B.C. continues to grow at a healthy pace

British Columbia continues to grow at a healthy pace despite a slight decrease in the quarterly economic index maintained by the Business Council of British Columbia.

The index edged back to 0.9 per cent in the first quarter, from a one-per-cent rise in the final three months of 2005, but this still amounts to an above-average gain.

Based on historical performance, the index suggests the economy is on course to grow by 3.5 per cent to 3.9 per cent this year, on a par with 2005.

Advances were recorded in five of the seven indicators that comprise the BC Economic Index with the biggest surprise coming from manufacturing.

"A lot of manufacturers have made some adjustments to the stronger dollar and there has been a notable upturn in manufacturing shipments," said Ken Peacock, the business council's senior policy analyst.

"Manufacturers have trimmed their workforces or invested in machinery and equipment. This rising dollar scenario has been going for three years now, so a lot of the adjustments have been made."

Employment is also driving the index higher, with B.C. leading all provinces in job growth. As well, signs of a pick up in the national economy over the coming months should benefit B.C.

Retail sales and housing starts also made positive, but more modest contributions, to the index. Retail sales levelled off at the end of 2005 before picking up again in January while housing construction climbed slightly at the end of the year after a generally flat performance compared to a record year in 2004.

Peacock said the number of international travellers and non-residential construction permits were the two indicators that dampened the index in the first quarter.

Although tourism is up from Asia and Europe, the number of visitors from the vital U.S. market continues to slip and Peacock blames the less favourable exchange rate.

"When it is less attractive to cross the border because of the dollar, fewer people do it."

As for fewer non-residential construction permits, he said there was a huge surge in permit values in 2005 and a slight tapering off is nothing to worry about.

"We're in the middle of a huge boom in non-residential construction," he said. "We can't keep building and growing at the pace we have been and, essentially, I would characterize this number as showing that you can't go straight up forever. That's all it is."

(prepared by Michael Kane/Vancouver Sun)