In this column, we review industry growth patterns in B.C. during the period since the 2008-09 recession, focusing on industries that have grown most quickly, and on those that have made the biggest contributions to the province’s overall economic growth.
While many features of the economy endure from one decade to the next, there are changes in the industrial structure that are worth tracking and understanding.
On most metrics, including employment and total business revenues, the province’s economy has become more diversified. This does not mean that all industries make similar economic contributions in a quantitative sense. But unlike Alberta, where the health of the oil and gas industry to a large extent dictates the state of the entire economy, no one industry is a dominant economic engine in B.C.
Industry data confirms that the process of diversification continued in B.C. from 2010 to 2018. By the end of the period, the role of the province’s major resource industries was slightly diminished compared with 2010. But our resource industries didn’t become smaller – the forestry, mining and natural gas sectors were all bigger in absolute terms in 2018 than in 2010, measured in terms of GDP. In fact, some resource-based industries expanded at a strong clip in the post-recession era. Instead, diversification is occurring mainly because other industries have been growing more quickly and now have a larger economic footprint.
The professional, scientific and technical services sector stands out in this regard. While the broad sector has expanded steadily, the component industries that have really propelled this sector include computer systems, related design services, management and scientific and technical consulting services.
Reflecting B.C.’s role as the Pacific gateway, the transportation and warehousing industry also shows up as a prominent growth sector. Within this industry grouping, the air transportation and truck transportation segments have been expanding rapidly.
The rise of tourism in B.C. is reflected in the above-average growth of the accommodation and food services industry. The accommodation industry just makes our list of the top 20 growth industries, but in recent years its growth has accelerated significantly.
One sometimes overlooked growth story is oil and gas production, especially when related construction activity is also counted. Here, too, the pace of growth has increased, with a pickup in drilling activity in advance of liquefied natural gas production coming online. Although the wood products manufacturing industry is in a slump, over the period examined here it was a growth leader.
Readers may be surprised to see the presence of non-resource manufacturing on the list. Manufacturing of electrical equipment and appliances, of primary metals, of non-metallic mineral products such as glass and gypsum, of chemicals and of plastics and rubber all make the list.
The individual industry that stands out as the growth star for B.C. is film and television production. Its GDP increased at an eye-popping average annual rate of 15% between 2010 and 2018, five times the economy-wide pace.
Construction is another high-profile growth engine. Although most elements of construction have performed well since 2010, residential construction warrants special mention. GDP in this segment of the broad construction sector has risen at an average annual rate of 7%, more than twice as fast as in any other province. In B.C., the residential construction industry – which also includes renovation spending – is also proportionally larger in size, so its contribution to economic growth is even greater. Thanks to an increasing population underpinned by high levels of immigration, we believe residential construction will continue to be an important economic contributor in B.C. in the coming years, notwithstanding the market disruptions triggered by government efforts to cool demand and extract more taxes from property owners and developers.
Jock Finlayson is the Business Council of British Columbia’s executive vice-president and chief policy officer; Ken Peacock is the council’s chief economist.
As published in Business in Vancouver.