B.C. Business Matters:
Ken Peacock >>
An update on B.C.'s fastest growing industries: A diverse group...but resources still prominent
By Ken Peacock
The figure below depicts B.C.’s 30 fastest growing industries through the half decade ending in 2017. They are ranked by average annual real GDP growth, which is growth in the final value of output in each industry, adjusted for inflation. The annual growth performance is averaged over the period 2012 to 2017. Growth rates just for 2017 are also shown (light blue bars) to readily compare an industry’s most recent expansion with its medium-term performance.
For many industries, the most recent growth performance is similar to the five-year trend. However, there are a number of sectors where 2017’s pace of growth differs.
The film and television industry tops the industry growth rankings. B.C. has long been an attractive location for film and television production, but the rise of Netflix and other streaming services, a low Canadian dollar and a competitive fiscal regime have served to supercharge the industry. A highly skilled workforce and quality infrastructure have also contributed to the sector’s strong performance.
Second on the list is aluminum production and processing. The recently revitalized Rio Tinto aluminum smelter in Kitimat is why this industry holds one of the top spots.
Construction in the oil and gas sector is third on the fast growth list. Its stellar five-year growth performance is largely the result of a near doubling in construction activity in 2017. A new compressor station, pipeline construction and a propane export facility near Prince Rupert all contributed to the oversize gain in 2017. Oil and gas construction activity provided a very significant lift to B.C.’s overall GDP economic growth in 2017, helping to offset the impact of slower growth in the residential real estate sector.
Looking at the contribution to growth in 2017 from construction in the oil and gas industry provides some insight into how the impending construction of LNG Canada’s Kitimat liquification facility and related pipelines will affect the province. In 2017, the value of activity in the oil and gas engineering construction sector increased by more than $1.5 billion, due to the projects noted above. The result was that the industry contributed 0.7 percentage points to 2017’s robust 3.8% real GDP expansion. When LNG construction is ramped up, it will likely make a similar sized contribution to growth. And this is only the construction. LNG Canada’s project also means more spending on engineering and professional services, environmental services, transportation services, and local manufacturing of some inputs. The northwest regional economy will also benefit from additional housing activity, higher retail spending and food and increased demand for accommodation services.
|Source: Statistics Canada, Table: 36-10-0402-01.|
A few other interesting findings emerge from the list:
From an industry output perspective, the downshift in residential real estate activity became evident in 2017 (and has persisted into 2018). The value of activity in the offices of real estate agents declined by 7% in 2017, making it one of just two industries in the top 30 list where output fell in 2017. Meanwhile, output in the residential building construction industry slowed from an average annual growth of 9.1% to just 2.5% in 2017.
A second important finding is that the overall natural resource sector still plays a very significant role in B.C.’s growth and prosperity. Natural gas is prominent in the fast growth list: investment in the sector (new engineering construction), gas production, and the distribution of natural gas are all top-ranked industries that are part of the broader sector. Based on the five-year figure, copper, nickel, and lead & zinc ore mining also counts as a leading growth industry, although its output did contract in 2017. Two different industry categories that capture value added wood products (veneer, plywood, & engineered products and other wood product manufacturing) are also among B.C.’s growth leaders. Non-ferrous metal production (mostly copper) is another growth industry that is based on the processing of B.C.’s natural resources.
A third notable finding is the prevalence of manufacturing. Architectural and structural metals manufacturing is on the top 30 list, along with machinery manufacturing (albeit further down), which had an outsized growth surge in 2017. Petroleum refineries is another manufacturing industry on the top 30 list. Electrical equipment and appliance manufacturing expanded by 12% in 2017, twice the pace of its average growth rate over the past five years.
Still in the manufacturing space, output growth in wineries puts this industry on the list, together with breweries. Miscellaneous food manufacturing ranks eighth, with steady growth of around 9% annually.
A number of financial services industries are also among B.C.’s growth industries. Credit unions, financial investment services and non-depository credit intermediation are all included in the top 30.