St. John’s saw the most growth in gross domestic product (GDP) of any Canadian census metropolitan area in 2010, according to a new report from the Conference Board of Canada.
The report, released Tuesday, credits gains in offshore oil production as well as growth in construction — especially the start of work on the Long Harbour nickel processing plant — for St. John’s 5.8 per cent growth in GDP, slightly beating Kitchener-Cambridge-Waterloo in Ontario (also listed as 5.8 per cent in the report, rounded off) among 27 metropolitan areas across the country.
Jane McIntyre, an economist with the conference board, said the biggest element boosting economic growth in the St. John’s area was the Vale nickel processing plant in Long Harbour, but there were several factors that came together to spur production.
“After falling for a couple of years, there were some production increases in the oil and gas sector with the startup of the North Amethyst field,” she said.
“So that worked its way into the numbers. The other thing was, as part of the stimulus program at the federal level, there was infrastructure spending that was going on. At the same time there was also increased housing starts because of low interest rates as part of the recovery, as well.”
Bob Carter, Vale spokesman, said late 2009 and 2010 were devoted to getting the site ready for the foundation as well as the erection of the main steel buildings of the plant.
“The Long Harbour project is a significant project — it is a US$2.8-billion capital expenditure that is taking place through a construction period that runs from April 2009 through to February 2013,” he said, adding that at its peak last year, there were between 800 and 1,000 people working on the construction site, with another 500 to 600 working in support roles in procurement and planning.
However, economic growth last year in St. John’s followed a decline of 5.8 per cent in 2009 — mainly due to declines in offshore production — meaning the city’s output is still slightly under its 2008 level of nearly $7.8 billion.
St. John’s also saw its unemployment rate drop half a percentage point from 8.2 per cent in 2009 to 7.7 per cent in 2010.
Personal income per capita also grew 3.8 per cent in 2010, from $35,605 in 2009 to $36,974 last year. Total housing starts grew by 5.6 per cent, from 1,703 in 2009 to 1,799 in 2010, not quite returning to the 2008 level of 1,863 starts.
The report predicts an easing of growth in 2011 because most of the reasons for the growth in 2010 won’t continue, said McIntyre.
“The peak spending on the (Long Harbour) project is done — that’s not to say the project is done or finished or anything, just that the peak spending happened last year, so we’ll see some scale-back in that respect,” she said.
“Also, the infrastructure program is coming to an end. As well, with tighter mortgage rules and slower growth in disposable income, we expect there will be some decline in housing starts this year as well.”
As the Conference Board report notes: “Overall economic growth will also be held back this year by more moderate output growth in the services sector.”
Still, the economic outlook for St. John’s is rosy, with the board predicting growth of 2.9 per cent, with a continued drop in the unemployment rate.
“They’re in quite a good position, having the oil and gas sector over the last few years, the number of service sectors that have set up shop in St. John’s, so what’s happening there affects St. John’s as well. And with the development of Hebron and stuff like that, the services side of the economy will continue to do well.”
Carter, Vale’s spokesman, said peak construction on the Long Harbour processing plant will actually occur this year.
“Peak construction will be in 2011, at which point we’ll have probably in the order of 1,600 or so people working on the site,” he said.
“We are installing a camp, and that work took place last year, to house people who are supporting construction, and the camp is scheduled to be ready for occupancy, if not later this month, in March.”