Major-project investment boosting consumer, business confidence, says city report

Daniel
Daniel MacEachern
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St. John's City Hall. — file photo

Major-project investment is making consumers and businesses optimistic about the St. John’s economy, according to data released by the City of St. John’s.

The report, released last week, said employment gains, coupled with wage and salary increases, are expected to drive personal incomes up 6.5 per cent in 2013 in the

St. John’s census metropolitan area, and lifting retail trade three per cent. Employment is forecast to increase 0.5 per cent while the unemployment rate is predicted to drop to 6.5 per cent.

Coun. Bruce Tilley, chairman of the city’s economic development and tourism standing committee, said there’s no question oil drives the economy in the province, and he pointed to the upbeat mood at last week’s Noia conference, which draws hundreds from the oil and gas industry.

He said he spoke to several businesses and other industry representatives, all of whom were enthusiastic about the area’s prospects.

“They’re so positive about here it’s not even funny,” he said. “In fact, a number of them will be moving here over the next year as the offshore goes forward.”

He said he’s not worried about the economy being too dependent on oil.

“There’s always fluctuations with respect to anything, whether it’s oil and gas or whatever,” he said.

“What I look at too, is we have a strong tourist industry, for example. Our tourism industry has really rebounded over the last couple of years, and I know in St. John’s in particular, they estimate that it’s worth about $350 million worth to the economy. And so the hospitality industry’s doing extremely well, and other components, the fishery, is doing very good. But there’s no question about it, we’re very dependent on the offshore.”

The airport strike does give him a little pause, though.

“That particular strike, certainly we’ve lost some conventions with respect to that. I don’t know how much longer this thing will go on, but my understanding is that basic airport travel is holding its own. … Hopefully they’ll get something done with that. It’s been long enough now.”

The report notes that in the St. John’s area, oil activity accounts for about 40 per cent of nominal GDP, up from 34 per cent in 2002.

Total employment of the offshore industry in the St. John’s area, according to the report, is estimated at about 9,000 person years, or about 8.2 per cent of total employment.

With the oil industry forecast to rebound after a steep drop in production last year, GDP growth is forecast to improve in tandem.

“Growth in spinoff activity related to the Muskrat Falls and Hebron projects will also ramp up,” reads a statement from the city.

“Real GDP in the

St. John’s Census Metropolitan Area is expected to increase by 6.3 per cent in 2013 to over $13.9 billion. Oil production is expected to total 84.4 million barrels in 2013, a 16.9 per cent increase from 2012.”

dmaceachern@thetelegram.com

Twitter: @TelegramDaniel

Geographic location: Hebron, Census Metropolitan Area

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Recent comments

  • M
    June 27, 2013 - 08:53

    While personal incomes are on the rise (by a projected 6.5%) this also means expenses will rise once again, and the people in minimum wage positions will end up even further down the food chain. I can guarantee that income hike isn't going to affect the people in entry level positions. I would also like to note that the vast majority of individuals in those entry level positions have degrees that they are unable to find work with, because over 70% of the adult population of NL has a post-secondary degree. Not only that, but the people getting this hike are most likely in the St. John's an surrounding area, meaning that rural NL gets the short end of the stick again. Stop sounding so optimistic about a skewed system. I admire the people who worked their butts off to get to a good position, but there are a lot of people who work their butt off and get nowhere.

  • david
    June 24, 2013 - 20:54

    We are not building a province...we are monetizing it, for the exclusive benefit of the residents of one city. But hey, that's the game.

  • Joe
    June 24, 2013 - 16:01

    I guess they missed the Premier speech last week that said we are past peak oil. What does this mean? Since 1996 when we first started producing oil we have produced more than 50 percent of the discovered reserves. This means that production per year in the future must decline substantially if we continue until 2050. New finds would have to be huge to change this outcome.

  • Jennifer
    June 24, 2013 - 14:39

    It would also be nice if the regualr working joe could actually afford to live. Things like home ownership, rasing a family, vacation, groceries, heat and light etc are becoming more and more out of reach with our new found wealth.,

    • a business man
      June 24, 2013 - 20:09

      Honestly, the average working joe can afford to live. What you fail to realize is that the average working joe works in an office, and likely has a university education. Those who can no longer afford to live are the unskilled and the uneducated, and I am perfectly fine with that. Yes, home ownership, vacations, groceries and heat are all becoming more expensive, and wages are rising for the skilled and educated workers. Those who are being left behind are the ones who dropped out of high school to take a low skill job, and those that never went to school and never invested in themselves or their own education. I went to school. I own many rental homes. I got on vacations at least 2 times per year. I went to school for 10 years after high school to ensure that I never have to worry about the rising cost of living. So, after all that hard work, I am hard pressed to feel sympathy for those who did not make the sacrifices that I did. And I am not concerned with the increasing price of home ownership because it has made my rental properties more valuable. As far as I am concerned, every thing is perfect in Newfoundland.

  • Glad
    June 24, 2013 - 13:45

    Glad to see the business community is optimistic. It would be nice if they did something about the crime wave so we can walk our streets.