The Vancouver Island/Coast’s economy showed strong signs of recovery throughout 2010.
Growth in the region’s key sectors and industries, job creation, increased building permits, and major project development will ensure our region’s economic revival continues to gain momentum into the coming year.
According to the BC Check-Up, Regional Edition, the region’s economy strengthened in 2010. Last year’s job growth rate of 1.8 per cent slightly outpaced the provincial average of 1.7 per cent, and ranked fourth in the province.
Out of the 6,800 jobs created in 2010, a significant portion of these gains, 5,600 jobs, occurred outside of the Victoria Census Metropolitan Area (CMA).
The region’s service sector was responsible for most of last year’s employment growth, accounting for 5,400 new jobs. Employment in the goods sector also increased.
A jump in housing starts saw employment in the construction industry increase by 2,700 new jobs, while forestry and manufacturing also reported gains, as mills increased production in response to higher prices and demand for pulp and lumber.
Last year’s job losses were primarily due to our sagging tourism industry, as room revenues dipped by 1.2 per cent. Three consecutive years of decline does not bode well for an industry that is vital throughout the region, especially in our main service and trade centres.
Despite these losses, the unemployment rate dropped significantly, to 6.3 per cent, a decrease of one percentage point from 2009. This was the largest drop in unemployment as well as the lowest unemployment rate in the province in 2010.
Due to last year’s building spurt, housing supply remains high, whereas sales, particularly in higher end of the market, have continued to fall.
Looking ahead, a combination with price reduction and low construction costs could help encourage a resumption of development and buyer activity.
The outlook for 2011 is one of cautious optimism. High prices and demand for pulp, lumber, and mineral resources, particularly from China and now Japan after their recent devastating earthquake, are expected to continue to be high.
Housing inventories are predicted to moderate and bring the market back into balance. This, in turn, should stimulate moderate levels of new construction, especially by year end.
Although concerns exist about rising interest rates, the impact of oil prices, U.S. economic recovery and possible deficit reduction measures by a new provincial government, market demand for the region’s industries appears to be sufficiently strong to assure ongoing job growth and further economic improvements this year.
However, as the region’s economic recovery gains momentum, there is a fundamental tax policy issue on the horizon that will undoubtedly impact the region’s export and service industries.
British Columbians should inform themselves on the consequences of retaining a 10-per-cent HST, or going back to a 12-per-cent PST/GST.
Keeping the HST is vital for B.C.’s economic growth. It makes our economy more competitive and helps businesses of all sizes protect existing jobs and create new ones.
At this crucial stage in our economic recovery, going backwards is not an option. Vote no to higher taxes, vote no to keep the HST.
Woody Hayes is a chartered accountant with Hayes Stewart Little & Co in Duncan. The BC Check-Up, Regional Edition is published by the Chartered Accountants of BC, and is available online at: www.bccheckup.com.