The workforce in the St. John’s area dropped slightly in 2013, despite significant growth in gross domestic product (GDP).
An expansion to the convention centre is under construction in downtown St. John’s, just one sign of increased economic activity. — Telegram file photo
The annual economic review and outlook from the City of St. John’s, released Tuesday, notes that the northeast Avalon’s GDP grew 4.4 per cent last year, from $13.4 billion in 2012 to an estimated $14 billion last year, buoyed by rising oil revenues. Employment, though, declined from 109,200 in 2012 to 108,000 last year, a drop of 1.1 per cent, and the labour force declined from 117,700 to 115,000 in the same period.
That difference in decline between the labour force and employment means the area’s unemployment rate dropped 1.1 percentage points, from 7.2 per cent to 6.1 per cent.
Wage increases boosted total personal income 4.7 per cent, from $9.2 billion in 2012 to $9.6 billion last year, and the region’s population went from 200,600 in 2012 to 203,600 last year, a gain of 1.1 per cent.
Coun. Dave Lane, the co-chairman of the city’s economic development committee, called the report a “snapshot” of the current economic situation, and says he tries to see how it fits into the city’s five- or 10-year plans.
“We’re in a fluctuating, resource-based economy, and we’re going to see ups and downs,” he said, pointing to the region’s jump in GDP despite the decline in employment and the labour force, which says a lot about the oil industry’s effect on the economy.
“It’s looking good in terms of the investment that’s happening here, but we’re going to see a major labour stress in our city and province. We need to keep our eyes on that. If we’re seeing the labour force go down, even though the population went up, what are we doing to make sure the population is always going up and it’s always going up with the skilled people we need to keep business flowing?”
Rising wages are going to increase cost stresses on businesses, including the city’s own capital projects.
“I spoke to the Business Association of Newfoundland (and Labrador) today, and my big message to them was, treat your employees well.”
“You want to ensure that they’re loyal to you as these other, bigger companies come in, and they’ll be able to pay. We can try to grow our businesses as fast as we can, but if we don’t have the loyalty, we’re never going to be able to match up with these global companies as they come in,” Lane said.
Denis Mahoney, the immediate past chairman of the St. John’s Board of Trade says the report affirms the region’s economic boom.
“At the Board of Trade, we are interested in the discussion on how to keep what we have today sustainable and growing, rather than losing any opportunities that we presently have.”
Good planning is critical, said Mahoney.
“At the municipal level, we need to continue the initiatives around increased density, to get better value and reduce costs associated with the infrastructure in the region,” he said. “We need to take a longer-term view to regional initiatives, whether it’s increased regional co-operation — regional transportation has been one of the highlights for us that we talked about during the recent municipal campaign.”
The report’s outlook for 2014 suggests slower growth this year, and predicts gains in exports from higher oil production will be offset by weaker performance in the rest of the economy, especially in the service sector. The report also suggests employment gains at Hebron and Muskrat Falls will be partially offset by lower employment at Hibernia and White Rose, and construction slowing down on Vale’s nickel plant in Long Harbour. But the report says personal income is expected to grow, driven by increased wages, and that will boost consumer spending.