The New Brunswick Economy 1999 Published by: Department of Finance Province of New Brunswick P.O. Box 6000 Fredericton, New Brunswick E3B 5H1 Canada Internet: www.gnb.ca/finance February 1999 Cover: Communications New Brunswick (CNB 96628) Translation: Translation Bureau, Supply and Services Typesetting: Queen's Printer for New Brunswick Printing and Binding: Printing Services, Supply and Services ISBN 1-55236-167-5 ISSN 0548-4073 Printed in New Brunswick Table of Contents Page Summary 5 The International Economy 7 1998 Review 7 1999 Outlook 8 The Canadian Economy 10 1998 Review 10 1999 Outlook 12 The New Brunswick Economy 14 1998 Review 14 1999 Outlook 17 Industrial Review 20 Agriculture 20 Fishing 21 Forestry 23 Manufacturing 27 Mining 29 Construction 31 Service Industries 32 Conclusion 37 Statistical Tables 39 1998 Statistical Summary Bilan statistique de 1998 New Brunswick % Change ($ Million) 1998/1997 (unless stated) N.B. Canada Nouveau-Brunswick Écart (en %) (en millions de entre dollars, sauf 1998 et 1997 indication contraire) N.-B. Canada Output and Income / Production et revenus GDP / PIB Current $ / (en dollars courants) 17,461.0 2.3 2.6 Constant $ (1992) / (en dollars constants de 1992) 16,040.0 2.1 2.9 Personal Income / Revenu personnel 15,195.0 2.6 3.1 Capital Formation / Formation de capital 2,744.0 7.0 5.4 Exports (Jan.-Nov.) / Exportations (janv.-nov.) 4,875.0 -2.4 5.3 Retail Trade (Jan.-Nov.) / Commerce de détail (janv.-nov.) 5,326.4 6.6 4.5 Population and Labour Force / Population et population active Total Population (July 1) ('000) / Population totale au 1er juillet ('000) 752.4 -0.1 1.0 Labour Force / Population active ('000) 368.9 1.8 1.8 Employment / Emploi ('000) 324.2 2.6 2.8 Unemployment / Chômage ('000) 44.7 -3.7 -7.7 Unemployment Rate / Taux de chômage (%) 12.1 .. .. Participation Rate / Taux d'activité (%) 60.9 .. .. Industrial / Secteurs d'activité Farm Cash Receipts (Jan.-Sept.) / Recettes monétaires agricoles (janv.-sept.) 245.1 10.0 -2.6 Housing Starts (number) / Mises en chantier (nombre) 2,447 -9.4 -6.5 Manufacturing Shipments (Jan.-Nov.) / Livraisons de biens de fabrication (janv.-nov.) 7,349.3 -3.6 2.8 CPI (1992 = 100) / IPC (1992 = 100) 107.5 0.6 0.9 Sawn Lumber Production (Jan.-Nov.) ('000m3) / Production de bois d'oeuvre (janv.-nov.) ('000m3) 3,189.3 12.1 0.3 Pulpwood Production (Jan.-Oct.) ('000m3) / Production de bois à pâte (janv.-oct.) ('000m3) 3,746.0 -1.0 -9.5 Summary Economic growth in the North American economies continued at a strong pace in 1998, although Canada showed weaker growth in the latter part of the year due to the world financial crisis and lower commodity prices. In New Brunswick, strong growth in the construction, trade, communications, tourism, business services and technology sectors resulted in real GDP increasing 2.1%, compared to 1.1% in 1997. The provincial economy benefited from numerous business start ups and expansion and diversification of existing operations in the manufacturing and service sectors. Growth in retail trade, motor vehicle sales, farm cash receipts and sawn lumber production surpassed national rates. Exports were down modestly, mainly due to low world commodity prices, although forestry products and machinery and equipment foreign shipments increased significantly. The construction industry saw increased activity on the Fredericton-Moncton highway and Sable Island natural gas pipeline. Tourism revenue reached a new high. The rise in the Consumer Price Index was below the national increase. Personal income benefited from increased employment and labour income. Provincial employment recorded its strongest performance in a decade, increasing 2.6% to 324,200. All of the employment gains were in full-time jobs. With slower growth in the labour force, the unemployment rate dropped to 12.1% from 12.8% in 1997. The participation rate rose for the second year in a row to reach a record level of 60.9%. For 1999, real economic growth in North America is expected to moderate. While many financial and economic fundamentals are supportive, additional negative impacts from the world financial system could slow growth in the U.S. and Canada. Projected real growth for New Brunswick is 2.3%. Increased construction activity will result from on going projects in the transportation and energy sectors and the expansion of the Irving Oil refinery. Diversification efforts in agriculture, fishing, forestry, manufacturing and the service sector will continue. World prices for raw material commodities are anticipated to stabilize and possibly show limited improvement. The provincial unemployment rate is expected to trend lower as employment increases faster than the labour force. Consumer inflation will be comparable to the national average. An additional development, the 8th Francophonie Summit will be held in Moncton this September with international participation of 52 French-speaking countries and governments. Several activities are planned in the months leading up to the summit. They include international conferences such as the Francophone Business Forum and Francophone Press, plus round tables on youth, youth projects and contests. The International Economy 1998 Review Following good performances in the first half of 1998, the major industrial economies of North America and Europe were impacted by the turbulence in international financial markets caused by domestic and monetary policies in the emerging Asian economies, banking sector problems in Japan and Latin America, and the financial collapse in Russia. The combination of these problems led to a marked downturn in equity, oil and commodity markets that only started to turn around by year-end. As a result, world economic growth slowed from about 4% in 1997 to approximately 2% in 1998. Both short and longer-term interest rates decreased in most countries in an effort to boost domestic demand and steady volatile financial markets. In countries where commodities were major items of trade (like Canada), exchange rates declined against the United States dollar. Public sector fiscal consolidation continued in North America and Europe, but was offset somewhat by stimulative policies in Japan. According to the Organization for Economic Co-operation and Development (OECD), economic growth in the United States, Canada and the United Kingdom continued at a strong pace. Activity in continental Europe accelerated as they moved towards monetary union and a common currency in 1999, with unemployment rates in Germany, France and Italy down modestly from peaks reached in 1997. For Japan, the economy continued to weaken despite public sector stimulation programs and the commencement of structural reform in the troubled banking industry. Inflation among the industrialized countries continued the slowing trend of the 1990's and averaged just over 1%. Growth in employment was mixed; increasing strongly in Canada, the U.S. and France, and more modestly in the U.K. and the rest of Europe, while falling sharply in Japan. As a result, only Japan among the seven major industrialized economies reported an increased annual unemployment rate. Fuelled by personal consumption, the U.S. economy maintained its strong pace of recent years, increasing at about 3.5% for the fourth time in the last five years. Tightening labour markets (unemployment dropped to 4.3% in December) appeared to have little impact on domestic inflation with consumer prices running below 2%. As well, lower oil and industrial commodity prices and a stronger U.S. currency internationally, served to weaken inflation. The GDP price deflator, a broader measure of price inflation in the economy, increased at its lowest level in over thirty years, at about 1%. The Asian crisis did exert a negative impact on foreign exports, and with imports soaring on stronger domestic demand, the trade deficit deteriorated markedly. The Federal Reserve acted to loosen monetary policy to extend the expansion by encouraging access to capital for consumers and business. 1999 Outlook As 1999 begins, signs of an impending slowdown in North America and Europe are evident. However, the outlook for the United States, Canada and the European countries joining in the new European single currency is for growth at more sustainable levels in the medium-term. The Euro countries include eleven members that began the European Economic and Monetary Union on January 1, 1999; namely Germany, France, Italy, Austria, Belgium, Finland, Ireland, Luxembourg, Netherlands, Portugal and Spain. The new currency is anticipated to make the economic union work more smoothly and help spur industrial investment. In North America, consumer-driven growth is anticipated to moderate, leading to increases in real growth of 2.0% to 2.5%. East Asian countries will continue to be negatively affected by financial problems, but appear to have passed the crisis point. For Japan, significant public sector fiscal stimulus and stabilization in the rest of Asia should have positive effects on the economy and employment. The impacts of the millenium bug on the world economy are difficult to estimate. The most negative scenario is that many computer and other date-sensitive technological systems will not operate correctly starting January 1, 2000. To mitigate possible interruptions, both the public and private sectors in the world economy have been investing in year 2000-compliant equipment and testing existing systems for problems. According to the OECD's December Outlook for 1999, only Italy and Japan among the seven major industrialized countries are expected to report stronger economic growth, with all countries experiencing an upturn in 2000. Inflation should be in the same range as the previous year, while most countries report stable, if not modest reductions, in unemployment. Consensus growth for the U.S. economy is in the range of 2.0% to 2.5%, depending on the continued strength of the consumer sector. With consumer confidence peaking in mid-1998 and personal savings rates dropping considerably, the current level of consumption may not be sustainable over the medium-term. The Federal Reserve can be expected to move quickly to avert any perceived problems with credit availability for both consumers and business. Should the problems of the East Asian countries intensify, the U.S. could report a deeper slowdown as exports to that region decline further. The unemployment rate is expected to edge upward towards 5.0%, while domestic inflation stabilizes modestly above the 1998 level. The Canadian Economy 1998 Review For the second consecutive year, Canada posted one of the better economic performances among the seven major industrialized countries. Consumer spending and business investment in technology, machinery and equipment continued to spark growth, with the public sector making a modest contribution for the first time since 1992. However, due to declining oil and commodity prices and the Asian crisis, weaker activity was evident in some industrial sectors in the latter half of the year. Real Gross Domestic Product (GDP) increased strongly from the first quarter of 1997 to mid-1998, before displaying a slowing trend in the third quarter. In the earlier part of the decade, Canadian economic growth was led by business investment and exports, with little contribution from consumers or the public sector. Starting in 1997, growth became more balanced with consumer spending providing the strongest boost as employment built momentum, interest rates fell to more favourable levels and consumer confidence rose rapidly. However, the world financial crisis and the resulting drop in raw material commodity prices impacted exports to Asia and weakened consumer confidence in the second half of 1998. For the full year, real GDP growth of 2.9% is expected, compared to 3.8% in 1997. With employment up significantly, personal income increased at the strongest rate since 1995, at about 3.3%. Consumer spending grew markedly faster than income, leading to a draw down on savings and a further increase in household debt levels. Personal savings have fallen as a percent of income after direct taxes, from 5.5% in the third quarter of 1996 to a negative 0.8% in the third quarter of 1998. Compared to increases of 264,400 and 170,700, respectively in the previous two years, employment rose 385,800 (or 2.8%), the strongest growth in a decade. The unemployment rate has been trending downward since mid-1996 and averaged 8.3%, the lowest rate since 1990. Following three years of stagnation, the labour force participation rate increased from 64.8% in 1997 to 65.1%. All provinces had higher employment levels, with only British Columbia reporting an increased unemployment rate. Inflation continued at the lower boundary of the Bank of Canada guidelines during 1998, with the increase in the Consumer Price Index, at 0.9%, the lowest since 1994. Pressure on prices was weakened by a sharp decline in most raw material prices which translated into essentially no change in prices for most manufactured goods. At the industrial level, additional capacity coming on stream coupled with a slight decrease in output dropped production capacity use in the second and third quarters. Industries operated at 83.5% of capacity in the July-September period, down 0.6% from the previous quarter. This level was 3.3 percentage points below the 86.8% peak recorded during the 1988 economic expansion. Despite the increase in employment, wage inflation was muted. According to Labour Canada, major collective bargaining wage settlements averaged 1.7% in the first half of the year, comparable to 1997 but in advance of the 0.9% of 1995 and 1996. Settlements for both the public and private sectors were similar. The severe financial problems of East Asia, Japan, Brazil and Russia impacted commodity prices and equity markets worldwide in late 1997 and 1998, with the resulting uncertainty leading to a marked appreciation of the U.S. dollar. With Canada seen internationally as having a commodity-based economy with a high dependence on external trade, downward pressure on the Canadian currency was inevitable. The dollar began the year valued at about 70 cents U.S., before declining to a record low of 63.3 cents in late August. The Bank of Canada raised its Bank Rate from 5.0% to 6.0% to help stabilize the currency and the dollar gradually appreciated the rest of the year, closing 1998 at 64.4 cents. In early 1999, the dollar has shown more strength, rising to over 66 cents by mid-January. The increase in the dollar in the last quarter allowed the Bank of Canada to lower its Bank Rate back to 5.25% by year-end, matching the interest rate reductions undertaken by the Federal Reserve Bank in the U.S. The Canadian prime lending rate (6.75%) continues to be about a full percentage point below the U.S. prime. Most key economic series generally pointed towards a slowdown in the latter part of 1998. Indicators such as retail sales, average weekly earnings, manufacturing shipments, wages and salaries, building permits, and new auto sales all posted growth, but at slower rates than the previous year. The Statistics Canada Composite Index, a leading indicator for the economy, reported only marginal gains after mid-year. Excluding the negative impact of the stock market, however, growth in the other components was more encouraging. The monthly estimate of GDP by industry, while generally maintaining an upward trend, slackened considerably from 1997 with weakness concentrated in the goods-producing sector. 1999 Outlook With the external economic environment forecast to weaken in 1999, the Canadian economy can also be expected to report a more modest performance than in the previous two years. Many of the financial and economic fundamentals that provided impetus for growth in 1997 and 1998 are still evident heading into 1999; increasing employment opportunities, stable inflation, an accommodative monetary policy, a competitive Canadian currency, growth in the U.S., and continued public sector fiscal stabilization. However, additional negative impacts from the world financial system could act to further weaken the U.S. economy and, ultimately lead to even slower growth in Canada. With the U.S. the recipient of nearly 85% of Canadian exports, the health of their economy is of major concern. For the full year, growth should match the U.S. in the 2.0% to 2.5% range. On a provincial basis, the economies of Newfoundland and Ontario will report the strongest performances, with most others near the national average. Employment increases should be more modest than in 1998, with the unemployment rate continuing a downward trend. Inflation is expected to remain in the mid-range of the Bank of Canada targets. World prices for raw material commodities are anticipated to stabilize and move modestly upwards. Monetary policy in the U.S. is expected to become more accommodative if the situation warrants, leading to the possible downward movement of Canadian rates. However, should external financial conditions deteriorate and the Canadian dollar fall in value internationally, the Bank of Canada may be forced to raise domestic interest rates. At best, only modest appreciation in the dollar can be expected unless there is a strong recovery in commodity prices. Canada Economic Indicators Growth Rates, 1997 to 1999 Indicateurs économique du Canada Taux de croissance de 1997 à 1999 1997 1998 19991 (percent change unless indicated) / (écart en pourcentage, à moins d'indication contraire) Gross Domestic Product (GDP) / Produit intérieur brut (PIB) 4.5 2.6 3.3 GDP (real) / PIB (réel) 3.8 2.9 2.1 Personal Income / Revenu personnel 2.9 3.3 3.4 Corporate Profits Before Taxes / Bénéfices des sociétés avant impôts 13.3 -6.5 1.0 Consumer Price Index / Indice des prix à la consommation 1.6 0.9 1.5 Employment / Emploi 1.9 2.8 1.9 Unemployment Rate (%) / Taux de chômage (%) 9.2 8.3 8.1 U.S. GDP (real) / É.-U. PIB (réel) 3.9 3.4 2.3 ________________ 1Projections / Prévisions The New Brunswick Economy 1998 Review Introduction In 1998, the New Brunswick economy strengthened as major construction projects in the transportation and energy sectors fuelled growth in the province, leading to an estimated increase of 2.1% in real GDP, compared to an increase of 1.1% in 1997. Besides the construction industry, strong growth was also registered in the province's trade, communications, tourism, business services, and information technology sectors. New Brunswick's service-producing industries are estimated to have posted stronger growth in 1998 than the province's goods-producing industries, while the public sector is expected to show positive growth. Gross Domestic Product Gross Domestic Product at market prices is estimated to have increased by 2.3%, following growth of 2.1% in 1997. Labour income led the way last year, while corporate profits and interest and miscellaneous investment income declined due to low world commodity prices, declining interest rates, and volatile financial markets. Increased labour income also impacted positively on total personal income, as did a rise in government transfer payments to persons following several years of weakness. Total personal income is estimated to have grown 2.6% in 1998, a significant increase from 1.8% growth in 1997. On the expenditure side of the accounts, personal expenditures on goods and services rose by an estimated 4.7% in nominal terms, or by a strong 3.6% after adjustment for inflation. A reflection of government efforts to restrain expenditures, current spending on goods and services1 increased only marginally. Following a drop in 1997 as major construction projects wound down, capital investment by business and government rebounded strongly in 1998, rising 7.0%. Exports Based on estimates for the first 11 months of the year, the value of foreign exports from New Brunswick declined 2.4% in 1998, with most of the drop attributable to large declines in exports of energy products and industrial goods. The weakness in these areas is mainly due to low world commodity prices, which lowers the dollar value of these export products. Among our other major exports, forestry products were up significantly on the year, rising 16.6%, while machinery and equipment increased 21.2%. Exports of agricultural and fishing products dropped slightly during the year. As the Canadian dollar trades at historical lows, the United States continues to be New Brunswick's major foreign trading partner, the recipient of more than 80% of our foreign trade, followed by Japan and Brazil, each with approximately 4% of the total. Depressed commodity prices coupled with a low Canadian dollar have demonstrated the importance of the U.S. economy to New Brunswick's exports over the past few years. Prices The Consumer Price Index (CPI) for New Brunswick increased 0.6% in 1998, down significantly from the previous year's rate of 1.9% and below the national increase of 0.9%. This marks the third time in the last four years that consumer inflation was below the Canadian average. Consumer prices in the province rose in seven of the eight major components of the CPI, with alcoholic beverages and tobacco products registering the largest gain (up 3.5%). Transportation prices declined for the first time since 1987. Labour Force New Brunswick's labour force increased by 6,500 (1.8%) to reach 368,900 in 1998. The provincial participation rate rose for the second consecutive year to reach a record high of 60.9%. The national rate stood at 65.1%, a 0.3 percentage point increase from the previous year. The participation rate for males in New Brunswick was unchanged at 67.4%, while the rate for females achieved a historic high of 54.7%. Employment gains were recognized in all provinces for the second year in a row. New Brunswick enjoyed the highest rate of growth among the provinces (4.0%) in the last quarter of 1998. Annual employment rose by 8,100 (or 2.6%) to 324,200, exceeding the previous year's high of 316,100. New Brunswick has not seen a gain of this magnitude since 1988. Women accounted for the majority of this growth, rising by 6,700 (4.7%). All of the employment gains were registered in full-time jobs, with nearly 90% by women. Full-time employment, which comprised 84% of all jobs in New Brunswick, increased by 9,200 while part-time employment fell by 900. Employment advanced for all age groups from the previous year. The number of working youth (15-24 year olds) increased for the first time since 1995, up 2,700 (or 5.6%). Nationally, the total number of employed increased by 2.8%. Four of the nine industry groups recorded employment increases in 1998. The community, business and personal services sector displayed the largest increase among the industry groups (9,600). Gains were also realized in manufacturing (2,100), construction (1,500) and, to a lesser extent, agriculture (100). Employment declines were evident in the remaining industries, with other primary, transportation, communication and other utilities and the trade sector posting the most significant job losses (1,200 each). With employment growth outpacing labour force growth, the number of unemployed in the province fell by 1,700 to 44,700. Nationally, unemployment dropped by 7.7% to its lowest level since 1990. New Brunswick's seasonally adjusted unemployment rate stabilized in the latter half of 1998 after deteriorating in the first half. The annual rate dropped by 0.7 percentage points from the previous year to 12.1%. Canada's unemployment rate was pushed down to 8.3%, the fourth consecutive year of single digits and the lowest rate in eight years. Unemployment levels and rates for males and females in New Brunswick decreased from the previous year. With the exception of older adults (45-64 year olds), unemployment rates declined for all age groups. The consistently high unemployment rate for 15-19 year olds reported the largest drop. A shrinking labour force coupled with larger employment declines caused the unemployment rate in the Northeast region of the province to rise, the only area to experience a deterioration from 1997. In the remaining four regions, the unemployment rates declined due to strong employment increases combined with weaker labour force growth. Population As of July 1, 1998, New Brunswick's population was estimated at 752,351, a decline of 0.1% from a year earlier. National population growth was 1.0%. In the 12 months ending June 30, 1998, the number of births for New Brunswick dropped to 7,800, while the number of deaths was stable at 6,000. As a result, the natural increase of the population fell to its lowest level ever (1,800). The main factor in the lack of overall population growth was migration, with a net loss of 2,800 people between New Brunswick and other jurisdictions. The median age of the province's population reached 36.5 years in 1998, slightly above the national average. Population distribution continued to fall in the younger age groups, to 18.6% for children 0-14 years and 21.0% for persons aged 15-29 years. While 32.2% of the population was aged 30-49 years, this group declined for the second year in a row. The older age groups showed increasing shares, 15.3% for pre-seniors 50-64 years, 9.7% for younger seniors 65-79 years and 3.2% for older seniors 80 years and over. The oldest baby boomers, in their early fifties, are starting to impact the growth of the pre-seniors group. 1999 Outlook The current economic expansion in New Brunswick is expected to accelerate its pace in 1999 as the economy continues its diversification and major projects in the transportation and energy sectors enter their peak years. Projected real GDP growth in New Brunswick, at 2.3% for 1999, will be similar to the growth rates of the U.S. and Canadian economies. All industries, with the exception of the mining sector, should see positive growth in New Brunswick. The construction industry in particular will see increased activity as work escalates on the Fredericton to Moncton four-lane highway project and the natural gas pipeline to the U.S. northeast. A $750 million expansion at the Irving Oil refinery in Saint John and the possible building of a new $200 million natural gas-fired power plant in Belledune will also benefit the construction industry, as well as give the provincial economy an added boost in 1999 and over the next several years. Nominal Gross Domestic Product is expected to increase by 3.7% this year, stimulated by a stronger performance from wages and salaries and modest recoveries in corporate profits and interest and miscellaneous investment income. Personal income growth will also benefit from stronger labour income as well as continued growth in government transfer payments to persons. Personal expenditures on consumer goods and services are expected to rise 3.4% in nominal terms in 1999, following a strong performance last year. Government current expenditures on goods and services will rise only fractionally in nominal terms and decline slightly once adjusted for inflation. Total capital investment by government, business and individuals is estimated to increase 8.6% in 1999. For this year, employment is projected to rise by 1.6%, in advance of the 1.1% increase in the labour force. As a result, New Brunswick's unemployment rate would decline from 12.1% to 11.7%. Regarding inflation, the Consumer Price Index is expected to increase by 1.5% in 1999, following a rise of 0.6% in 1998. New Brunswick Economic Indicators Growth Rates, 1995 to 1999 Indicateurs économiques du Nouveau-Brunswick Taux de croissance de 1995 à 1999 1995 1996 1997 1998 19991 (percent change unless indicated) / (écart en pourcentage, à moins d'indication contraire) Economic Accounts / Comptes économiques Gross Domestic Product (GDP) / Produit intérieur brut (PIB) 6.3 0.0 2.1 2.3 3.7 Personal Expenditures / Dépenses de consommation 2.8 3.9 4.1 4.7 3.4 Government Current Expenditures / Dépenses publiques courantes -1.9 0.5 0.3 0.5 0.6 Capital Formation / Formation de capital 10.7 9.8 -8.9 7.0 8.6 GDP (real) / PIB (réel) 1.9 1.7 1.1 2.1 2.3 Income / Revenus Personal Income / Revenu personnel 3.6 1.5 1.8 2.6 3.9 Labour Income / Revenu du travail 4.0 1.3 3.0 3.3 3.4 Corporate Profits Before Taxes / Bénéfices des sociétés avant impôts 29.9 -13.4 11.0 -13.8 4.3 Population and Labour Market / Population et marché du travail Population, Total2 / Population totale2 0.1 0.2 0.0 -0.1 0.0 Labour Force / Population active 1.0 -0.1 2.3 1.8 1.1 Employment / Emploi 2.1 -0.3 1.1 2.6 1.6 Unemployment Rate (%) / Taux de chômage (%) 11.5 11.7 12.8 12.1 11.7 Participation Rate (%) / Taux d'activité (%) 59.3 59.0 60.1 60.9 61.3 Other / Autre CPI / IPC 1.6 1.5 1.9 0.6 1.5 ______________ 1Projections / Prévisions 2As of July 1 / Au 1er juillet Industrial Review Agriculture Receipts from New Brunswick farming operations increased 10.0% in the first three quarters of 1998 and seem headed for a record level. Nationally, receipts declined 2.6%. Crops receipts, the largest component, rose 26.7%. Potato receipts, comprising 60% of total crops, increased 47.4%, while fruits were up 46.8%. For potatoes, approximately 57,250 acres were in production in 1998, with good yields reported for most varieties. For the livestock and products sector, receipts increased 2.6%, with weakness in hog prices offset by marked increases in cattle, sheep and poultry revenues. Assistance to farmers from stabilization and other government programs dropped sharply for the second consecutive year with the removal of federal transportation subsidies. For 1998, net income to farmers is expected to increase over the previous year. Over the last several years, provincial government programs were instituted to help the agriculture industry expand and diversify by increasing production of cattle, hogs, vegetables and fruits such as cranberries and blueberries. The Farm Credit Corporation in July approved a financial package to make it more affordable for New Brunswick farmers to develop additional land for crop production. The package provides a principal deferral for up to 36 months on loans to farmers financing land development under the Province's Land Stewardship Program, designed to cover land clearing, drainage, soil conservation and irrigation water sourcing. Emerging markets for blueberries in Asia have shown great potential. As well, 68 acres of commercial cranberry beds were harvested in 1998, with 48 acres planted during the year and 100 additional acres scheduled for planting in 1999. Since 1994, the Agricultural Development Board has approved 12 perennial Crop Establishment Loans to assist with the development of close to 330 acres of cranberry beds. Another new product, wild ginseng is now being planted at 65 sites in central New Brunswick. The roots of the plant are especially in demand in Asia as a herbal tonic. The provincial government has made available $1 million in a combination of loans, principal deferrals and loan guarantees to hog farmers battling a severe drop in prices for their products. Looking at self-sufficiency in forage for livestock, the province's grain harvest in 1998 was the largest since 1962 at about 100,000 tonnes. To assist the development, promotion and tourism potential of local farmer's markets, the provincial government in June unveiled the Farmer's Market Development Strategy. The program will provide training sessions on food safety, merchandising and promotion to farmer's market vendors and hopes to increase the number of vendors by 30% in the first year. The agriculture industry is also looking at expanding markets outside the province. An agreement was signed by the provincial government and a delegation from Brazil in August for the sharing of information on potato production and identifying areas of potential cooperation in the dairy sector. In October, an agreement was signed by Canada and Mexico to again allow Canadian seed potatoes access to the Mexican market. This was particularly good news for New Brunswick exporters, who comprised 60% of the export market in Mexico in 1996-97 before a dispute over inspection procedures led to a cessation of trade. In an effort to attract immigrant farmers from Europe, the provincial government launched a campaign to promote the province as a destination for establishing their agricultural operations. A video translated into six languages was produced as a promotional tool. For 1999, farm cash receipts and income for New Brunswick farmers are forecast to rise from 1998. The industry will continue to diversify into new products and improve value-added for existing ones, while exploring external markets for additional opportunities. Fishing For the second consecutive year, New Brunswick's commercial fishing industry experienced a decline. Preliminary landings for the snow crab fishing season were 6,719 tonnes, a 25% decrease over the previous year. In the lobster fishery, landings were down slightly in the Gulf of St. Lawrence, but prices were higher than in 1997. Preliminary data indicate lobster catches in the Bay of Fundy were also lower, while herring landings in the Gulf declined by 24%. In the Scotia Fundy area, the herring quota increased to 95,000 metric tonnes, a 50% increase from 1997. New Brunswick herring landings in the Bay of Fundy were 21% higher, totaling 37,242 tonnes in 1998. New Brunswick's aquaculture sector declined in 1998 due to a disease problem. Infectious Salmon Anemia (ISA) has caused mortality on fish farms and important revenue losses for two consecutive years. In 1998, a comprehensive management program was implemented which appears to be achieving its objectives. The culture of Atlantic salmon represents the majority of aquaculture production in the province, with other species such as oysters, mussels, Arctic char, trout and eel contributing to the overall production output. The industry also continued to face fierce competition on international markets with the price of salmon dropping due to global production increases. Total New Brunswick Atlantic salmon production was estimated to be 14,232 metric tonnes, valued at $106 million. The province pursued its efforts in species diversification with projects designed to develop methods for culturing candidate species and accelerating their commercialization. These efforts were focused on halibut, haddock, winter flounder, giant sea scallops, bar clams, quahogs and the soft-shell clam. The industry also continued to assess opportunities for enhancing gonad production (roe) in sea urchins. This product experiences strong demand on the Japanese fish and seafood market. Looking at the seafood processing sector, the industry continued to aggressively pursue new markets through trade show participation, foreign buyer missions, and special promotions on targeted markets. A number of important investments were made which further demonstrates the growth in value-added processing. Some of these investments during the past year included the opening of a new state-of-the-art salmon processing facility in St. George, while a Scoudouc processing plant specializing in frozen seafood and other prepared meals became fully operational. A joint venture project in Cap-Pele with a U.S. partner resulted in a new value-added mussel operation, and a similar joint venture was initiated in the Acadian Peninsula for the processing of value-added herring products. A partnership between a Lamèque company and a French organization, which combines value-added processing with raw material imports, was also initiated. The preceding investment initiatives have created in excess of 150 full-time jobs over the past two years. Other important projects with raw material imports are currently being developed with the purpose of processing species such as red crab, mussels, groundfish, lobster, herring, mackerel, snow crab and rock crab. New Brunswick continued to post impressive export numbers during the past year despite a drop in prices. Fish and seafood exports for 1997 reached $561 million, an 8% increase from the previous year. Preliminary fishery product exports during the first nine months of 1998 show a 3% decrease in value but a 4% increase in volume over the previous year. Exports to the United States during the same period in 1998 reached 44,416 metric tonnes valued at $339 million, increases of 18% and 10% respectively, while the volume and value of exports to Japan for the same period were 4,649 metric tonnes valued at $41 million, decreases of 38% and 45% respectively over 1997. The Japanese were more selective in their purchases due to the devaluation of the yen and the economic crisis in Asia, events which negatively affected New Brunswick's second most important seafood market. The New Brunswick fish processing industry continues to perform relatively well in highly competitive international markets, while often facing declining resources in several species and needing to adapt to various regulatory changes to maintain access to key markets. In recent years, industry representatives have developed raw material procurement networks, which enable the processing sector to extend processing activity beyond local resources and seasons. Combined with a serious effort in value-added initiatives and new packaging and presentation concepts, this ensures the industry will maintain its competitive position on world markets. Forestry The province's forest-related industries posted another solid year of growth despite weak prices affecting both the wood products and paper and allied products industries. The fall of the Canadian dollar and the continued strength of the U.S. economy helped New Brunswick forestry companies survive these difficult market conditions as most of the province's forestry products are sold in the American market. The value of shipments from the wood products industry rose by an estimated 8.4% during the first 11 months of 1998 following a similar increase in 1997. Production of sawn lumber in the province remained strong, increasing 12.1%. Lumber prices remained in a depressed state in 1998, ending the year at the same level as 1997, while oriented strand board (OSB) and plywood prices both rose during the year, with OSB prices at record highs towards late summer. Although weak Asian demand caused an oversupply of lumber in the market, demand has remained strong as U.S. housing starts rose 9.6% in 1998. The manufacturing of value-added wood products continues to be important to the province's forestry industry, diversifying production and making the industry less susceptible to market conditions for lumber. Some of the larger projects undertaken or announced in 1998 include a $7.25 million expansion by West-Wood Industries of Scoudouc, the new operator of the former Lock-Wood plant, enabling the company to produce value-added wood products; a $30 million expansion by Flakeboard Company Ltd. of St. Stephen that will double production of the company's high density fibreboard product, with the expectation of 55 new jobs; and the opening of a new $10 million sawmill and hardwood processing facility in Minto by HTM Industries Inc., planning to employ 72 people once in full production. Other projects include a $4.5 million expansion by Atlantic Pressure Treating Ltd. of Beaverdam, New Brunswick's only producer of pressure-treated wood products, which should lead to the creation of 65 jobs; a $3.1 million expansion by Veneer Products of NB in Napadogan to produce a higher grade of veneer, expecting 10 new jobs; and a $1 million expansion project by Groupe Savoie Inc. of Saint-Quentin that is anticipated to create 21 jobs. As 1998 unfolded, the province's paper and allied products industry experienced deteriorating market conditions as prices for most pulp and paper products declined. However, the value of manufacturing shipments in the industry increased during the year, rising 11.1% in the January-to-November period following drops in the previous two years. Pulp prices fell throughout the year due to weak demand from Asia, while newsprint prices rose slightly due to ongoing strikes in the industry, notably the five-month strike at Abitibi-Consolidated Inc. which finally ended in November. Coated paper prices also fell during the year, as did the price of corrugated medium paper used to make cardboard boxes. Smurfit-Stone Container Corp., the newly merged company resulting from the union of Stone Container Corp. and Jefferson Smurfit Group Plc, one of the world's largest producers of paperboard and paper-based packaging products, announced the permanent closure of its Bathurst bleached chemical thermal mechanical pulp (BCTMP) plant at the end of November, leaving 35 people out of work. Opened in 1983, the plant had shut down temporarily four times since 1996 due to low pulp prices and its inability to compete effectively in world pulp markets. The closure comes as part of the company's 10% reduction of its international workforce, up to 3,600 jobs. The company's reorganization may lead to further layoffs this year at its other Bathurst plant employing 300 people in the production of corrugated material used in packaging. One of the paper machines at the plant was shut down for five weeks in 1998 due to poor market conditions. In a similar fashion, St. Anne Nackawic Pulp Company's hardwood pulp mill in Nackawic underwent a three-week shutdown in August due to large inventories at the plant. The mill mainly sells its product in East Asia, and the ongoing economic difficulties in the region have slowed demand for pulp. Meanwhile, the AV Cell Inc. pulp mill in Atholville started production in May, employing 240 people. The mill, closed for two years before being purchased earlier in the year by Tembec Inc. and the Birla Group, an Asian fiber and chemical conglomerate, produces dissolving pulp for the manufacturing of textile rayon. In other industry developments, the sale of Repap's Alcell plant in Miramichi and the accompanying Alcell technology fell through on two separate occasions in 1998, as both prospective buyers were unable to secure the necessary financing to purchase and operate the plant. Although the Alcell technology and assets still may be sold in the future, Repap is considering whether to permanently shut down the plant, which has been closed since 1996. On a more positive note, Repap will be moving its research and development centre to Miramichi from the United States, adding seven jobs. In the northwest, Fraser Papers in Edmundston invested $19 million to modernize its wood chip handling system in order to improve the quality of paper produced. Elsewhere, Bowater Inc., the largest newsprint company in the United States, purchased Avenor, which operates a newsprint mill in Dalhousie, becoming the world's second largest newsprint producer and the third largest pulp producer in North America. Silviculture will continue to be a source of employment in the province's forests over the coming years. Provincial government spending on silviculture projects on private woodlots tripled in 1998, increasing from $2 million to $6 million. As there have been ongoing concerns regarding the overharvesting of the province's private woodlots, silviculture activities on private woodlots have increased in importance. Many reports express concern about the effects continued overharvesting could have for the viability of a number of provincial sawmills. In a related announcement, the provincial government released a report which recommends the establishment of a network of protected areas in New Brunswick by 2005. The report recommends a minimum of seven protected areas be established across the province where human contact would be kept to a minimum and logging, mining and other commercial activities would be prohibited. The forestry industry is predicting mill closures and job losses if these areas are accorded environmental protection. As the past year drew to a close, progress had been made on recognizing aboriginal rights to cut wood on Crown land, although the ownership of the province's forests had yet to be decided. In April, the New Brunswick Court of Appeal overturned a court decision which had permitted New Brunswick aboriginals to cut trees on all Crown land. With this new verdict, it became illegal for aboriginals to harvest timber on Crown land. Although the Supreme Court of Canada refused to hear the appeal of the New Brunswick Court of Appeal's verdict, other cases arguing aboriginal rights to Crown land are now proceeding through the courts, and are expected to present stronger arguments supporting aboriginal cutting rights than the case rejected by the Supreme Court. Meanwhile, the provincial government negotiated interim logging agreements with 14 of the province's 15 First Nations, allowing them access to 5% of the provincial annual allowable cut during the 1998 cutting season. These agreements are for the purpose of economic development, and are considered separate from the future negotiation of aboriginal logging rights on Crown land. The government appointed a Task Force on Aboriginal Issues to consider ways in which a longer-term solution to the logging issue might be negotiated between the Province and the aboriginal communities in New Brunswick. Their report will be completed later in 1999. The outlook for the forest-related industries sees the wood products industry continuing to experience difficult market conditions in 1999 as lumber prices remain weak and slower economic growth is expected in the United States, leading to a drop in housing starts and U.S. demand for lumber. Meanwhile, the recovery in pulp and paper markets will be postponed until the second half of 1999 due to the on-going crisis in Asia. Pulp prices are anticipated to remain weak in the early part of the year, but should recover slowly during the latter half of 1999 and into the year 2000. Newsprint and coated paper prices are also expected to remain weak in 1999, with a possible recovery in the second half of the year, while prices of corrugated medium paper may begin to rise as early as the second quarter of this year. Manufacturing The value of manufacturing shipments fell by 3.6% in New Brunswick during the first 11 months of 1998, with most of the drop attributable to a 23.6% decline in shipments from the miscellaneous group of industries2, representing over 25% of total provincial manufacturing shipments. The weakness in this area is mainly due to low world commodity prices, which lowers the dollar value of manufactured products in these industries. Excluding the miscellaneous category, provincial shipments were up 5.8%, with shipments in most industry groups increasing during the year. The value of manufacturing shipments rose 2.8% for the country as a whole. Among the various manufacturing sectors, the furniture and fixtures industry posted the largest increase in manufacturing shipments (22.2%), followed by paper and allied products (11.1%), printing and publishing (10.9%), and plastics (9.8%). Increases also occurred in wood products (8.4%), non-metallic mineral products (7.2%), clothing (6.7%), and metal fabrication (4.5%). Declines were noted in beverages (-0.9%), food processing (-0.9%), chemicals (-2.6%), machinery (-5.9%), and the miscellaneous group of industries. Even as the province's resource-based industries experienced difficult market conditions in 1998 due to depressed commodity prices, the provincial manufacturing sector continued its steady pace of growth and diversification as existing companies expanded their operations while many new firms set up shop in the province. In the food processing industry, Belgo-Canadian Pastries Inc. will establish a new waffle manufacturing facility in Grand Falls, creating an estimated 106 jobs, while in the machinery industry, Les Systèmes Erin Ltée, a new firm specializing in the design and production of fixed and mobile granulometric selection and screening systems, is building a plant in Caraquet, expecting 75 new jobs in its first year of operation. The company plans on further expansions in its third and fifth years of operation, with the addition of another 110 jobs planned within five years. Currently operating a furniture plant in Saint-François de Madawaska employing 210 people (Nadeau-Shermag), Shermag Inc. opened a second furniture plant in Edmundston, expecting to create 125 jobs over the next three years. The $5 million plant will manufacture the same product as the Saint-François facility. In order to spur the development and the diversification of the province's manufacturing sector, the government has expanded its NBJobNet Internet employment network to include people looking for work in the plastics, metalworking, and textiles industries. It is also actively recruiting U.S. metalworking companies to come to New Brunswick while encouraging the development of existing New Brunswick metal fabrication businesses. In this area, Apex Industries Inc. of Moncton has developed a new airport boarding bridge and is expecting to hire 20 people to work on the production of this new product, while Allain Equipment Manufacturing Ltd. of Cocagne, a custom-made metal manufacturing company, has rebuilt and expanded its facilities following a fire last winter, creating 13 new jobs with the expansion. Finally, Imperial Manufacturing Group of Richibucto, a manufacturer of heating, hardware and building supply products for the home improvement market under various company names, is expanding into the production of plastic components it currently purchases outside the province, expecting to create 73 new jobs. Investments in the clothing and textile industries include a $2 million expansion by Paquet Yarns Inc. of Paquetville that will enable the company to diversify into the production of woven fabrics, creating 30 new jobs over the next two years, while JML Shirt Ltd. is expanding into the production of men's briefs and is planning to add more than 30 jobs, within a year, to its 270-member workforce in Grand Falls. Meanwhile, in the plastics industry, Wirsbo Corp., a U.S.-based plastics manufacturer, will be opening a plastic tubing plant in Saint John that is expected to employ 100 people within three years, and PASSTEX Group Inc. of Saint-Antoine has opened a manufacturing facility to produce various woven plastic products like truck tarpaulins, greenhouse products, packaging and accessories, creating 10 full-time and two part-time jobs. The largest investment project announced in 1998, both in terms of size and impact, was Irving Oil's $750 million expansion at its Saint John refinery, with 1,600 to 2,000 people expected to be employed on the $300 million construction phase of the project. Of the overall $750 million, more than $300 million will be spent on new refining equipment, with the remaining $100 million being spent on environmental upgrading equipment. The expansion will enable the refinery to produce more high-end fuels such as high-grade, low sulphur gasolines and less lower-grade heating oil, with no change to the refinery's processing capacity. The company expects the project will lead to a 15% to 20% increase in cargo ship traffic. The new equipment is expected to be in operation by October 2000. The Saint John region also had its share of disappointment in 1998, as it was announced that the Lantic Sugar refinery would be closing at the end of this year, throwing 220 people out of work. The company has decided to expand its Montreal plant at a cost of $65 million and close the Saint John plant in order to better compete against its main competitor, Redpath Sugar of Toronto. Elsewhere, Calicloth International, a Bathurst textile manufacturer, entered bankruptcy at the end of 1998. The company had been in business since 1995, and employed up to 25 people when the facility closed its doors in December. In the Moncton area, Phase Atlantic, a subsidiary of Com Dev International Inc., laid off 39 people in September due to a slowdown in orders. The manufacturer of high-tech wireless communications equipment laid off 15 workers in March and another 58 contract workers in December 1997. The slowdown is blamed on economic conditions in Asia, and the workers were expected to be rehired when new orders came in. The province's manufacturing sector should continue to grow in 1999 as the coming on stream of many small-scale and diverse investment initiatives undertaken in 1998 will serve to boost and broaden manufacturing output. Export markets will remain attractive to the province's manufacturers, especially with continued economic growth in our main market, the United States, and the current low exchange rate for the Canadian dollar. The sector will also continue to benefit positively from the Harmonized Sales Tax, which serves to improve the competitiveness of the province's manufacturers in both domestic and foreign markets. Mining The sharp drop in international prices brought about by weak industrial demand and world production over-capacity for some metals impacted the provincial mining industry during 1998. As well, the closure of a potash mine in 1997 and indefinite shutdown of a base metal mine in the latter half of the year served to lower overall provincial production in 1998. In addition to these problems, exploration activity for additional mineral deposits declined. Production at the province's largest mine, Noranda Inc.'s Brunswick base metal mine, has declined in recent years due to the depletion of resources and depth of the workings. With prices for zinc, currently about 70% of the total value of production, down almost one-quarter from the previous year, Brunswick announced it will reduce its work force by about 200 of its approximately 1,000 employees by the year 2000. Reserves for the mine which has operated for 35 years near Bathurst, are currently estimated to be less than 15 years at the present rate of extraction. Noranda's other mine site, Heath Steele, announced it will close its base metal mine in September 1999. The mine employs about 280 and studies have shown the quantity and quality of remaining reserves do not make future operations economically feasible. The Department of Natural Resources and Energy released a study in December that confirmed the life of the mine could not be extended. Breakwater Resources Ltd.'s Caribou and Restigouche mines, also near Bathurst, ceased production in August, citing low prices for zinc, its major product. Approximately 230 workers were affected by the shutdown. The provincial government extended the New Brunswick Exploration Assistance Program for fiscal year 1998 to help the junior mining sector in the identification of mineral potential in several sites around the province. The program, which was initially started in 1994 with a three-year horizon, created over 200 person-years of employment and $6.7 million of exploration expenditures over the previous three years. In 1998, a total of 12 companies with a combined exploration budget of $2.5 million received assistance for activities in such diverse sections of the province as Bathurst, Plaster Rock, Woodstock, St. Stephen and Hillsborough. The Department of Natural Resources and Energy released results of a 1997 mining survey for the south of Campbellton to provide data to exploration companies looking for signs of minerals in the northwest portion of the province. This led to over 600 mineral claims and there is expected to be an increase in exploration. Companies such as Mountain Lake Resources, Major General Resources, NovaGold Resources, Eastmain Resources Inc. and Stratabound Minerals have been active in exploration for copper-lead-zinc-silver deposits in the Bathurst area. Freewest Resources Canada Inc. is studying gold mineralization at its property on the Maine border near Woodstock. In the oil and gas sector, MariCo Oil and Gas has drilled several test wells in southeastern New Brunswick and Shell Canada announced a three-year $8 million exploration program looking at bituminous shale. In the non-metals, the Potash Corporation of Saskatchewan (PCS) purchased the Potash Co. of Canada (Potacan) Cassidy Lake mine which was officially closed in late 1997 due to water inflow. PCS is utilizing the potash mill at Cassidy Lake to upgrade product from their mines in Saskatchewan. The PCS mine, which employs about 340, also experienced a water leakage problem, but on a much smaller scale. Regarding the coal operations near Minto, NB Power announced plans to close its coal-fired generating plant at Grand Lake by 2004 as part of its long-term reorganization plan, effectively closing demand for the coal fields. In recent years, about 300,000 tonnes of coal per year have been produced. The province's peat industry continues to grow and diversify. In 1997, production of New Brunswick peat was valued at nearly $46 million and represented over a third of total Canadian production. Good Earth Canada Ltd. is converting its Point Escuminac peat operation from a seasonal to full-year operation, increasing the number of full-time jobs from 7 to 25. The mining industry is at cross-roads with exploration and development declining during the last 10 years. During 1999, the Province will be examining ways to revitalize the industry. Construction Following the completion of major investment projects in the forest, manufacturing, transportation and trade sectors in 1997, the construction industry in New Brunswick was led by increasing activity on the Fredericton-Moncton highway and Sable Island natural gas pipeline. According to Statistics Canada's mid-year 1998 survey of private and public investment, capital spending in the province increased 0.9% to $2,624.5 million. Nationally, investment increased 7.7%. Provincial spending on construction was up slightly to $1,586.3 million, while investment in machinery and equipment rose 2.2% to $1,038.2 million. Public investment, composed largely of government departments and the education and health sectors, declined 5.5%, while spending by the private sector, which represented over three-quarters of total investment, increased 3.1%. On an industry basis, manufacturing, transportation, finance and insurance, and business services posted significant increases. Spending on new housing increased 6.9% to $680.1 million. The value of building permits issued by municipalities in the province increased 3.7% during the first 11 months of 1998. Non-residential permits rose 10.7%, while residential permits fell 2.4%. According to Canada Mortgage and Housing Corporation, housing starts during the year were down from 2,702 in 1997 to 2,447. Employment in the construction industry averaged approximately 19,000 in 1998, up from 17,500 the previous year. For 1999, construction activity can be expected to increase markedly as work progresses on the Fredericton to Moncton highway project and the Sable Island natural gas pipeline. An initial spin-off investment from the introduction of natural gas to the province is a major expansion to the oil refinery in Saint John. Additional capital investment in the national and provincial highway systems is anticipated, along with a stronger residential sector and projects in the manufacturing, service and trade industries. The industrial reviews of the forestry, manufacturing and service sectors provide information on many of the construction projects planned, or underway, in the province. Service Industries The service sector maintained its share of total provincial employment in 1998 (74.4%) as employment increased by 5,900 (or 2.5%) from the previous year. Wages and salaries for service industries rose 2.8% for the January-to-October period, while the goods-producing industries increased 3.5%. Transportation, Communication and Other Utilities Employment in transportation, communication and other utilities averaged 27,600, a decline of 1,200 from 1997. Wages and salaries for the first 10 months of 1998 were similar to the previous year. In preparation for the Francophonie Summit, the Moncton airport will complete the refurbishment of its terminal and expansion of a runway; in addition, Canada 3000 will have a flight to Paris. Safety improvements were completed on the airports in Miramichi, Charlo and Bathurst. Port New Brunswick, formerly Port of Saint John, opened their new $1.5 million roll on/roll off notch to accommodate more efficient turnaround for loading and unloading cargo ships. The port had its most successful cruise ship season with 22 calls and approximately 29,000 passengers. Overall shipments during the first 11 months of 1998 were down 4.8% from the previous year due to a decline in outgoing traffic. New Brunswick Southern Railway, Sunbury Transport, Port New Brunswick, and Canadian American Railway in Maine formed a partnership to ship goods faster than previously from Saint John to Toronto and larger U.S. cities. The New Brunswick East Coast Railway announced 29 new jobs in Campbellton. In Moncton, Besner Atlantic Trucking Ltd. expected to start operations employing 20 people and Purolator Courier opened a new trace centre creating 45 jobs. NBTel recently announced a 5-year alliance with U.S. West, an American telecommunications company, worth $5 million to develop electronic service delivery applications for their U.S. government customers. Another partnership was formed with Toronto-based Balisoft Technologies to launch a new generation Internet customer service package for call centres. VibeTM, NBTel's high speed Internet and multimedia service was expanded further to include Fredericton and other areas of Moncton and Saint John. NBTel Internet service has over 50,000 customers province-wide, up nearly 45% from 1997. Fundy Communications launched the first digital television service, MAX TV, in Eastern Canada. The $4.5 million investment will initially serve the Moncton area. Other new initiatives were a long distance telephone service, Lingo, creating upwards of 30 jobs in Saint John and Moncton and a pager service called Fundy Paging. TVNB, The New Brunswick Channel, started broadcasting with over 40 New Brunswick-based television series. A network of six in-province studios will distribute coverage of daily events throughout the province. Fundy Communications also announced a partnership with Lucent Technologies to offer telecommunication services to small and medium-sized businesses. The new service called Fusion is expected to create 20 new jobs. Earlier in 1998, the ICT Group opened a call centre in Riverview with 150 jobs. Saint John saw Xerox adding 100 jobs at its centre and Liberty Mutual Insurance Company establishing a new centre creating 28 jobs. Fulford Enterprises commenced operations in Sackville with 40 employees. Recent announcements include expansions in Saint John of Xerox Canada by 500 jobs and Cendant Canada Inc. by 378 jobs. Star Choice Television Network in Lincoln is adding 114 jobs after completing a $2 million expansion, Marriott Lodging of Canada is opening in Fredericton with an initial 54 employees, and Camco Inc. is creating 20 jobs at its Moncton call centre due to Eaton's transferring their warranty contracts. Total electric power generation in the province increased 9.7% for the January-to-October period. NB Power projects capital expenditures of approximately $80 million for 1999-2000. While there was a power rate increase of 2.9% in October 1998, no rate increases are currently planned. Point Lepreau received a two-year license renewal and has operated consistently since returning to service following a planned maintenance shutdown in July. Public consultations are taking place regarding the future of the electrical industry in New Brunswick. Tractebel and NB Power recently announced a project development agreement for a $200 million natural gas-fired power plant at Belledune. Construction of the Sable Island natural gas pipeline through southern New Brunswick started, with completion planned for late 1999. Maritimes & Northeast Pipeline formed an alliance with BFC Marine to construct the pipeline worth more than $300 million. The next stage involves developing a natural gas distribution system throughout the province. Retail and Wholesale Trade Employment in the trade sector fell 1,200 to 58,200 in 1998. Wages and salaries for this industry group rose 5.3% for January-to-October. Retail sales for all stores rose 6.6% in the first 11 months of 1998, compared to a 4.5% increase for Canada. Double-digit growth was recorded for men's clothing stores, specialty clothing stores, automotive parts stores, and specialty durable goods stores. Wholesale trade increased 8.0% during January-to-November. Developments in retail trade include the opening of a $6 million Canadian Tire store in Tracadie-Sheila creating 50 jobs, a $5 million Sobeys megastore supermarket and a new Kent Home Improvement Warehouse in Fredericton, a Staples Depot in Bathurst, and a Real Atlantic Superstore in Saint John. Construction activities involve a $9.5 million redevelopment of Moncton Mall into a strip mall renamed NorthWest Centre, a $3 million expansion to the Canadian Tire store in Moncton, and a Chapters book superstore in Fredericton. Closures include: K Mart stores in Fredericton (2 locations), Moncton and Douglastown affecting 400 people; Thornes, a hardware chain, in Saint John and Moncton (80 positions); IGA in Bathurst (37 employees); and Beaver Lumber in Moncton (21 employees). Finance, Insurance and Real Estate Employment in this sector was down 500 from the previous year to 13,500. Wages and salaries increased 4.4%, compared to the first 10 months of 1997. Construction of the $18 million Royal Oaks Estates & Golf Club, a residential property and golf course, is underway in Moncton. Planned projects include an office building in Fredericton and a $4.6 million waterfront redevelopment in St. Stephen. Community, Business and Personal Services This sector includes non-commercial activities such as the provision of health, welfare and education services, and commercial activities, including: business services, personal services, entertainment and recreation facilities, and accommodation and dining establishments. Employment increased by 9,600 to 123,200. Wages and salaries grew by 3.1% from January-to-October. Newbridge Networks and the Province entered into a $20 million partnership to create up to 300 jobs in the technology sector over the next four years. As a result, ImagicTV of Saint John received $6.4 million to create 90 software development jobs. Following the opening of the $4 million Greater Fredericton Knowledge Park, CGI Group Inc., a computer systems integration firm, relocated there with an additional 20 jobs. Other initiatives for Fredericton include LearnStream, developer of courseware and software training materials, commencing operations with 50 jobs, and Universal Systems, geographic software developer, announcing plans to add 75 jobs over the next three years. The film industry is experiencing growth in New Brunswick. Total production estimated at $32 million in fiscal year 1998 is more than double the previous year. Current work includes TV series such as Dans ma cour, Daring and Grace and Witness to Yesterday, as well as a feature film, The Fourth Floor. Other developments include the $19.8 million Leo Hayes High School in Fredericton opening in September 1999, a $7.6 million expansion to the University of New Brunswick information technology program in Fredericton which includes construction of a computer science centre, and a $4.8 million expansion to the community college in Campbellton. Renovations worth $37 million are planned for 148 public schools and four community colleges during the spring and summer of 1999. Tourism Economic Development, Tourism and Culture announced the 1998 tourist season was the most successful in recorded history. Revenues were $850 million, a 7.6% increase from the previous year with visitation rising 7.9% to over 1.4 million. There were gains from all Canadian regions as well as the United States. The peak season occupancy rate surpassed 80% for the first time. Other developments in the tourism sector include strategies to increase the number of tourists from France and market the Appalachian Range; continuation of the NB Trail system with $1 million for the counties of Restigouche and Gloucester and $2.2 million for Kouchibouguac National Park; opening of the first part of the Fundy Trail, Hopewell Rocks' Ocean Tidal Exploration Centre and new three-star accommodations in Lamèque and Kingston Peninsula; and the announcement of a $6 million hotel to be constructed in Moncton. Conclusion While economic growth for the U.S. maintained a strong pace, Canada displayed a slowing trend in the latter half of 1998. In New Brunswick, major construction projects supported an improved performance as real GDP is estimated to have risen 2.1%, compared to 1.1% in 1997. Employment growth exhibited its strongest gain since 1988, leading to a drop in the unemployment rate. Personal income rose significantly compared to the previous year, while consumer inflation was below Canada's increase. Growth in retail trade, motor vehicle sales, farm cash receipts and sawn lumber production exceeded the national average. Modest economic growth is expected for both the U.S. and Canada in 1999. Additional problems in the world financial system could weaken the U.S. economy and subsequently lead to slower growth in Canada. The New Brunswick economy should increase 2.3% in 1999, similar to projections for the U.S. and Canada. All industries, except mining, will exhibit positive growth. Major projects in the construction industry will have significant impact. Employment growth is projected to outpace labour force growth, leading to a modest decline in the unemployment rate. While the Consumer Price Index is expected to increase, it will be similar to the national average. Statistical Tables Table Page 1 Population 41 2 Population by Age Group 41 3 Components of Population Growth 42 4 Components of Personal Income 43 5 Personal Income and GDP at Market Prices, Per Capita 43 6 Provincial Gross Domestic Product - Income Based 44 7 Provincial Gross Domestic Product - Expenditure Based 45 8 Provincial Gross Domestic Product - Expenditure Based, Constant (1992) Dollars 46 9 Gross Domestic Product by Industry 47 10 Gross Domestic Product by Industry, Constant Dollars 48 11 Private and Public Investment 49 12 Average Weekly Earnings by Industry 50 13 Labour Force Statistics 51 14 Employed by Industry and Occupation 52 15 Government Employment 53 16 Components of Farm Income 54 17 Principal Statistics of the Logging Industry 55 18 Estimates of Total Forest Production 56 19 Principal Statistics of the Fishing Industry 57 20 Principal Statistics of the Mineral Industries 58 21 Mineral Production - Value 59 22 Principal Statistics of the Manufacturing Industry 60 23 Manufacturing Shipments by Major Industry Groups 61 24 Dwelling Starts and Completions 62 25 Value of Construction by Type of Structure 63 26 Retail Trade 64 27 Retail Trade by Kind of Business 65 28 Consumer Price Index 66 29 Receipts of Accommodation and Food Services 67 30 Supply and Disposal of Electric Energy 68 31 Domestic Exports 69 32 Domestic Exports by Commodity 70 Key to Symbols .. figures not available ... figures not appropriate or not applicable - nil or zero -- amount too small to be expressed p preliminary figures r revised figures x confidential * Department of Finance estimate 1 This represents roughly 45% of government current spending and does not include subsidies, transfer payments to persons and to other levels of government, interest on the public debt, or capital expenditures. 2 The miscellaneous group of industries comprises diverse groups of small plants as well as large producers such as the Irving Oil refinery, the Saint John shipyard, and Brunswick Mining and Smelting.