B.C. Business Matters:
Ken Peacock >>
BC's Fastest Growing Industries Come from a Diverse Mix of Sectors
By Ken Peacock
Amid the steep downturn in global commodity markets, the BC economy has held up surprisingly well. Two decades ago, a comparable world-wide mining/energy downturn would have meant malaise for the provincial economy. But what we see now, notwithstanding some regional challenges, is an economy that is on a solid growth footing. The BC economy is estimated to have expanded by 2.6% (after inflation) in 2015, and based on our forecast it is on course to grow by 2.8% this year. These are not barn-burning figures, but to put them in context, the Canadian economy is likely to grow by 1.5-1.9% in 2016. With many other provinces suffering from the commodities slump, BC is likely to top the provincial growth rankings this year.
One factor contributing to BC’s comparative economic success is that positive growth across many sectors of the economy has resulted in greater diversification than was the case a couple of decades back.
The accompanying figure depicts the annual average growth (between 1997 and 2014) of the 25 fastest growing industries in the province. Not surprisingly, technology shows up in a number of areas. Software publishing has seen the fastest expansion of any industry. Computer system design services is also a leading growth sector, as is the design and technical services industry. Reflecting the steady improvement of environmental practices, the waste management and remediation industry has consistently been a BC growth leader over the past two decades.
BC Top 25 Growth Industries
(average annual GDP growth 1997-2014, %)
Contrary to what many would expect, natural resource industries also feature in the list. Because we are looking at growth over the past two decades (and not just the past few years), oil and gas extraction is in the top ten. Higher value wood products also show up, in two industry segments: plywood and other panel products, and manufacturing of pallets, millwork and other containers. In these areas, product and process innovations have played an important role.
The impact of Asia’s global rise, and of closer trade linkages within North America, is also evident, as Gateway-related activity appears on the list of fast-growing BC industries via the railway industry and the truck transportation sector. Note that data for the water transportation industry are suppressed by Statistics Canada, otherwise the shipping industry would also likely be on the list.
A number of non-resource manufacturing industries also emerge as growth leaders, which may come as a surprise to some readers because BC generally is not known for manufacturing outside of resource-based sectors.
BC’s aquaculture industry has seen GDP increase at an average pace in excess of 5%. Although film production has experienced some ups and downs, over the long term it too has expanded briskly. Several other service industries make the list, including equipment and machinery repair, household maintenance, investigation and security services, and gambling industries. The proliferation of language schools and other training facilities, and an increase in the number of British Columbians taking trades training, are also evident in the data on fast growth industries. The role of residential real estate as a generator of economic activity in BC is reflected in the solid growth of the residential construction industry.
Having expanded at an average annual rate of 3.6% since 1997, municipal and regional public administration makes the list. “Output” in this industry has grown well above the all-industry average of 2.5%, which is a bit puzzling because over the long-term large public sector industries tend to grow in line with or more slowly than the overall economy. Indeed, because of economies of scale in the delivery of their services, municipal and regional public administration should grow more slowly than the macro-economy. The provincial public administration sector, for example, has grown at an average pace of just 1.5%. Similarly, the expansion of federal public administration GDP has been even more modest at 0.8% per year. Even in the publicly dominated health care sector GDP has grown at an average pace of 1.3%, despite the relentless demand for services. In truth, local government is an outlier within the broader BC public sector in the extent to which it has increased in size and impact.
What emerges from this brief review is that, over the past two decades, BC’s fastest growing industries have been drawn from many different sectors. The list reflects the diversity of our economy. Importantly, BC’s natural resource industries are well represented, along with the important Gateway sector. Manufacturing, more generally, has also done quite well, while the advanced technology industry has become a key growth engine for the province.
 Statistics Canada has suppressed data on the water transportation sector to comply with privacy requirements.