There were sales declines for shoe stores, general merchandise stores and other semi-durable goods stores. • New motor vehicle sales declined for the second year in a row. In 2001, the value of new vehicle sales decreased 7.9% while the number of new vehicles sold was down 6.4%. • Wholesale trade increased 2.0% in 2001 following growth of 6.8% the previous year. • The retail trade sector represents more than 6% of New Brunswick's GDP and wholesale trade makes up another 5%. • Developments for 2001 include Home Depot, Kent Home Improvement, Sears Furniture and Appliance, Wal-Mart, three American Eagle stores, Cleve's Source for Sports, Coop Country Store, Superstore, Home Hardware and a Sobeys store. Projects to be completed or started in 2002 involve Mark's Work Warehouse, Valu Village and Pier One. These developments are mainly concentrated in the Moncton area with a few in Saint John. See tables 11, 29 and 30. Wages and Salaries Continue to Increase • For 2001, New Brunswick wages and salaries rose 4.2%, matching the national increase for the second year in a row. Changes in earnings, as well as the level of employment, contribute to wages and salaries growth. • Growth was higher for the service sector (+5.1%) than the goods producing sector (+2.2%). • Eleven of the 13 major industry categories reported increases, with strongest growth in professional and personal services industries (+11.1%), information and cultural industries (+11.0%) and utilities (+6.6%). Declines were reported in public administration (-0.3%) and mining and oil and gas extraction (-8.1%). The decrease in public administration was related to pay equity payments made by the federal government in 2000. • More than 60% of wages and salaries are captured in the categories of manufacturing (14.3%), professional and personal services industries (13.6%), trade (13.0%), public administration (11.0%) and health care and social assistance (10.3%). • For 2001, average weekly earnings ranged from $259.60 in accommodation and food services, $486.31 in trade, $538.17 in health care and social assistance, $687.81 in manufacturing, $714.13 in public administration, to $802.24 in professional, scientific and technical services. Overall average weekly earnings were $591.23, up 1.1% from 2000, and represented 88.9% of the national average of $664.93. See tables 9 and 14. Employment Steady • The number of employed in New Brunswick remained at the same level (334,400) as a year ago. This followed positive growth in each of the last four years. Nationally, employment slowed to 1.1% in 2001, less than half of the previous year's growth of 2.6%. • Overall, provincial employment increased 1.4% for females and declined 1.2% for males. Part-time employment fell by 1,300 but was offset by a corresponding rise in the number employed full-time. Growth in full-time employment, which accounts for 85% of all jobs in New Brunswick, was due strictly to gains in the number of women employed. Conversely, all the part-time job losses were among women. • Two age groups registered employment gains from 2000, all in full-time jobs. Working youths 20-24 years of age and older adults aged 45-64 years, saw increases of 900 and 3,000, respectively. • The gap between the provincial and national participation rates continued to narrow. For the fifth consecutive year New Brunswick's participation rate increased, reaching 62.2%, its best performance since 1976. Nationally, the average stood at 66.0%. • Employment is projected to show an increase in 2002. See table 15. Service Sector Employment Higher • Job growth in New Brunswick was concentrated in the service sector with employment increasing by 3,600 in 2001. The goods producing sector suffered a corresponding loss, the first decline in this sector since 1996. • Four of the 11 service industries registered employment gains. Employment rose in management, administrative and other support (+3,200), accommodation and food services (+1,900), professional, scientific and technical services (+1,800), and finance, insurance, real estate and leasing (+100). Two industries, other services and public administration, endured the majority of job losses at 1,200 and 1,100, respectively. The remaining industries had employment declines under 1,000 each except for educational services, which was unchanged. • Employment fell in four of the five goods producing industries. The manufacturing and natural resources industries posted the most significant declines, down 2,100 and 1,200, respectively. Job losses were also evident in construction (-400) and agriculture (-100). Utilities employment rose by 300. • In 2001, the service sector employed 253,700 and the goods producing sector 80,700. See table 17. Unemployment Rate at 11.2% • Strong labour force growth combined with flat employment resulted in New Brunswick's unemployment rate increasing to 11.2% in 2001 after falling to 10.0% in 2000. Canada's unemployment rate jumped to 7.2% from 6.8% the previous year. • Provincial unemployment stood at 42,200, an increase of 4,900 from 2000. • The unemployment rate increased for both males and females in 2001, to 12.8% and 9.3%, respectively. Males, who comprise more than 61% of the unemployed in New Brunswick, saw their unemployment rate rise for the second consecutive year. • Unemployment rates rose for all age groups, with those aged 15-19 experiencing the largest increase. • The unemployment rate in 2002 is forecast to increase slightly. See table 15. Employment Gains Concentrated in Two Regions • Employment gains were realized in three regions of the province, Campbellton-Miramichi (+1,400), Moncton-Richibucto (+1,300) and Fredericton-Oromocto (+100). Two areas reported declines: the Saint John-St. Stephen area lost 2,500 jobs while the Edmundston-Woodstock area lost 300. • All regions of the province experienced deterioration in their unemployment rates. The Campbellton-Miramichi region, which maintains the highest rate (16.4% in 2001), recorded the smallest increase. • Labour force participation rose in only three regions, despite a rise in the working age population in all five regions. Campbellton-Miramichi, with the lowest participation rate among the regions, exhibited the largest increase (up 1.3 percentage points to 56.5%). The Saint John-St. Stephen area saw its participation rate decline to 62.7%, while the participation rate in the Edmundston-Woodstock area was unchanged. See table 16. Population Growth Increases • As of July 1, 2001, the provincial population was estimated at 757,077, a 0.2% rise from July 1, 2000. This rate was double the 0.1% growth in each of the two previous years, but still far behind the national rate of 1.0%. New Brunswick represents 2.4% of Canada's population. • Between July 1, 2000, and June 30, 2001, New Brunswick's population increased by 1,799, up from 872 during the previous 12-month period. • Growth was mainly the result of a lower net outflow to other provinces. Interprovincial migration showed that people leaving New Brunswick exceeded those coming to the province by only 81, compared to a net loss of 1,183 the previous year. • Increases in the number of immigrants and net non-permanent residents led to a sixth consecutive year of growth in the net international migration component. • With 92 fewer births and 202 more deaths in the province from the previous year, the natural increase fell to below 1,000, its lowest level ever. The number of births dropped to under 7,700, while the number of deaths rose to almost 6,700. • New Brunswick's population is projected to increase 0.1% in 2002. See tables 1 and 3. Population Continues to Age • The median age of New Brunswick's population reached 37.9 years in 2001, slightly above the national average of 37.2 years. • Younger age groups continue to exhibit a declining portion of the population, falling to 17.7% for children 0-14 years and 13.5% for youth aged 15-24 years. The concentration of young adults (those 25-34 years) has also decreased, from 17.3% ten years ago to 14.0% today. • Persons aged 35-49 years, including the youngest baby boomers, represented 24.7% of the total population. • The pre-senior group (those aged 50-64 years) is the fastest growing age group as its share increased to 17.0% in 2001 from 12.7% ten years ago. The oldest baby boomers, who are in their early fifties, are starting to impact the growth of this group. • The proportion of seniors continued to grow, with young seniors (65-79 years) comprising 9.6% of the total population and older seniors (80 years and over) making up 3.4%. See table 2. Capital Investment Third Highest Ever • Following the completion of major construction projects in the previous two years, capital investment in New Brunswick was $3.3 billion in 2001, a decrease of 16.9% from last year's level. Despite the sharp decline, this still registered as the third highest level on record. • Private sector capital investment, which represented 75.9% of total investment in 2001, decreased 18.8% to $2.5 billion, while public investment fell 10.2% to $787 million. Spending on construction decreased 25.0% to $1.8 billion and investment in machinery and equipment declined 4.8% to $1.5 billion. • Non-residential construction activity in New Brunswick dropped by 40.2% with the end of the Fredericton to Moncton four-lane highway project, the Saint John lateral natural gas pipeline and the Irving Oil refinery expansion. Private non-residential construction was mostly responsible for this decline with a 57.8% decrease over 2000, while public construction spending decreased 14.7%. • According to Canada Mortgage and Housing Corporation, housing starts in 2001 increased to 3,462, a gain of 12.4% and the highest level since 1993. • Construction industries account for approximately 5% of total GDP for New Brunswick. • For 2002, capital investment in New Brunswick is expected to be relatively strong and remain close to last year's level. See tables 11, 12, 13 and 27. Manufacturing Shipments Influenced by Petroleum Prices • New Brunswick's value of manufacturing shipments rose 7.3% in 2001, while overall Canadian shipments decreased 5.2%. Despite the strong growth, manufacturing employment declined 5.1% to 39,000. The sector accounts for about 15% of provincial GDP. • The group of miscellaneous industries1, which comprises almost half of the total value of shipments, increased by 28.6% in 2001, mainly due to strong prices for refined petroleum products in the first half of the year. Other important industries such as wood, pulp and paper and food products reported decreases. Excluding the miscellaneous industries, manufacturing shipments fell 8.8%. • The manufacturing sector got a boost from the opening of the Prelco glass factory ($8.8 million) and the expansions of IPL Plastics Inc. ($20 million) and Enseignes Imperial Signs. Despite the closure of Medina Mills, the textile industry saw solid growth in 2001 and further expansions of Atlantic Fine Yarns and Sunshine Mills were announced for 2002. • The global decline of the telecommunications industry in 2001 impacted ComDev Wireless, as 85 employees were laid off and the company was put up for sale. • With the anticipation of further weakness in world commodity prices important to New Brunswick, the value of manufacturing shipments for 2002 is expected to moderate. See tables 11, 17 and 26. 1 The miscellaneous group of industries comprises diverse small plants as well as large producers such as the Irving Oil refinery, the Saint John shipyard and Brunswick Mining and Smelting. Wood Products Remain Sluggish • Many events negatively affected the New Brunswick wood industry in 2001, with the value of wood products manufacturing shipments decreasing 1.5% from 2000. Despite this, the production of sawn lumber increased 4.9% in 2001, rising to 3.5 million cubic metres. Wood industries represent 3% of New Brunswick's GDP. • Demand in the US and Canada was strong, as shown by the 2.1% and 7.3% increases, respectively, in housing starts, which were encouraged by multiple interest rate cuts by the US Federal Reserve and the Bank of Canada. • Uncertainty following the end of the Softwood Lumber Agreement and the subsequent countervailing duty and anti-dumping duty imposed by the US Department of Commerce contributed to fluctuating prices in the North American lumber market. • The problems in the North American forestry industry rippled in New Brunswick with temporary shutdowns of various mills in both the lumber and pulp and paper industries. Some indefinite shutdowns of smaller sawmills were also reported. • Mergers and acquisitions were common in New Brunswick in 2001, with among others, UPM-Kymmene acquiring Smurfit-Stone Containers' sawmill in Bathurst, Nexfor acquiring the Juniper I-joist plant and Bowater merging with Alliance Forest Products. There was also a strike at the Juniper I-joist plant and fire destroyed the Nelson Forest Products sawmill in Miramichi. • The industry outlook is dependent on the resolution of the Canada-US softwood lumber dispute. Wood demand is expected to remain strong in 2002 as long as favourable interest rates remain for residential construction activity. See table 11 and 26. Paper and Allied Products Decline • The value of manufacturing shipments of paper and allied products declined by 18.2% in 2001 as North American market conditions deteriorated throughout the year. Pulp and paper manufacturing represents almost 4% of New Brunswick's GDP. • The average price for newsprint improved slightly (+3.8%) due to a strong performance in the first half of 2001. There was a downward trend later in the year as prices declined 6.7% and 10.6% in the third and fourth quarters, respectively, from the previous quarter. Pulp producers in North America, including UPM-Kymmene in Miramichi and St. Anne-Nackawic, took downtime and curtailed production throughout the year in an effort to stabilize prices and reduce inventories. The volume of pulpwood production declined 12.8% in 2001 to 3.7 million cubic metres. • The continuing decline in newsprint prices in 2001 is mostly due to the sharp drop in the demand for advertising in magazines and newspapers following the implosion of the dot.com sector in the US and the economic recession. September 11th contributed further to the price erosion with travel agencies and airline carriers pulling their ads as they adjusted to a new market dynamic and, in some cases, tried to avoid bankruptcy. • Increased demand and output of pulp and paper products will most likely have to wait until a general economic recovery, which is expected in the second half of 2002. However, with customers and mill inventories at record lows, any unexpected demand increase could send prices skyrocketing as printers and publishers engage in a bidding war until production catches up. Until then, producers will continue with production cutbacks and temporary shutdowns to avoid further price erosion. See table 11 and 26. Mining Production Steady • In 2001, the value of New Brunswick mineral production increased 2.2% to $789.2 million. The mining and oil and gas extraction industry represents about 2% of provincial GDP. • Despite low world metal prices, the value of production for the metals sector rose 8.0%. Noranda's Brunswick mine reported record metal production levels, mining an average of 9,863 tonnes of ore per day with a zinc-content recovery rate of nearly 88%. In October, Noranda closed its Bathurst exploration office as a cost-cutting move. The company has undertaken considerable exploration activity since the 1950s, but was unable to find economically viable deposits of any size. It is expected Brunswick will run out of mineable reserves by 2008. • The value of production in the non-metals sector was down 10.0%. With world prices for potash trending downward, about one-third of the workforce of 330 was laid off in November and part of December to reduce inventories. Several firms were active in oil and gas drilling projects in southeastern New Brunswick, including Corridor Resources, Columbia Natural Resources and EOG Resources Canada Inc. In the peat industry, a new provincial policy was announced to encourage further value added production. • The Province established a number of initiatives to improve and expand the viability of the mining industry, as recommended in a major study presented in 2000. In addition to the Prospector Development Program and the Junior Mining Assistance Program, there are two new initiatives to assist the exploration and mining industries: an 18% tax credit to companies that undertake advanced exploration and a new mine reclamation fund. The Province also plans to invest in two projects for gold and hydrocarbon exploration in New Brunswick. See tables 11 and 24. Utilities Stronger • For 2001, electric power generation in the province increased by 5.3%, while provincial usage declined 1.2%. Utilities industries (electric power, natural gas and water) represent over 4% of New Brunswick's GDP. • NB Power projects capital expenditures of $300 million for 2002-2003, compared to $140 million the previous year. The company has completed feasibility studies on three development projects: the refurbishment of the Coleson Cove and Point Lepreau generating stations, and an international transmission line and interconnection with Maine. Activities are progressing on regulatory approvals, engineering specifications and supplier negotiations. • As a result of the province's energy policy released last year, NB Power is working to address issues concerning an open access transmission tariff, a "standard offer service," rate proposals and the elimination of cross subsidies with customer classifications. • Bayside Power became fully operational in late 2001 as Westcoast Energy undertook the $180-million conversion of NB Power's oil-fired unit at Courtenay Bay to natural gas. The plant makes direct deliveries to NB Power during the winter season and sells power to the New England Power Pool market the remainder of the year. • Enbridge Gas New Brunswick continued developing the natural gas distribution system in the province. Six marketer firms are serving the Saint John, Moncton, Fredericton and St. George areas with emphasis on the large industrial and commercial customers. See tables 11 and 33. Technology and Communication Strengthen • Employment in technology and communication surpassed 40,000 in 2001 with growth above the provincial average at 13.0%. This group accounts for almost 8% of New Brunswick's GDP. • Some 90 customer contact centres employ about 15,000 people in the province. New jobs for 2001 were mainly due to CIBC, the Spiegel Group and Virtual-Agent Services. Recent announcements involving Rogers Communications, Moneris Solutions, Imperial Oil, ClientLogic and Connect North America point to continued growth for 2002. • The NRC Institute for Information Technology - e-Business initiative is progressing. Construction of the $7.5-million main facility in Fredericton got under way in 2001 with completion planned for mid-summer 2002. The institute will build research and working relationships with companies, universities and other partners across the province. • Aliant spent more than $200 million over the last two years to develop broadband Internet services and an interactive television system in New Brunswick. The company is also expanding its digital cellular service along the main highways. • Rogers AT&T Wireless expanded network coverage throughout the province in 2001 at a cost of $15 million. Rogers Television New Brunswick, a new local programming channel, was recently launched. Investment of $1.6 million was made in new equipment and resources for the cable network, which has stations in six cities. See tables 11 and 17. Transportation Sector Still Strong • Employment in the New Brunswick transportation sector in 2001 fell back to its previous high of 19,000. The sector accounts for 6% of total GDP. • Total tonnage at the port of Saint John was at a record level of 26 million tonnes in 2001, up 31.7% compared to last year. Declines in potash and forest products and stable container traffic were more than offset by an increase in petroleum products. There was also a strong cruise season with 53 calls and 88,000 passengers visiting the area. In 2001, the Port Authority announced plans to spend $14 million in its capital works and major maintenance program over five years and carried out facility improvements worth more than $5 million in the first year. • The port of Belledune handled over 2 million tonnes, a rise of 21.5% over 2000. There were significant increases in coal, lead concentrate and zinc concentrate. Capital investment of $3.2 million is planned for 2002. • The Greater Moncton Airport set a new record in 2001 by serving more than 400,000 customers, an increase of 11.4% over last year. Construction got under way on the $22.3-million new air terminal building and related infrastructure with completion planned for September 2002. • Construction began on the $9.5-million runway extension at the Greater Fredericton Airport and is to be finished in summer 2002. There are also plans for terminal renovations and an apron expansion with expected completion by March 2003. The $2-million project includes a new international arrivals gate. • The Saint John Airport Authority announced an expansion project worth $3.3 million. See tables 11 and 17. Food Services Growth Slows • In 2001, New Brunswick restaurant, caterer and tavern receipts increased 2.6% to $669.7 million, compared to the national increase of 6.6%. • Provincial hotels and other lodgings reported an average July-August occupancy rate of 75.5%, a decline of 3.5 percentage points from last year. At the same time this was well above the US and Nova Scotia occupancy rates where both experienced a 5-point decline. • Growth in employment and average weekly earnings for the accommodation and food services sector were each above the provincial average. Employment increased 8.5% to 24,300 in 2001 (representing 7.3% of total employment) and average weekly earnings grew 6.6%. • Accommodation and food services represents almost 3% of the provincial GDP, above each of the four primary sectors. • New Brunswick tourism revenue in 2001 is estimated at $900 million, a decrease of 2% from the previous year. The weakening of the North American economy and September 11th impacted the industry with overall visitation down 3%. While some attractions experienced declines, others including the Shippagan Aquarium and Marine Centre, Le Pays de la Sagouine and Fundy and Kouchibouguac National Parks had increases ranging from 6% to 21%. Total campsite sales at the 10 provincial parks increased 3% to just over 56,000. See tables 11, 14, 17 and 32. Primary Food Production Strong • Farm cash receipts in New Brunswick increased 10.2% to $402 million in 2001. Crop receipts were up 11.6% with strong growth in potato receipts of 20.0%. Livestock receipts rose 9.1%. Overall receipts benefited from higher production and better prices. • New Brunswick exported fish and fish products worth $883 million in 2001, an increase of 7.8% over 2000. This was mainly due to higher quantity and price for Atlantic salmon and higher quantity for lobster. • Overall landings in the commercial fisheries sector increased 2.1% to $177 million in 2000. Landings were higher for crab and shrimp. While prices remained much the same for most species, there was a slight increase for crab. • Sales of aquaculture products and services rose 23.4% in 2000 to $282 million. New Brunswick sales account for almost 41% of the national total, a close second to British Columbia. • The agriculture and fisheries industries account for almost 2% of New Brunswick's GDP. The food component of manufacturing industries represents another 2% of the total. Food producing industries make up about 16% of all provincial manufacturing shipments. • Farm cash receipts are expected to continue to grow in 2002. Diversification efforts will carry on in the fisheries and aquaculture industries. See tables 19, 22 and 26.