Note to readers
The Industrial Product Price Index (IPPI) reflects the prices that producers in Canada receive as the goods leave the plant gate. It does not reflect what the consumer pays. Unlike the Consumer Price Index, the IPPI excludes indirect taxes and all the costs that occur between the time a good leaves the plant and the time the final user takes possession of it, including the transportation, wholesale, and retail costs.

Canadian producers export many goods. They often quote their prices in foreign currencies, particularly for motor vehicles, pulp, paper, and wood products. Therefore, a rise or fall in the value of the Canadian dollar against its US counterpart affects the IPPI.

The Raw Materials Price Index (RMPI) reflects the prices paid by Canadian manufacturers for key raw materials. Many of these prices are set in a world market. Unlike the IPPI, the RMPI includes goods not produced in Canada.

OTTAWA - Almost one-quarter of Canadian households - more than 2,700,000 households - are paying too much of their income to keep a roof over their heads. And calculations done by the Canadian Council on Social Development (CCSD) show that it is families who rent that are the most likely to have to pay a disproportionate amount of their household income for shelter - almost 40% of all tenant households.

"This creates a financial tightrope that is especially tough on families, particularly in the post-holiday season," says CCSD President Peter Bleyer. "Everyone from bankers to financial planners to housing experts agree that 30% of your income is the most you should have to pay for a safe and healthy place to live. Yet it is a near-impossible goal for many Canadians - even those who work full-time."

The report was released on January 30, 2007, at a CCSD-sponsored meeting of community planners. It indicates that provincially, nearly 45% of renters in British Columbia, Nova Scotia, and Newfoundland paid more than one-third of their income on shelter costs.

Regionally, the largest proportion of households paying more than one-third of their income on rent lived in Cape Breton, Kingston, and Thunder Bay. Nearly half the renters in both Victoria and Peterborough faced similar circumstances.

And although Quebec had the highest proportion of renters, tenant households in the province were the least likely to have to pay more than 30% of their income on rent.

Data from the Urban Poverty Project also show that in 2000, more than 13% of Canadian families lived at or below the poverty line. According to the Census, 16% of families in Newfoundland were poor - the highest percentage in the country. The lowest proportion of poor families lived in Prince Edward Island and Alberta.

"There's no question that urban poverty is a core reality in Canada," says Bleyer. "Not only are 38% of all unattached Canadians poor, they are living in urban areas where their chances of finding a decent and affordable place to live have been compromised. Canada has failed to develop a national vision that supports community solutions."

As part of the CCSD's Urban Poverty Project, Community Profiles presents national and provincial data about population, households, and employment. The document then "drills down" to provide equivalent information at the community level. This report is the first of a series of products examining trends in poverty across Canada using data and analyses from the 2001 Census.

Consumers kept spending as Christmas approached, led by more spending on furniture and appliances. Other durable goods were buoyed by strong sales of flat panel televisions, which offset slower auto demand. The personal sector also buttressed the growth in services employment. Housing turned up for the first time in nine months as existing home sales hit their highest level in 2006. Housing starts ended the year on a weak note.

The stock market set another record high. Metals completed a year of strong growth, while energy issues again were lacklustre. These trends were reflected in export earnings, where metals have jumped by one-third in the past year while energy fell 20%, pulling its ranking down from our leading export group to only the fourth largest export.

The trend of the US leading indicator was unchanged in the last two months, after five straight declines. After the first increase in new orders for Canadian manufactured goods in six months, orders slumped anew in October. Manufacturing activity appears to have bottomed out, at least temporarily, as jobs recovered slowly in November and December.

The study "International mobility: A longitudinal analysis of the effects on individuals earnings" examines the relative growth in earnings among men who left Canada during the past two decades, spent some time out of the country working and then returned.

It was based on Statistics Canada's Longitudinal Administrative Database, which allows the comparison of individuals' earnings before leaving compared to levels after their return. It also allows comparisons between the earnings of individuals who left and returned against those who did not.

The study found that men who left Canada to live outside the country for a period of time had, on average, substantially higher earnings than those who never left. However, most of these differences were already apparent in their pre-move earnings patterns.

The study found that the effects of leaving and coming back as measured by the change in relative earnings levels appears to be much more moderate. The change also varied significantly by the number of years spent abroad and pre-departure income levels.

Overall, men who left for two to five years appear to have done best in terms of their earnings. Their post-return earnings were 12% higher in their first five years back, compared with their last five years before leaving (after accounting their expected earnings growth had they stayed in Canada).

Those who left for only one year showed a more moderate 7% average increase in their relative earnings.

Men who were away six years or more were found to have lower earnings after their return than otherwise might have been expected. However, these patterns varied significantly, and might well have been due to particular events related to the return, such as moving into retirement.

All measured effects take into account pre-move earnings levels and the normal growth in earnings that occurs with age, along with other factors that can affect earnings. These would include marital status, province and area size of residence, and the unemployment rate.

Data further indicated that the gains in earnings appear to have been more concentrated among individuals with the lowest pre-departure earnings levels (less than $60,000). Gains among individuals with higher earnings were substantially lower and were more uneven.

Previous research released in The Daily on November 17, 2006, showed that overall, about 0.1% of the adult population leaves Canada in any given year, that is, one person out of every 1,000.

During the past two decades, departure rates tended to follow the economic cycle, but far from perfectly. Between 2000 and 2003, they have fallen sharply.

Between 1982 and 2003, about 3.5% of individuals who left returned after one year. This rose to 4.7% in the second year, and then declined thereafter. Some 16.2% of those who left had returned to Canada within five years. These rates have risen in recent years, reflecting the substantial declines in departure rates.

New Investment Promotion Agency "Invest in Germany"

BERLIN, Germany - The federal government announced January 11, 2007, the merger of the two agencies "IIC - The New German Laender Industrial Investment Council GmbH" and "Invest in Germany GmbH." The new organization's name is "Invest in Germany." Its mission is to promote Germany as location for business, investment, and technology and to actively identify business opportunities for international investors.

Dr. Horst Dietz, President of the new organization "Invest in Germany," called the move a clear signal to investors and the international competitors: "With the new Invest in Germany we will be in a much stronger position to promote Germany even better as a leading business and investment location. And it will allow us to support and advise international investors even more effectively and comprehensively. The new organization will combine our two major objectives, namely the international marketing for the business location Germany and the acquisition of foreign investors for Germany. This new focus further strengthens Germany's competitiveness as one of the world's most attractive locations for foreign investment. A larger budget as well as additional highly qualified personnel allows us to build on the successes of the past."

The "IIC" has up to now been responsible for attracting investment into the former East Germany - the so-called new federal states. The company was founded in 1997 and has since then acquired investments totalling 4.7 billion Euros. Dr. Horst Dietz has been president of the IIC since 2002.

The mandate of the old Invest in Germany was to promote and market the business and investment location Germany in its entirety. The new company will be headquartered in Berlin with 90 employees and will have offices in the United States, Japan, and China.

For a copy of the background paper, click here:

OTTAWA - Toronto's economy will accelerate slightly in 2007, but it will be 2008 before it resumes its place as one of the fastest growing economies in Canada, according to the Conference Board's Metropolitan Outlook - Winter 2007.

"After a disappointing 2006, Toronto will see modest gains in 2007, but will still be well behind the national leaders from the west in Calgary, Edmonton and Vancouver," said Mario Lefebvre, Director, Metropolitan Outlook Service. "Fortunately, better results are in the cards beginning in 2008."

The impact of the strong Canadian dollar on industries sensitive to foreign trade, especially manufacturing and tourism, has dampened overall economic growth in the Toronto census metropolitan area (CMA) since 2003. That continued last year, when manufacturing output shrank and the overall economy grew by just 2.3 per cent. In 2007, the manufacturing sector is expected to improve modestly, helping real gross domestic product to grow by 2.9 per cent.

By 2008, manufacturing output growth will be sufficient to lead to positive job creation in the industry. This, combined with continued strong non-residential construction, will support economic growth of four per cent. Between 2008 and 2011, Toronto's annual growth will average 4.1 per cent, tops among all 20 CMAs covered in this edition of the Metropolitan Outlook.

Several signs at year end were indicating that the slump in GDP growth would not be prolonged. This was summarized by the sharp improvement in the leading indicator, whose growth in November nearly doubled to a six-month high. While components such as the stock market and consumer services remained strong, there was a significant turnaround in the leading indicator for the US. This has already begun to translate into higher orders for Canada's manufactured goods. The profit margins of manufacturers also received a boost from the loonie, which fell to a 12-month low early in 2007.

The US economy improved on a number of fronts. Retail sales strengthened in November, while an upturn in auto assemblies led a gain in industrial production. Falling energy prices triggered a sharp reduction in both the trade deficit and inflation. Most significantly, the US housing market stabilized, at least temporarily, after provoking much of the US slowdown in 2006. Home sales posted back-to-back gains, helping to whittle down the large backlog of unsold homes, as households responded to lower house prices and mortgage rates.

The housing market in Canada also improved, with a second straight increase in both housing starts and sales in November. Household demand was stimulated by a continued buoyant labour market. Employment posted another modest gain in December, with factories increasing payrolls for a second straight month. This is consistent with the data in the leading indicators that suggested manufacturing activity was firming at year-end. The stock market also ended the year with a flourish, hitting another record to cap a fourth straight year of double-digit growth.

Companies exported merchandise worth $38.1 billion in November while imports stood at $33.5 billion.

As a result, Canada's merchandise trade surplus with the world widened to $4.7 billion from $3.8 billion in October.

Exports to the United States surged 3.6% to $29.4 billion, with gains in exports of energy and autos. This was in contrast to a downward trend in exports to the United States that has dominated the second half of 2006 in the wake of retreating energy prices and falling shipments of lumber and autos.

In fact, these second-half declines, combined with rising demand for metals, chemicals and aircraft from countries other than the United States, have changed the composition of Canada's exports.

The United States, our biggest trading partner, accounted for only 77% of all merchandise exports in November, compared with 82% a year ago and 84% in November 2002. Exports to the United States were 1.7% lower in the first 11 months of 2006 compared with the same period a year earlier.

On the other hand, exports to countries other than the United States were up 13% for this 11-month period.

Exports to the European Union were up 15.7% compared with January to November 2005, thanks to higher exports of gold, uranium and aircraft. In terms of other Organisation of Economic Co-operation and Development (OECD) countries, Mexico is the leading destination for exports, registering increases in iron and steel, telecommunications equipment, as well as auto parts.

For the rest of the world, exports to India were also up, with wheat, aircraft and metal ores leading the way. Brazil and Russia have also shown large gains in 2006.

Exports to China have not expanded beyond 2005 levels. However, Canada's exports of metals to China, such as nickel, have recorded a large jump. This has been offset by declines in agricultural materials, such as potash.

Automotive products lead increase in exports

Exports of automotive products, after cooling for several months as a result of production slowdowns and plant retooling, showed strength in October and November. In contrast to October, when trucks alone pushed up auto export values, increases in cars, trucks and parts accounted for the rise in November.

Exports of industrial goods hit a record high of $8.5 billion in November, as a result of a 3.1% increase for the month. Metals and alloys accounted for most of the gain, rising 8.3% to $3.2 billion on the strength of nickel exports. Exports of uranium to the United States and United Kingdom also contributed to the advance.

The export story for 2006 has certainly been industrial goods and materials, specifically metals. Exports of industrial goods for the January to November period of 2006 are 11.3% greater than during the same period in 2005. Also, since June, industrial goods have been the highest value export sector, rising above machinery and equipment.

Energy and machinery and equipment also registered gains in November, with steady agricultural exports and declining forestry exports rounding out the export report card.

Energy export values were up 3.7% in November to $6.4 billion. An increase in exports of petroleum and coal products, specifically, ultra low sulphur diesel to the United States, secured the rise. Gas stations in the United States were mandated as of mid-October to make available this fuel, which has a sulphur content of less than 15 parts per million.

Natural gas values increased 1.8% for the month following two declines, while crude values remained unchanged after three consecutive decreases.

In machinery and equipment, a 7.2% rise in aerospace products exports assured the gain. For the year, aircraft exports are up with increased demand from the European Union and Asia compensating for a large drop in exports to the United States.

Exports of agricultural products remained at $2.7 billion, with a slight decline in wheat and fish exports being offset by an increase in barley, other cereal preparations and live animals.

Forestry exports were down 2.2% in November, continuing the downward trend that has dominated 2006.

Imports show slight gain

Energy imports, as well as automotive imports, were up in November, allowing total import values to edge up 0.4% despite a large drop in industrial goods and materials.

After reaching a record high level in October, industrial goods and materials were down 4.4% in November to $6.9 billion dollars. Imports of metals and metal ores declined 7.9% and chemicals and plastics fell 3.8% for the month, following large orders of zinc, copper, as well as chemicals for pharmaceutical manufacturing in October.

Imports of energy products registered gains of 8.3% in November to reach $2.6 billion, following large drops in September and October. Imports were up for crude petroleum, heating and diesel fuel, as well as natural gas, however, values remained well below the August record high for energy imports of $3.4 billion.

A 6.1% increase in imports of motor vehicle parts pushed imports of automotive products up for the month. Imports of parts have registered declines since July. Imports of passenger autos and trucks were down 0.7% and 1.3% respectively.

Imports of consumer goods inched up to a record high of $4.4 billion on the strength of toys and televisions. In contrast, imports of machinery and equipment were down 0.4% to $9.6 billion.

Imports of agricultural products were stable at $2.0 billion. Within agricultural products, coffee imports grew 7.4% to $348 million; however, this increase was offset by widespread declines in other agricultural products.

Note to readers

Merchandise trade is one component of the current account of Canada's balance of payments, which also includes trade in services.

International trade data for the United States, Japan and the United Kingdom are available on both a balance of payments basis as well as a customs basis. Trade data for all other individual countries are available on a customs basis only.

Starting with reference month September 2006, there will be a section in The Daily at the end of each quarter describing trends in trade between Canada and emerging economies, such as China. This section will discuss data which is on a customs basis and is not seasonally adjusted.

Please be advised that the International Trade Division is currently updating the base year for import and export price indices. This update will see the base year change from 1997 to 2002, and is being undertaken in collaboration with the System of National Accounts. Base year 2002 CANSIM tables will replace the current CANSIM tables 228-0035 to 228-0040 and 228-0044 to 228-0046 in mid-2007.

Revisions

In general, merchandise trade data are revised on an ongoing basis for each month of the current year. Customs basis data are revised for the previous data year each quarter.
Factors influencing revisions include late receipt of import and export documentation, incorrect information on customs forms, replacement of estimates with actual figures, changes in classification of merchandise based on more current information, and changes to seasonal adjustment factors.

Revised data are available in the appropriate CANSIM tables.

The full report is available at

http://www.cfib.ca/legis/ontario/bus_outlook.asp

OTTAWA - Despite a downturn in U.S. economic growth, Canada has enough strength in its domestic economy to grow by 2.7 per cent in 2007 and 3.3 per cent in 2008, according to the Conference Board's Canadian Outlook - Winter 2007.

"The wealth generated by high resource prices is the primary reason why Canadian household incomes, corporate profits and government coffers grew strongly in 2006," said Pedro Antunes, Director, National and Provincial Forecast. "While some commodity prices have slipped recently, resource prices in general remain strong, and they are expected to continue producing wealth throughout the Canadian economy.

"Another year of healthy income growth and the possibility of further tax cuts from federal and provincial governments mean that consumers will continue to form the backbone of Canadian economic growth in 2007."

Canadians' real after-tax household income growth peaked in 2006 at 4.7 per cent, and is expected to moderate slightly, to 3.2 per cent on average, in each of the next two years. The Conference Board's Index of Consumer Confidence rose by 1.6 points in December, which further indicates that consumers are feeling good about job prospects and household finances.

The U.S. consumer is a key factor in the Canadian outlook. The correction in American real estate markets is causing U.S. household spending to soften, but a "soft landing" for U.S. growth is still expected. The slowdown in U.S. vehicle sales and decline in residential construction are affecting Canada's auto, lumber and construction export volumes. However, a weakening Canadian dollar will benefit export-oriented industries, allowing real exports to grow by more than two per cent in 2007.

Inflation Outlook: Moderate Price Increases Expected

The majority of chief executives expect changes in their firms’ selling prices in 2007, with just 10 percent anticipating price increases in excess of 10 percent. On average, firms plan to hike prices by 3.3 percent, slightly lower than last year’s expectation of 3.4 percent. Some 7 percent plan decreases and 14 percent foresee no change.

Housing starts in 2006 reach their second highest level in nearly two decades despite cooling in December

OTTAWA - New home starts are estimated at 227,400 in 2006, surpassing the level in 2005, reaching their second highest level in nearly two decades. However, the seasonally adjusted annual rate(1) of housing starts decreased to 211,500 units in December from November's 229,300 units, according to Canada Mortgage and Housing Corporation (CMHC) statement on January 9, 2007.

"Growth in 2006 housing starts was driven by low mortgage rates, solid employment and income growth, and a high level of consumer confidence. Even with the slowing trend in residential construction in recent months, new home starts estimated at 227,400 units in 2006 surpassed the level reached in 2005," said Bob Dugan, Chief Economist at CMHC's Market Analysis Centre.

"After two strong months in October and November, the volatile multiples segment fell in December and single-detached starts continued to trend downward, reaching their lowest level of the year. Housing starts are expected to remain strong in 2007, but are forecast to decrease to 210,900 units." December's seasonally adjusted annual rate of urban starts declined 9.0 per cent from November to 180,000 units. Urban multiples fell 13.9 per cent to 93,400 units in December, while singles decreased 3.0 per cent to 86,600 units.

All regions saw urban starts fall in December compared to a month earlier. The largest declines were in the Prairie region and the Atlantic region where urban starts fell by 20.5 per cent and 17.9 per cent, respectively. Weaker activity in the urban multiples sector drove the decreases registered in both of these regions. British Columbia, Ontario and Quebec recorded smaller declines of 7.1 per cent, 3.6 per cent, and 1.5 per cent, respectively.

TORONTO - Global economic and financial market prospects increasingly will be shaped by the confluence of competitive and demographic forces, according to Scotia Economics' latest flagship report, Global Outlook, entitled New Age Meets Old Age.

"The near-term outlook will be driven by new age factors related to the rising importance of Asia and other emerging regions," says Scotiabank's Chief Economist Warren Jestin. "However, a powerful array of demographic factors linked to an aging world population, rising dependency ratios and inevitable labour shortages in developed nations is also looming on the horizon."

According to Jestin, growth in 2007 and 2008 is expected to slip to an average of about 2.5 per cent in North America and two per cent or less in Europe and Japan. "While the pace of activity may also be a bit less frenetic in Asia, China should stay on a nine per cent-plus growth track, with India not far behind growing by about eight per cent annually. Mexico, Brazil and a number of other nations will also continue to exceed the performance of the mature G7 nations by a significant margin."

Even with a general tendency for growth and inflation to moderate, the monetary policy response will vary across G7 economies. The Bank of Japan is expected to sanction a mini rate rise in the first half of 2007. The same is true for the European Central Bank and the Bank of England, though monetary authorities in these regions will likely shift to the sidelines thereafter if growth disappoints and the spectre of inflation fails to materialize.

In contrast, short-term interest rates are likely to be headed lower in both the United States and Canada in the months ahead. Jestin points out that "the U.S. Federal Reserve is expected to trim rates by three-quarters of a percentage point by the summer, more if the housing setback deepens. The Bank of Canada also is likely to reduce its bellwether rate by half a percentage point as the disappointing economic performance in the second half of last year spills into 2007.

"Currency market prospects are a big wild card in the outlook," says Jestin. "The greenback's Achilles Heel is the massive trade deficit, bloated by imported energy and highly competitive products from lower-cost regions, which will probably stay stuck above US$800 billion even though foreign sales have been growing at double-digit annual rates since 2004."

"The Loonie's prospects are pivotal to the Canadian outlook," reports Jestin. "After briefly soaring above the 90 cent (US) mark, the currency has fallen back to the 85 cent (US) level alongside the reversal in some key commodity prices from historic highs, concerns about delays in longer-term resource mega-projects, and weaker manufacturing exports."

However, Jestin cautions that "Canada's relatively sound domestic fundamentals and weak U.S. dollar underpinnings suggest that the Loonie is likely to rebound later this year. Canada is well-positioned to attract global investors looking for opportunities in the resource sector or for low-risk ways to diversify U.S. dollar positions."

Another major theme of the report is that big differences in the demographic profiles of developed and developing nations also will reinforce the growing economic importance of emerging powerhouses in Asia and Latin America. Canada and other mature industrial nations are already wrestling with the implications of an aging baby boom population.

"Supporting the retirement bulge is a big public policy issue. A 2005 survey indicated that only seven out of ten Canadian families had some form of pension or other retirement saving assets, approximately unchanged from 1999," says Jestin. "Funding health care, which is already approaching 40 per cent of provincial program spending, will be another big-ticket challenge because per capita health care costs for seniors are much higher than for working-age Canadians."

In contrast, most developing nations, with the exception of China, have much younger and more rapidly growing populations. Many emerging economies also are likely to experience big efficiency, productivity and income gains as rural families move to urban locations, skill levels rise and a greater percentage of their populations formally join the labour force.

"For developed nations, new age forces will at least temporarily constrain growth, while the longer-term shift to an older population points to a relatively modest trend in consumer demand and a major overhaul of public policy priorities," adds Jestin. "For the emerging industrial powerhouses, current competitive advantages and solid internal demand dynamics should reinforce robust growth, tilting international economic activity in their direction."

Across Canada, British Columbia will continue to outperform the national economy in 2007, led by a strong non-residential construction sector. In addition to ongoing 2010 Winter Olympics preparations, activity in the energy and mining sectors will help offset weakness in the forestry sector. Oil sands expansion in Alberta continues at a rapid pace, supported by profitable energy prices and a significant inflow of investment capital. The province's construction boom shows little sign of abating and is spilling over into the non-resource and service sectors. Mounting cost pressures and labour shortages, however, will likely limit the province's overall expansion below last year's six per cent-plus pace.

Saskatchewan's growth is also rooted in its rich endowment of natural resources. New capacity and recent contracts with China should boost potash production in 2007. The agriculture sector will benefit from higher livestock and crop production, and increased grain prices. Manitoba's diversified economy makes it a steady performer. Expansion of hydro and wind-generating capacity should advance construction, while increased global biofuel production and tight grain supplies are supporting agricultural shipments.

Ontario's economic performance will remain below the national average as manufacturers continue to struggle with a strong Canadian dollar, high energy prices, intense overseas competition and now, moderating U.S. growth. Non-residential construction will continue to expand at a solid pace, spurred by attractive financing and low commercial vacancy rates. In Quebec, public infrastructure projects, including power generation, new hospitals and schools, are expected to keep growth steady. The telecommunication industry, hit hard in 2006, should recover as demand picks up late this year.

Several large-scale energy projects should help sustain New Brunswick's expansion in 2007, with mining activity benefiting from the re-opening of zinc mines amid strong global demand. Nova Scotia's energy production should recover this year as the Sable gas fields boost production by at least 20 per cent. The province also will benefit from continuing public infrastructure spending. Non-residential construction will be the primary driver for P.E.I., which is investing heavily in a renewable energy policy. Newfoundland & Labrador's prospects are upbeat, with oil output set to rise by at least 20 per cent in 2007 as production rebounds at Terra Nova and the White Rose oilfield ramps up to capacity.

Alberta surged ahead in employment growth in 2006, charting its largest growth rate in 26 years (+6.0%). Saskatchewan, Newfoundland and Labrador, and British Columbia also finished the year above the national employment growth rate.

Over the course of 2006, seven provinces hit record high employment rates while six reached 30-year record low unemployment rates.

There were increases in both full- and part-time employment in December. However, in 2006, employment growth was driven by full time, which accounted for an estimated 80% of employment gains.

With continued strength in employment, average hourly wages stood at an estimated $20.00 in December 2006, an increase of 2.6% from 12 months ago. Alberta's tight labour market continued to put pressure on the province's wages, which rose 5.9% from a year ago to $21.60, the highest growth rate in the country. Alberta surpassed Ontario throughout 2006 for the highest hourly wages.

Employment increased in several industries in 2006, including natural resources; business, building and other support services; finance, insurance, real estate and leasing; health care and social assistance; "other services" and construction. There were declines in manufacturing and information, culture and recreational services.

In 2006, almost two-thirds of all the employment gains were among adult women. The proportion of women aged 25 and over who were working hit a record high in December 2006. This brought their unemployment rate to a 30-year low by year end, lower than that of adult men.

After two years of declines, the participation rate increased slightly in 2006, entirely due to increased participation among adult women.

More working in Ontario in December, but not enough to push growth for the province above the national average in 2006

In Ontario, employment increased by an estimated 42,000 in December, bringing total gains for the year to 1.8% (+113,000). Most of this province's employment gains in 2006 were in the service sector, including health care and social assistance, trade and "other services", while declines in manufacturing continued. Since the peak in November 2002, manufacturing declines in the province have totalled 130,000 (-11.6%). Although a substantial loss, this is still only half of the previous decline of the early 1990s recession, when factory employment in Ontario fell by 24.4% (-260,000).

Unlike the national trend towards more full-time gains in 2006, almost two-thirds of Ontario's employment increases were in part time. The unemployment rate for this province ended the year at 6.1%, similar to the rate of 12 months ago.

In Quebec, there were fewer people searching for work in December, bringing the unemployment rate to a 30-year low of 7.5%. Over the course of 2006, there were employment gains in finance, insurance, real estate and leasing; business, building and other support services; transportation and warehousing; and professional, scientific and technical services. However, declines in manufacturing and construction dampened overall growth. This left employment up only 0.9%, less than half the national growth rate.

The West shines in 2006

Despite a pause in December, Alberta's employment rose substantially for the year (+6.0% or 109,000), its largest rate of growth since 1980. Although Alberta represents only 10% of working-age Canadians, it accounted for almost one-third of all employment growth in 2006. Gains varied across the goods and service sectors, with above average growth in natural resources; manufacturing; construction; educational services; health care and social assistance; and accommodation and food services.

Employment in Saskatchewan was up an estimated 3,000 in December, bringing total gains for the year to 23,000 (+4.8%). December's employment growth also boosted the employment rate to a record high of 67.4%. Saskatchewan followed Alberta (70.9%) with the second-highest proportion of their working-age population employed. Saskatchewan's employment gains in 2006 were mainly in trade; construction; professional, scientific and technical services; natural resources; and agriculture.

British Columbia also had employment gains in December (+10,000), which brought year-to-date growth to 51,000 (+2.4%). In December 2006, 62.7% of British Columbia's working-age population was employed, a record high. Over the year, employment gains in natural resources, manufacturing; construction; business, building and other support services; finance, insurance, real estate and leasing; educational services and health care and social assistance more than offset losses in information, culture and recreation; trade; and accommodation and food services.

Unemployment rates in the West continued to be below that of the national average throughout 2006.

Although there was little change in employment in Newfoundland and Labrador in December, employment was up 3.8% (+8,000) from 12 months ago. This was the largest employment increase since 2001 for this province, moving their employment rate up 2.8 percentage points to 51.3% by December 2006. Employment growth was spread across several goods and service industries.

Strength spread across several industries in 2006

There was strong employment growth across a number of industries in Canada in 2006: natural resources (+10.9%); business, building and other support services (+8.8%); finance, insurance, real estate and leasing (+6.9%); health care and social assistance (+5.8%); "other services" (+4.8%) and construction (+3.5%). However, there was continued weakness in manufacturing (-2.7%) and declines in information, culture and recreational services (-2.6%).

Although there was no change in employment in natural resources in December, this industry has shown remarkable strength in the last year (+34,000). This continues a trend that began four years ago. Most of this growth has come from Alberta in the mining, oil and gas sector. British Columbia also contributed to the 2006 growth in mining, oil and gas as well as in forestry and logging.

There was an employment increase of 12,000 in business, building and other support services in December. This brings total gains for the year to 58,000, and follows strong growth from the previous year.

While there was little change in finance, insurance, real estate and leasing in December, employment was up by 69,000 since December 2005, mostly in real estate and leasing.

Employment increased by an estimated 15,000 in health care and social assistance in December, which brought total gains to 100,000 in 2006. Each province had employment increases in this industry, but the largest were in Ontario and the western provinces. Employment also increased in "other services" in December (+20,000), bringing employment gains for the year to 32,000, with most of the increase in Ontario.

Although construction employment was up for the year (+37,000), the growth rate was only about half that of the previous two years. The majority of growth in 2006 was in Alberta and British Columbia.

Manufacturing employment declined by 2.7% (-59,000) in 2006, bringing total losses since the start of the decline in November 2002 to 9.0% (-216,000). In 2006, the losses were primarily in Ontario and Quebec. In contrast, large gains in manufacturing were seen in Alberta, British Columbia and Manitoba over the course of the year (+32,000).

Information, culture and recreational services also saw large declines in 2006 (-19,000), driven primarily by weakness in British Columbia.

Self-employment increased by 49,000 in December. Despite this jump, there were fewer self-employed workers in 2006 than the previous year. Most of the employment growth in 2006 was among private sector employees (+3.1% or 332,000), three times the rate of growth for the public sector.

Growth in full time and for adult women in 2006

December's employment increase was in both full time (+37,000) and part time (+25,000). Although the vast majority of gains in 2006 were full time (+278,000 or 2.1%), part-time employment was also up 2.3% (+67,000).

Employment was up an estimated 36,000 for adult women in December, with total gains of 215,000 (+3.4%) in 2006, most of which were full time. By comparison, employment among adult men was up only 1.3% (+93,000). The proportion of adult women who were working hit a record high of 58.5% in December 2006. This brought their unemployment rate to a 30-year low of 4.9%, lower than that of adult men at 5.3%.

With an increase of 15,000 in December, youth employment was up 1.4% or 36,000 over the year. This follows a similar growth rate for the previous two years. The youth unemployment rate, at 11.2% in December 2006, has been steadily declining, approaching its lowest rate since 1989.

Annual averages

The analysis presented above describes labour market trends in 2006 by looking at the change in estimates from December 2005 to December 2006. This indicator picks up the more recent labour market trends for the year but can be influenced by unusual spikes or declines in the end points used to calculate the change.

An alternative indicator of labour market trends is the annual average, which is an average of the 12 months of the year and is usually compared with the 12-month average of the previous year. The change in the annual average is an indicator that better reflects longer trends. Annual average estimates for 2006 are now available on CANSIM (tables 282-0001 to 282-0099).

Yukon and Northwest Territories' annual average unemployment rates as low as western provinces

Among the territories, only Nunavut recorded annual employment growth in 2006 compared to 2005 (+700 or 9.3%), pushing their annual average unemployment rate down to an estimated 10.3% in 2006 (-2.2 percentage points).

The Yukon's annual average unemployment rate declined to 4.3% (-0.6 percentage points) from 2005 to 2006, while the rate for Northwest Territories remained the same at 5.4%. These low unemployment rates are similar to the rates seen in the western provinces.

Note: The Labour Force Survey estimates are based on a sample, and are therefore subject to sampling variability. Estimates for smaller geographic areas or industries will have more variability. For an explanation of sampling variability of estimates, and how to use standard errors to assess this variability, consult the Data Quality section of the Labour Force Information.