Last year, our economy continued to suffer from the impact of the 2009 global recession. Our region had a relatively slow year in terms of economic activity, which led to poor labour market conditions and a loss of valuable human capital to nearby regions and Alberta.
According to the BC Check-Up, Regional Edition, the Thompson-Okanagan experienced the largest loss of jobs since 2009, with a contraction of 7,500 jobs; more than three times the provincial average. Construction and tourism, two economic drivers for our region, both suffered extensive job losses in 2013. An additional 6,000 individuals also chose to opt out of the labour force, and our unemployment rate climbed to 7.1 per cent. These factors underlined our region’s weak economy, and many workers left to seek employment elsewhere in B.C. or Alberta.
Development activity in our region also fell to its lowest level in six years, as the total value of major capital projects dropped to $24.5 billion in 2013. This was 27.9 per cent below the region’s pre-recession peak. However, the total value of proposed projects by the end of last year saw an increase of 8.3 per cent, to $7 billion. This is primarily the result of the $1 billion multi-year mixed-use development project in Peachland.
Comparatively, the value of projects under construction in December 2013 totaled $16.3 billion, which was one percent less than the previous year. Most were residential, commercial, and resort projects, including several large multi-year projects that have been in progress for several years. These projects include the $2.1 billion Glenmore Highlands Development and $1 billion Tower Ranch Golf resort in Kelowna; $1.5 billion Lakestone Resort, $1 billion Revelstoke Mountain Ski resort, $1 billion Ponderosa development in Peachland, and $1 billion Rise Resort development in Vernon. The go ahead of a few of these projects will encourage economic activity and buoy some of our primary industries.
Our region can also capitalize on the increasing venture capital (VC) investments that are coming to B.C. Last year, VC investments in our province increased from $198 million in 2012, to reach $478 million. Although much of the VC investments went to Southwest B.C., our region also benefitted as it has the second-largest cluster of digital media companies in the province, including Disney Interactive’s Club Penguin that generates over $40 million in annual sales. It is also home to the Okanagan Research and Innovation Centre, which is an important incubator for high-tech companies. Continued efforts in maturing our technology sector will bring long-term economic benefits and attract educated and skilled workers back.
Our economic prospects in 2014 remain uncertain at this point. The expansion of the forestry industry resulting from higher demand from the recovering US and growing Asian markets should improve our economy. However, the mining industry is facing the challenge of softened commodity prices, which may delay operation of new mines and impact production at existing operations.
A lower Canadian dollar will potentially improve the export market, attract tourists, and induce some second-home investors back to the region. There was also a moderate surge in property sales attributed to low interest rates and price reductions that increased housing starts in the latter part of the year. However, housing inventories remain high, which will continue to dampen development and construction activity.
The BC Check-Up report is available online at: www.bccheckup.com.