Labour Force Comparison – a first look

last week’s release of the latest labour force numbers from Statistics Canada prompted your humble e-scribbler to go back and try a comparison of the overall provincial labour force in comparison to national averages.

Right off the bat, let everyone understand this is nothing more than a quick comparison based on readily available information. It should serve as the jumping off point for future discussion and if nothing else, it should help everyone get way beyond the rather simplistic comparisons of month-to-month numbers. Sometimes those things are meaningful but as the past couple of months have shown, sometimes, the statistics are just off.

The provincial numbers comes from a document included with the last provincial budget.  It’s called The Economy and gives an overview of the year just ended.  The national numbers come from the latest labour force statistics. Both sources use the same job classification system.  The listing below bundles them together so that the comparisons match up.

The figures are the percentage of the total number of jobs in each category.  For example, 1.7% of jobs in Canada are classified as being agricultural.  The corresponding percentage for Newfoundland and Labrador is 0.4%

To draw attention to aspects of the comparison, please note that categories where the provincial percentage lags behind the national significantly are marked with the digits underlined.  Where the provincial is significantly above the national average, the figures are in red. 

Statisticians may wonder what the definition of “significant” is.  Well, it comes down to the relative difference in the two numbers as they appear on the face of it. 

Category	National	Newfoundland and Labrador
Goods-producing	22%	21%
Agriculture	1.7	0.4
Natural Res	2.0	6.7
Utilities	<1	2.1
Construction	7.0	7.3
Manufacturing	10.2	5.5
Services-producing	78	79
Trade	15.7	16.2
Trans/warehouse	4.7	5.4
Fin, ins, RE,Bus	10.5	6.7
Prof./sci./tech.	7.4	3.6
Education	7.2	8.1
Health/soc asst	11.9	16.1
Accn	6.0	6.1
Public Admin	5.5	7.9
Other	4.3	4.8

Right off the bat, note that the relative breakdown into goods-producing and service- producing is virtually the same for both the provincial and national economies.

Let’s look at the goods sector. Overall, the provincial economy in this sector is very heavily reliant on resource extraction. The natural resources grouping (which includes fishing, trapping, mining and oil extraction) accounts for three times as large a percentage of jobs within the province as the same grouping.  Manufacturing, on the other hand, accounts for only half as much.  That 5.5% manufacturing for the province includes 2.2% for fish processing.

In the services sector, there are some equally interesting comparisons.  Finance, insurance, real estate and business services account for 6.7% of the jobs in this province while the same grouping accounts for 105% of jobs nationally.  The professional, scientific and technical services sector accounts for 3.6% of local jobs versus 7.4% nationally.

Take a look, though, at two service sectors which are publicly funded. About 16% of local jobs are in the health sector compared to 11.9% nationally;  that’s 33% above the national number.  Public administration is 43%, accounting for 7.9% of provincial jobs compared to 5.5% nationally.

Fully a quarter of the jobs in the province are public sector jobs compared to 17.4% of jobs across the country.  Given that some of the other categories likely also contain public sector employees, it wouldn’t take too much to estimate reasonably that the public sector accounts for about one third of all workers in the province.

Incidentally, just to put actual numbers on this, the health and social assistance sector accounted for 34,600 jobs in 2009 according to the provincial government figures.  That’s out of a total of 214,900 jobs.  It is the single largest category in the service sector, with retail trade coming in at 29,600 for second place  There were 17,300 in educational services and 16,900 people working in public administration.

The largest job category in goods-producing was construction at 15,700. The second largest was manufacturing with 11,900.  Of that manufacturing number, 4,700 were involved in fish processing.

- srbp -

Pre-publication post-script update:  This posts was written the night before it appeared. labradore has a simple set of numbers using more recent data for the size of the public sector in the province. His estimates are for the provincial public sector alone;  the figures above are for federal, provincial and municipal.

Still, according to labradore, the provincial government public sector accounted for 25% of the current labour force in the first half of 2010.

The World of the Psychic Economic Forecaster

On the one hand Jeff Rubin is in St. John’s telling audience that oil will be back in triple digit pricing within six months and will stay there. It’s a line from his book, basically.

The recovery presumably is underway and is solid.

On the other hand, in another part of the globe someone notices that a key index of shipping tonnage is currently at about 2,784 compared to 11,793 points  - a record high – that it hit just before oil prices hung in the triple digits for a short period in 2008.

Followed of course by a massive collapse.

Jeff says oil prices caused the collapse.

Okay.

Sure.

And that runny nose you have?

It caused your cold.

Chest pains?

Caused your heart attack.

Jeff’s forecast and the indicators don’t quite seem to fit together, do they?

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Reach for the Screech

In a couple of weeks time, the Memorial University political science department is holding a reunion.  The thing is timed to coincide with the spring convocation.  A bunch of alumni will be there, none of whom has written – as best as your humble e-scribbler can determine – what we used to joke was the definitive doctoral thesis on local politics.

The influence of rum on Newfoundland public policy.

That was the working title.

On the surface, it would be a piece about the triangle trade and especially the exchange of salt fish with Caribbean countries in exchange for that magical elixir.

But on the more cynical level it was supposed to be a work that noted the number of times local politicians made decisions that seemed – in the cold light of morning – as if they’d been tanked up on the dark liquid at every stage from the moment the idea popped into someone’s head until someone scrawled the last  signature across the last contract.

Rum, it would seem, played a role in a few of the more colourful events in local political life.  Elections sometimes turned on the number of swallies doled out in the right districts. Fistfights in the legislature sometimes came complete with their own aroma – essence of the captain – to cover over the smell of blood and snot on the curtains behind the Speaker’s chair from the odd poke in the snoot one gave another.

Heck, so pervasive is the rumoured connection between politics and the bottle that the current Premier – the Old Man Hisself – could not help but make a half-joking reference to it.  That was back in 2004, incidentally, in an editorial board meeting with the crowd at Macleans. 

But while tippling on the job fell out of favour a few years back, few would blame the current crowd were they to ever to be found seeking comfort with a reach for the Screech. 

After all, they have not had a good political day in the better part of a year:  Resignations, the stunning loss of a by-election, public finances in a mess, caught frigging with the 1961 Churchill falls lease and then forced to hold an emergency session of the legislature to clean up the mess of that, the shagged up expropriation of Abitibi’s polluted properties, pollution reports they tried to keep secret.

And still no Lower Churchill.

The finest undeveloped hydro project in North America, as the Old Man likes to call it.  The phrase is getting a little shop-worn by the way, since it was first called that way back before the provincial government nationalised BRINCO in the mid-1970s. 

40 years later, still undeveloped but still the finest.

Once said to be Hisself’s legacy project.  Staying until it as done, he said.

But now things are so dark that even Hisself apparently doesn’t like to talk about legacies anymore.

Don Martin, still desperate to see his 2004 “Harper wins majority” headline used as something other than a joke, took a trip to the far east to chat with the Old Man. The account of the visit – or a least the sampling of the local heart-stopping cuisine – is in the weekend National Post.

"I hope my own legacy -- which is a stupid term but it's in vogue so I'll use it -- is that we can keep this feeling of pride and respect and self-confidence, that we're as good as anybody else.

"For the longest time we were perceived by Canadians as second-class citizens. Those who knew us knew it was bum rap, but it was an overall perception that's changed dramatically. When you've got young people from other parts of the country coming here, not just for an education but also to stay and work, it shows we have a real good future."

There it is:  Williams wants to be remembered for something he didn’t do.  Williams has nothing to talk about except a throne speech from five years ago:

This is a speech which claims credit for finding that which was not lost. It praises the lustre restored to that which had not been dulled. It lauds the cleansing of that which is not sullied. It remembers what was never forgotten. This speech sings hymns of praise to its authors unhindered by modesty or fact.

Williams chose to call his 2005 hand-out from Ottawa the “Atlantic Accord” and not surprisingly it is often confused with the real accomplishment of the same name done by someone else 25 years ago.  It shouldn’t be surprising he now wants his legacy to be claiming credit for something Newfoundlanders and Labradorians never lacked:  confidence in their own abilities. Forget what others thought.  Self-confidence and ability is something the people of this province have always had, in spades.

But look at Danny Williams’ comments in this Martin column and you can see the state of affairs almost eight years after he took office.  We need to be masters of our destiny Williams says, or more like it: masters of our domain as a budget speech two years ago put it.  “Need to be”, as if we aren’t now and never have been.

Again with the false goals.  Newfoundlanders and Labradorians have always been masters of their own fate.

The problem they face today is that as they roll up on the end of the period Williams used to say was the time frame for his plan to take effect, things are not looking all that good.

The local economy seems more dependent than ever before on public spending.  The Conference Board of Canada predicted last week that the provincial economy would grow by 2.4% in 2010 based mostly on public infrastructure spending. But the government budget last year was short by a half a billion dollars, one of the largest cash deficits in the province’s history.  The forecast is that it will be short again by at least that much, if not more. If growth depends on the public purse, then this province is in for a hard time any day now.  

Williams came to office promising ”jobs, jobs, jobs” that he would create based on his proven ability as a local businessman. A new department – with the creative name “business”  - sprang up to to channel his genius. 

After a couple of years, no one  - least of all Danny - had any idea what the department was supposed to do.  Scuttlebutt had it that his own deputy minister couldn’t get to see him for months on end. The only thing that piled up were claims about how many files from companies sat on someone’s desk.

By the time someone figured out what the “plan” might look like, Williams had long since handed over his own personal department to first one and then another and then another of his ministers. Other things needed the Old Man’s attention more urgently than did his own personal department.

The “plan”  - as the successors finally hit on it in 2007  - would be to hand out free cash to any company that would come here to do business.  The only thing missing from this revolutionary, never-before-seen concept was the Latvian crook to run around clicking his heels together with a snappy “Yes, My Premier” at the prospect of yet another rubber boot factory or eyeglass plant.

Not content with just that bit of genius, after threatening expropriation a couple of times and then finally doing it to no fewer than three companies, the current crowd put in authority over us have so fouled the investment climate in the province that they cannot even pay companies to come here and create jobs. 

Think about that for a second.

Out of $75 million budgeted for the give-aways since 2007, the business department has handed out only $14 million of it.  Some went to set up a marine service centre in  a land-locked town. Half the cash they did dole out went to a company – itself a descendant of the Latvian legacy – that promised to add 50 jobs but instead cut nearly twice that. No word if they’ll still get all the cash.

The Tories said “no more give-aways” but somehow this doesn’t seem to be what they had in mind.  Things have changed on many fronts, alright, but not in the way people might have expected.

The government backbenchers don’t talk so much any more about how great things are across the province.  Their speeches in the legislature these days are more likely than not great homages to their glorious leader.  They offer paens to his posterior that seem to be either laying the groundwork for his departure -  he is, Martin tells us, “mindful of being closer to the end of his political career than the beginning”  - or coded, panic-stricken pleas for him not to shag off permanently to the new digs in Florida. 

It’s likely been a bit jarring for the poor dears to poke their heads out of the fog of their prepared Open Line talking points only to discover that they are not – in fact – just coming up on the New Jerusalem as foretold in the speaking notes;  they are in fact currently midway up shit creek and none of Danny’s potential replacements appears to know where he keeps the batteries for the GPS, let alone have a clear idea of how to work it.

And that original eight year plan, the one it took them four years just to figure out?

Even that has changed:

But that's just the beginning of his 30-year plan to harness offshore oil and gas, wind and hydro electric power into Newfoundland's shield against buffeting by external forces.

It’s enough to make anyone reach for the Screech.

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The recovery is here all right…

Someone just forgot to tell the friggin’ Europeans.

Crude is hovering at about US$71 a barrel, down the better part of twenty bucks in the matter of a few weeks.

Meanwhile at the provincial finance ministry they’d likely be flinging themselves out the window if their offices weren’t on the bloody first floor.  Billion dollar deficit forecast based on oil averaging about $15 above where it is now and the odds are looking very good that we just had the high point for the whole year.

That would be so friggin’ cool if it wasn’t going to hurt us all.

Hurt us all very, very badly.

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Rosy with a chance of goofballs

Not only will the provincial government continue to make billions despite dwindling oil production, that situation will continue over the next decade with the provincial government raking in around $2.0 billion annually.

That includes 2016 when – according to the production forecast used to make these awesome predictions - production will be a mere 65 million barrels.

The source of this sunniness is none other than the local Blue Team’s favourite economist Wade Locke.

Yes, folks, the same guy who complained when he was accurately quoted (but unfortunately contradicting the official spin) is predicting sunny days ahead.

And it’s there for all to read, on the front page of the Saturday Telegram complete with a pretty graph of annual oil production.

Not surprising, is it?

And there is no reason for doubt.

Locke remains confident in his forecast, a year after he gave it:

"That what I was expecting before, and that's what I'm still expecting."

Of course, he is. 

Just like he was confident when he forecast gigantic things for Labrador at a time when the global economy was tanking.  he expected it then and he still expected it right up until it didn’t happen.

Or like 1990 when he pissed all over the economic benefit from Hibernia.

Yes, those economic boons can be hard to predict.

We just have to make sure the credit goes in the right direction.

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Significant Digits – oil production

In 2009, the Canadian Association of Petroleum Producers forecast a steady decline in local oil production. 

The decline is forecast to end around 2017 as new production from Hebron comes on stream, but the increased production only lasts for a couple of years before the decline sets in again

The peak once Hebron comes on stream is forecast to be about the same level as the forecast shows for 2012.  That’s slightly above 80 million barrels.

 

But hang on a sec.

Production for the current year – 2010 – is forecast by government officials at 86 million barrels.

Yessirree, that’s right.  And production last year was 97 million barrels, again a figure CAPP had down for 2011.

In other words, the decline is about two years ahead of forecast. We also know that Hebron is behind schedule as well.  How much behind schedule isn’t clear but it could be as much as a year later than the optimistic projections when the deal was announced or when it was re-announced.

So that period in the low-production trough could well be longer than CAPP’s forecast shows and the rise back up after Hebron could be much slighter.

In other words, when finance minister Tom Marshall admits that oil production is on the down-slide, he’s acknowledging that he already knows exactly what the implications are from that CAPP graph.

Let’s put it this way:  this year, if oil averages around $83 a barrel as the provincial government believes, the total value of oil production offshore will be about $7.1 billion ($83 X 86 million)

In order for the provincial treasury to bring in the same royalty as it forecasts for this year - $2.1 billion – with production at 40 million barrels (i.e. the bottom of the trough) – oil would have to average $178 dollars per barrel in that year.

No sweat, says you, oil got to $147 a couple of years ago.

Yes it did, sez your humble e-scribbler.  And look what happened right afterward.  Oil didn’t average that price:  it hit the number and then fell off quickly.

If that isn’t enough for you, consider that oil prices averaging $178 a barrel would be more than double the average price ($83) the provincial government forecast for oil this year.

So in order for the provincial government to do exactly what they are doing in 2010 in that mythical year we will call 2014 (remember everything is two years ahead of schedule) oil would have to be almost $180 a barrel all year.

For those keeping track, and just to show you how soon this is, just bear in mind that 2014 is one year beyond the period of continuing deficits forecast in the spring provincial government budget.

And just remember, as well, that this year the budget is forecast to be short by almost a billion dollars of cash.

Not only is there not enough of a cash reserve to cover that sort of a shortfall in 2014, there wouldn’t be enough cash in any secret government pockets to handle a deficit half that big.

And that’s without thinking of what tremendous pressures there’d be for higher wages and higher costs and higher priced everything else in a world where the price of oil doubled in a mere four years. 

Yes, gentle reader, that little scenario assumed spending stayed where it is predicted to be in 2010.  But as we all know, if oil prices were to shoot up that way, spending would have to go up just as radically.  The only problem is that spending would shoot up but – as we know – the major source of provincial government revenue would only come in at the level for 2010.

When oil was forecast to be half the price.

Increase your spending dramatically while holding your revenue about the same.

That’s the definition of “unsustainable”.

-srbp-

No bubbles in sight: GDP dropped 26% in ‘09

The value of goods and services produced in Newfoundland and Labrador dropped 26% in 2009 compared to 2008.  Those figures are in an appendix to the finance minister’s budget speech delivered on Monday.

GDP in 2009 hit $22 billion compared to $31 billion in 2008. That’s only slightly above the GDP in 2005.   The single year drop erased the gains of 2006 and 2007 which together saw an increase in GDP of 27.9%.

Real GDP declined 8.9%.

In 2008, Premier Danny Williams claimed the province would be protected from the global recession by some unknown means.  He and finance minister Tom Marshall continue to claim the recession did not affect Newfoundland and Labrador as severely as it did other places.

Average annual employment in the province during 2009 remained below employment levels in 2006 and the current forecast is for negligible growth (one half of one percent) in the coming year.  Meanwhile the labour force remains swollen with returning migrants thrown out of work in other parts of the country by the recession. 

Wages and salaries in the province are higher, driven primarily by increases in the public sector.

Sales of manufactured goods (shipment value) were down 33% in 2009. Housing starts fell 6%.

Oil production hit 97 million barrels in 2009, compared to 125 million in 2008.  That’s basically the forecast production from Budget 2009.  Interestingly, the December financial update had forecast an increase in oil production to 101 million barrels.  Oil production is forecast to drop again – to 86 million barrels – in 2010.

Newsprint shipments in 2009 were down by 49% from 2008 and 66% from 2005.  The value of fish landings was down 19% in 2009, wiping out gains in the preceding two fiscal years.

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Loonie on the way up

The Canadian dollar is at a level it hasn’t hit since just before the giant meltdown of the economy in the middle of 2008.

And this is supposedly a good thing.

How exactly is unclear since the United States economy is still in the crapper and the Canadian economy is still full of government cash.

Productivity is up, for sure, and that’s good.  But…

While the recent pickup in productivity is welcome, “the question of sustainability still remains front as centre as firms continue to increase hours worked along with overall employment,” said Bank of Nova Scotia economists.

That’s really the warning that has to go with any Pollyanna projections:  we can’t be absolutely sure this is real.

Sales of manufactured products was down 11% in this province in January from December.  But the January 2010 numbers were about the same as the numbers in January 2009.  And that’s the opposite of what was happening nationally.

Oil production is still running about 17% below last year.  January production was about 8.7 million barrels compared to 10.5 million barrels in January 2009. That’s consistent with what you’ve been seeing reported in this corner since last fall.

 

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Inherent weakness: a public sector-driven recovery

Newfoundland and Labrador showed weak job growth in February with an increase of a mere two tenths of one percent compared to January 2010 and 1.5% compared to February 2009.

Nationally, the job growth in February was driven almost entirely by the public sector.

That matches rather nicely with the experience in Newfoundland and Labrador where private sector job creation has been trailing off for a couple of years. As usual you can find great details on this at labradore: One, Two, Three, Four, Five, Six.

Here’s a chart – h/t  labradore – that should help you get a clear picture of what has been going on.

Three things to take away from this:

1.  What you just saw is absolutely, categorically NOT what you are hearing from the mainstream media, political circles and people in the local business community.  But it is real. The happy-crappy-talk coming from places like the Board of Trade demonstrates the extent to which the Board has its head up its collective backside or can’t understand simple numbers.

2.  The corollary to the private sector jobs-slide is that the jobs growth that has taken place – akin to the boom on the northeast Avalon – has been fuelled almost entirely by the public sector.  Since public sector spending is – as regular SRBP readers have known for years – unsustainable the whole thing is built on very shaky foundations.

It can’t last.

Therefore…

3.  Stand by for some serious adjustments.  The reckoning may not come in the next few months but it will have to come.

Of course, you will hear nothing but happy-crappy-talk from politicians who are looking to get re-elected in two years.  The pre-election campaign has already started.  What’s more, in a worst case scenario, some of those politicians may be looking to become Premier in a Tory leadership fight before then. Either way, there’s little hope that any political party in the province will be able to come to grips with the real economic issues and start taking action to set the right course for the future.

To steal the words of the Lucides:

Those who deny there is any danger are blinded by the climate of prosperity that has prevailed in … recent years. … That’s the peculiarity of the current situation: the danger does not appear imminent but rather as a long slow decline. At first glance, there doesn’t seem to be any risk. But once it begins, the downward slide will be inexorable.

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RBC Economics: Imaginary project to drive NL economy in 2010

Sometimes you wonder if these guys actually have a clue:

The recent Public and Private Investment Intentions survey revealed that growth in non-residential capital investment in the province will be the fastest in Canada, surging by an impressive 31.2%. This increase will be fuelled by stronger investment in mining, oil and gas extraction,
utilities (related to the Lower Churchill Hydro development project) and the provincial government’s aggressive infrastructure stimulus plan.

Lower Churchill Hydro development project?

Since no one will be spending money on a project that doesn’t exist it’s going to be pretty hard for that gigantic imaginary project to drive economic development in the province.

It’s like the Matshishkapeu Accord, appropriately named around these parts after the spirit of the anus, the flatulence god.  Because that’s pretty much what the whole LC project is right now:  so much hot air that hits your nostrils with a pretty ripe odour.

Then there’s this piece of sure shite from the boys at the bank:

Employment in the province fell by 5,200, causing the unemployment rate to rise during most of the year; however, outside of energy and mining, the rest of the domestic economy fared surprisingly well.

Sure.

Surprisingly well indeed, if you don’t mention that the fishery is down 22% in landed value.

And let’s not forget that forestry, as in pulp and paper making, is in near complete friggin’ meltdown.  Mills closed.  The one remaining mill has one machine going instead of two and is slicing off workers and costs in a desperate effort to stay afloat.

The province’s finance minister admits they’ve shagged up government spending so badly that current spending patterns are “unsustainable.”  But the fin min say recently that if it wasn’t for oil – thanks BP, CKW, BT, and   RG – he and DW would be shagged up royally?  good thing there were all those give-aways before 2003 of they’d be up the creek.

But sure sure thing, there, RBC economist guys.

Everything in Newfoundland and Labrador is just wonderful.

Protected by a magic bubble.

Friggin’ loons.

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Yep, that’s unscathed alrightee

The province’s fishing industry saw a 22% drop in the value of fish landings in 2009.

So much for coming through the recession protected by some sort of magic bubble. Then again, some of us mocked that idiotic idea the moment the words slipped out of someone’s mouth.

Now you know that when a provincial politician talks about coming through the recession better than most you know they were only talking about themselves, personally. 

They sure as heck weren’t talking about their constituents.

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Financial shorts – Second Monday in March edition

1.  Crack whores rebel:  Icelanders voted against a US$5.3 billion package to deal with part of the country’s financial mess.

“This is a strong no from the Icelandic nation,” said Magnus Arni Skulason, co-founder of a group opposed to the deal.

“The Icelandic public understands that we are sovereign and we have to be treated like a sovereign nation — not being bullied like the British and the Dutch have been doing.”

Sovereign Icelanders may be, but they are also broke.  If they don’t like it when people come looking for their money back – it ain’t bullying, BTW – then maybe they shouldn’t have been running the financial equivalent of a crack-house.

2.  More hidden cash turns up:  There may be a few million extra in provincial coffers when the financial year ends.  This isn’t a windfall or a gift.  It’s just what you get when you compare the actual amount of federal transfers in the current fiscal year - $1.264 billion – to the $988 million reported in Budget 2009 last spring.

Well, that’s if you use the Estimates which gives different numbers than the ones in the budget speech. The numbers in the budget speech are pretty much dead-on the actual federal transfers.

Someone should ask the finance minister to explain why he feels the need to keep two sets of books.

3. Counter-intuitive.  Okay.  Crude is up.  Gold is up and silver is is up as well. US dollar is down.  The American economy shed jobs but not as many as expected.  Some news media are reporting this as a good thing.  Basically, it’s more of the recovery-is-here-yada-yada crap they’ve been fed since this time last year.

If the dollar is down, and oil and gold are up, that’s a sure sign that not only is the US economy not in recovery, it’s virtually a guarantee it won’t recover while prices for things like crude oil are that high.

The American economy needs oil prices to be about half of what they are currently in order to see a recovery tale hold.  And when a recovery does start, it won’t keep going if oil prices shoot back up to their current levels.

In the meantime, stand by for an “adjustment’ sometime in 2010 or early 2011.  The “correction” won’t be as big as the collapse in 2008 but it will hurt.

It will especially hurt any government that doesn’t have its financial house in order.

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Economic Recovery: Not exactly as illustrated

By definition, anyone connected to “economic development” in any provincial government or quasi-government organization must be so positive and upbeat as to make a Pollyanna look like someone about to climb into a warm bath and open a major artery or six.

That pretty much sums up the view in central Newfoundland where the regions major private sector employer is gone and there is nothing on the go even remotely as big:

"(If it was contrary to what businesses are reporting) you would see it in job losses, you would see it in lack of inventory," [Amy Coady-Davis, chair of the Grand Falls-Windsor town economic development committee] said.

"The turnover is there - it is right in front of your face. You can't fudge those numbers. Sales are up, they have said they're up, you can see that they are up."

Well, not exactly, at least if you judge by some numbers included the same Telegram article and which came from no less an authority than the town’s own economic development agency:

According to the economic development office in Grand Falls-Windsor, housing starts are down 50 per cent from 2008 - there were 118 units built then as compared to 53 units in 2009.

There you have it.

And if that wasn’t enough, consider the view from the local chamber of commerce:

Gerald Thompson, president of the Chamber of Commerce - which represents 209 businesses in Grand Falls-Windsor - tends to agree with the town's positive outlook.

He said they are getting far more positive feedback from members than negative.

"... Although there's been a number of small businesses that have closed in the last year, we still know that the people that have done business here in this valley, their percentages over last year are up.”

Of course, they are up. 

Some of the people who used to patronize those businesses that have closed up have moved their custom to the ones remaining.

And those companies that went out of business? 

Well, they aren’t members of the chamber of commerce any more – most likely – so their voices wouldn’t heard when the chamber does a survey of members.

Just to add to the whole surreal atmosphere of the article, don’t forget that the president of the chamber of commerce cited as proof of the great things the positive view from the people who build new homes.

Oh yeah.

Things are so great in that business people are building only half as many homes as they did in that artificial bubble the year after the mill closed.  That would be the year of severance cheques and all that extra, short-term cash.

What happens from this point onward will be entirely the result of whatever economic activity there is left now that the Abitibi mill’s corpse has stopped twitching.  Those who are tempted to look at places like Stephenville need to think again.  All those paper mill workers found other jobs, mostly in Alberta.  Those sorts of options don’t exist for the crew from Grand Falls-Windsor.

Nor is there a chance that the province’s remaining paper mill – there were three in 2003, incidentally – will take up any slack.  It is struggling to survive.  The company that runs the mill is reportedly looking for a 10% wage roll back from workers.

The professional pollyannas can be as bright-eyed and optimistic as the want.

The reality may well prove to be not exactly as illustrated.

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NL economy to shrink by 4.5% in 2009: RBC

From the latest RBC Economics provincial outlook:

After suffering a significant setback in its resource sector in 2009, Newfoundland & Labrador’s economy is set to jump back into growth mode in 2010. Major declines in mining and crude oil production during the past year are expected to be largely reversed. Stronger global demand for iron ore and the eventual settlement of a labour dispute at the Voisey’s Bay nickel operations are forecast to
boost metal mining output and the imminent entry into service of the North Amethyst satellite field — an expansion to White Rose — will provide a temporary lift to offshore oil production. This positive swing in a sector that represents approximately 30% of real GDP in the province will once more be the dominant factor in overall growth in 2010, contributing more than one percentage point to output. We forecast real GDP growth at 2.4%, revised up from 2% in September, and a 1.5% increase in 2011. In 2009, the slump in mining and oil
and gas extraction is likely to lop off more than six percentage points from real GDP growth, which has been revised lower to -4.5% to reflect longer-than anticipated mining operation shutdowns.

That forecast 2.4% growth in gross domestic product for 2010 puts the province in the middle of the pack among the other provinces.

Talk about a slender reed:  it is based entirely on production from the White Rose expansion.

Real growth in 2011 is positively anaemic at 1.5%.  That’s the lowest of any province.

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Long term work force trends hard to see…yet

Friday’s release of job statistics for November has prompted some media stories focusing on the very minor change in employment levels across the country.

Closer to home, innovation minister Shawn Skinner emphasised the longer term trends in his comments.

That’s pretty much what you need to do if you want to see what is really happening.  The major problem is that at this juncture it is very hard to see what the trends are, at least within the province.

Look at it this way:  in November 2008, the number of people working full-time or part-time in the province was about 218,000. The figures used here are seasonally adjusted, by the way so that we can get an accurate comparison.

A year later, the number is 215,300.  That’s up about 3,000 from September and October.  Before you get excited that the trend might be upward, just remember that there were fewer people in the province working in November 2009 than there were in either March or August and November’s employment is only a couple of hundred ahead of July.

Now look at it another way:  the average size of the work force in the period from April to November (i.e. the current fiscal year) has been about 213, 000.   Scan back through the monthly numbers from Statistics Canada (linked above) and you can see the monthly numbers go up and down slightly around that steady number.

The trending really isn’t clearly up or down.

Then there’s the comparison across the country.  Year over year, every province saw a drop in employment except for Nova Scotia, New Brunswick and Prince Edward island.  They weren’t anything to write home about, of course, with increases of 0.3% in both Nova Scotia and New Brunswick.

At –1.4%,  Newfoundland and Labrador wasn’t the worst, but it is on par with Ontario, Alberta, Manitoba and British Columbia, all of which suffered year over years drops in employment ranging between –1.1% and –1.8%.

That’s a far cry from the assurances last year being tossed out by some people that the province would escape the ravages of the recession because of some magical bubble.  The province has been hit proportionately in some respects and certainly on par with the impacts others have felt in some other respects.

Oil royalties are below even the pessimistic projections of the current budget forecast.    Overall, royalties are down 57% from last year.  Oil production is down as well, on the order of almost 30%.

The fishery has had a rough year.  Forestry is way down with the closure of the oldest paper mill in the province and mining is also suffering the effects of the recession. Vale Inco is still closed at Voisey’s Bay due to a labour dispute.

Things will turn around.  They haven’t yet, but they will. They always do.

No one can say, though, how long it will take for things to turn around.  it may be as little as a year away;  it may take longer.

But if you look at the employment trends, well it’s really pretty hard to say which way things are going. 

That’s why, when it comes to the province’s mid-year financial update and planning for next year, a little prudence might be in order for a change.

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The first forecast for negative economic growth in 2010

According to the Conference Board of Canada’s latest economic projections for the provinces,  province’s that are down this year are going up next year.

All except one.

Newfoundland and Labrador’s economy is forecast to shrink 3.6% this year but the Board has now said that the local economy will also contract another half percent in 2010.  The Board doesn’t anticipate a return to growth in Newfoundland and Labrador until 2011.

It put Newfoundland and Labrador in a category of its own. That province is expected to post the biggest GDP decline this year at 3.6% and is the only provincial economy forecast by the Conference Board to contract (by 0.5%) in 2010. The board said the province was hurt by declines in forestry, mining and manufacturing this year, and offshore oil drilling is expected to remain at depressed levels next year.

Incidentally, VOCM missed the importance of that entirely.

The forecast contraction for Newfoundland and Labrador this year is the largest in the country for 2009, incidentally.

Now all of that make as a complete mockery of the line coming from local politicians.  After the collapse last year, the Premier talked about the province being protected by an economic bubble last year.  That turned out to be a version of the St. John’s Harbour bubble apparently.

And just within the past couple of weeks, environment minister Charlene Johnson was out telling a local Rotary Club audience about how the province was well positioned to weather the economic storm due to the wonderful things done by the crowd she’s a part of.

Well that’s another issue.

There’s no question however, the economic bubble was entirely fictitious.

The Conference Board projection is in line with the actual oil revenue data for the first half of 2009 that Bond Papers brought you exclusively earlier this week. it shows royalties are down 57% for the same period in 2008 and that they are 15% below the government’s own forecast thus far.

Oil production is also down.  In the first six months of fiscal 2009, production is  running about 29% below the same period in 2008.

Add to that personal income tax. Last year, personal income tax (PIT) generated $899,460, 000 in government revenue.  That works out to $4, 037 for each of the 220, 300 people working in the province, full-time and part-time.  You can find those figures using information in the provincial government’s own financial documents tabled with the budget last spring.

Government lowballed the number for its 2009 budget, projecting PIT at $786 million.  That’s despite expected growth in income  - yes, they forecast more income going around - and a decline in employment of only 2,000.  That $786 million is about $100 million below what the government’s own numbers would work out to be, incidentally.  That’s why the ones actually published in the Estimates are said to be low-balled.

Job losses are currently running higher than forecast.  In October it was 5,400 for the same month in 2008.  Now word publicly on wages but working with the provincial government’s figures and the actual performance you would bring personal income tax in at around $870 million.  (4037 X 215,000)  Now that’s a rough estimate.

Even if PIT went to the same number as last year by some quirk, it still wouldn’t offset the forecast decline in oil revenues and the drop that came in mining and the forestry sector.

The government is on track to get the budget they forecast.  There won’t be any surprises, like discovering that despite all the posturing and puffing about being a have province, the government actually opted to switch formulas and collect Equalization in 2008.  They did that, incidentally, five months after Danny Williams made his great “have province” speech at the November Tory fundraiser. It was a spectacular poll goose but it was also a fraud since the provincial government knew the numbers and cabinet knew that it would not make its Equalization election until the following March.  There is more to being a have province than a political speech, a poll goose and a rip-off video.

But that, too is another issue.

There are serious issues to be faced in the months ahead.  The people of Newfoundland and Labrador are only just now starting to see the signs.

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