Some bright spots in the Kootenays’ economy
The resource sector was a key contributor to the economy of the Kootenay Development Region (Kootenays) in 2016, as coal prices recovered and lumber demand increased. The sharp rebound in steelmaking coal prices in the latter half of 2016 had a positive impact in East Kootenay. The forestry sector also showed strength in 2016. US demand for softwood lumber increased lumber production in BC’s Southern Interior Forest Region by 3.5%. These factors helped the region weather an otherwise challenging year:
1. Overall employment fell to a 12-year low of 67,400 jobs. The service sector suffered the brunt of the damage, with much of this reduction occurring in the retail trade industry. The net loss of 1,600 jobs helped push unemployment rate to 8.0%.
2. The value of major projects declined by 4.6% to $9.1 billion between the third quarters of 2015 and 2016. The decline follows the overall provincial trend, which saw a decrease of 2.7% to $437.7 billion over the same period.
Looking at 2017, economic prospects for the Kootenays are cautiously optimistic, due to uncertainty around global commodity demand and potential trade policy changes. The federal government’s $867 million financial assistance package to the softwood lumber industry should soften the impact of the US tariff on softwood lumber. In addition, the coal mining industry is expected to remain busy. Teck predicts that coal production will be close to 2016 volumes, and permits have been approved to begin mining in new areas. Another coal mine near Sparwood is also expected to begin construction this year.