Kootenay Economy Appears To Be Gaining Strength, However Serious Concerns Remain

 

According to the 2014 BC-Checkup, a benchmark study of the province’s economy since 1999 by the Chartered Professional Accountants of BC (CPABC , the Kootenay economy appears to gaining strength, however serious concerns remain that raise more questions than answers.

In regards to the Kootenay development region, the report states:

In its third year of recovery since the recession, the economy of the KDR appears to be gaining strength. The labour market continued to expand in 2013, and the overall employment level surpassed the prerecession high. The KDR achieved the highest rate of job creation in the province, led by service sector growth in trade, transportation and warehousing, and accommodation and food services employment. Likewise, the unemployment rate fell for the third straight year and is now the second lowest in BC. The continued shift towards full-time employment has improved purchasing power for some. Another positive development is the substantial drop in business bankruptcies.

There are, however, still some areas of apparent weakness in the KDR:

Population loss over the past few years suggests that the region is not an opportune place for all. This outflow may, in part, reflect the shift in labour market demand from goods-producing sector jobs towards service sector employment as individuals relocate to areas where opportunities better match their skills.

-The KDR’s high rate of consumer insolvencies confirms that not all residents have benefitted from labour market improvements.

-Also of concern is the Development Region’s high rate of youth unemployment. The tight job market makes it challenging for young people to remain in the region, and increases the risk of permanent loss of valuable human capital.

-While it is preferable that educational attainment of the KDR’s labour force advances at the same pace as the BC average, attainment levels generally correspond to regional job availability. The KDR labour market does not demand the same level of skills as some jurisdictions in the province.

Looking ahead to 2014, several large projects that have the potential to proceed—the Jumbo Glacier Resort, Teck’s water treatment facilities in Sparwood, the Bingay Main Coal Project, and Phase Two of Teck Coal’s Line Creek Mine—all promise to generate substantial employment and economic benefits in the East Kootenay Regional District. Rising housing starts in the US and demand from China means continued demand for BC lumber. On the supply side, the mountain pine beetle epidemic that has infested much of the wood in the BC interior is threatening the stock of harvestable timber. Interior mill production is slowing as mills scale back or close down.27 The KDR, however, has ample timber supply for its mills and may benefit from soaring prices in the next few years as overall BC production declines. A surplus of coal in world markets combined with slowing growth in China has further reduced coal prices during the first quarter of 2014. Some North American producers have already cut back production and staff. Teck anticipates that production at its coal mines will remain on track this year, but some workforce reductions at its Elk Valley operations are expected as the company is planning to trim its global workforce by 5% to remain competitive.28 It is anticipated that the five East Kootenay operations will remain busy throughout 2014.

However, the most recent seasonally adjusted, short-term trends in labour market indicators are not positive. Employment in the first quarter of 2014 pulled back sharply and is considerably lower than the same period last year. Stats Canada reports that 6,600 jobs were lost (-8.9%) in the KDR between December 2013 and March2014, pushing the unemployment rate upwards to 7.8%. 29,30 The biggest losses occurred in the construction and trade industries.

27 Jim Girvan, Murray Hall, Gerry Van Leeuwen, Alice Palmer and Russ Taylor, “BC Mountain Pine Beetle Epidemic: Big Industry Changes Expected by Mid-decade,” Wood Business, Aug 2012.
28 Sygutek, Lisa, “Teck Announces the Layoff of 600 Workers”, Crowsnest Pass Herald, April 23, 2014, Vol. 84 No. 16.
29 Stats Canada, Labour Force Survey Estimates, Employment by Economic Region and North American Industry Classifi cation System, Annual, Table 282-0061.
30 Stats Canada, Labour Force Survey Estimates, by Provinces, Territories and Economic Regions Based on 2006 Census Boundaries, Monthly, Table 282-0054.

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