B.C. export momentum improved in March. Seasonally adjusted goods exports rose 12% from February to the highest level in a year, driven by a doubling of metal and non-metallic mineral sales, and a 12% increase in energy exports following two months of declines. Consumer goods also gained traction, while forestry shipments and food product sales edged lower.
That said, first-quarter exports were virtually unchanged on a year-over-year basis. Energy sales, composed largely of natural gas, coal and electricity, fell 10%, while forestry exports fell 2% and food products declined 5%. Offsetting gains have come from strong mining and processed metal sales, as well as consumer goods.
While energy exports are down sharply from a year ago, this largely reflects lower electricity exports, while natural gas export sales have declined on lower export prices. Elsewhere, real forestry exports are down close to 10% with dollar-volume sales propped up by high prices. That said, demand for wood products remains high with sawmills operating near peak capacity, though as with other commodities, shipments have been limited by rail bottlenecks.
Exports will trend higher through 2018. Growth in the U.S. and other markets is strong with global expansion pegged at 3.9% by the International Monetary Fund. Protectionist policies remain a key threat to exports.
Industry gross domestic product estimates confirmed another banner year for B.C.’s economy in 2017. Growth in real output rose 3.9%, up from 3.6% in 2016. This marked the fourth straight year that B.C. growth exceeded 3%. B.C growth outpaced a strong national expansion of 3.3% and was second only to Alberta, which rebounded with a 4.9% surge following a 3.6% contraction in 2016.
Manufacturing growth was strong at 4.5%, led by a 9.8% gain in primary metals, due in part to increased production at the Alcan plant in Kitimat, as well as a 14% rise in petroleum and coal production. Forestry and logging fell 4.3% following a 1.3% contraction in 2016, and wood manufacturing fell 2.1%. Wildfires limited some production during the year, while transportation bottlenecks may also have been a factor.
Construction grew by 9.9% owing to robust engineering construction on plants and transportation projects, while residential construction growth was a mild 2%.
Service-sector expansion of 3.6% geared off the strong goods-sector performance, robust labour market, and demand for export services.
Technology subsectors also boomed as tech hubs expanded and export demand increased. The broad information and communication technology sector GDP rose 4.7%. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.