New Brunswick bottoming out

By Henry Gray (AIMS on Campus Student Fellow)

The four Atlantic Provinces will be the four weakest provinces for economic growth in 2018, according to an average of eight private-sector forecasts compiled by New Brunswick’s Department of Finance. Prince Edward Island—an apparent bastion of prosperity on the East Coast—fared the best out of all of the Atlantic Provinces, coming in seventh place with a projected growth rate of 1.5375 percent. Nova Scotia came next, with an expected growth rate of 1.075 percent. Newfoundland and Labrador is ninth, with a flat one percent projected growth rate. New Brunswick, however, plays the role of caboose for the rest of Canada, falling to just 0.9625 percent in the forecast.


What’s the matter with New Brunswick? In January alone, the province of about 760,000 lost 5,800 jobs. These losses dragged New Brunswick’s unemployment rate up to 9.1 percent—the third worst rate in the country. On January 30, we learned that German food processing company Dr. Oetker would be leaving New Brunswick and taking 180 jobs with it, and in a province that is this small, losing a single enterprise can have vast economic consequences. Grand Falls, N.B.’s Dr. Oetker factory—a pillar of the community of 5,000—would be closing its doors, with 70 percent of the work going to the company plant in London, ON, and the remaining 30 percent of labour skipping across the border into Lodi, New Jersey.

New Brunswick holds the distinction of being the only province in Canada where fewer people are working today than a decade ago. New Brunswick has 2.1 percent fewer people working today than it did in July 2007. By way of comparison, over the same period, Alberta saw an increase of 14 percent. This statistic, in fact, makes the story seem less grim than it really is: New Brunswick has 9.3 percent fewer “prime age” workers (i.e. workers between 25 and 54 years of age) than it did in 2007.


Readers of the present blog post will doubtless know that the provinces of Atlantic Canada generally have had trouble retaining workers and investment seemingly for eons now. However, New Brunswick’s long-term negative job growth is unique even among Atlantic Provinces. Can we pinpoint a source of New Brunswick’s structural problems?


The most obvious is aging population. The median age of a New Brunswick in 1971 was 24; today, it is 45. In other words, New Brunswickers are older, on average, than the residents of every other province, save Newfoundland and Labrador; and the differential between NB and NL is of a mere 0.2 years. While the population of Canada has been aging rapidly in general, New Brunswick is outpacing the national average by four years. The loss of labour force due to outmigration leads not only to revenue loss for the provincial government, but it also leads to the loss of potential productivity gains.


There is also a less obvious factor that may be contributing to New Brunswick’s unequalled stagnancy. New Brunswick has experienced 25 consecutive quarters of net population outflows to other provinces. While it is true that many of the working-age New Brunswickers who leave settle in Alberta and Ontario, a significant number relocate within Atlantic Canada, with many New Brunswickers settling in Halifax. It is likely that Nova Scotia, Newfoundland and Labrador, and Prince Edward Island have an advantage over New Brunswick due to the fact that each province is dominated by its capital city: Halifax, St. John’s, and Charlottetown are each exceedingly larger and more important than the next most important city in their respective provinces. Uniquely, the three biggest cities in New Brunswick are roughly the same size, and its capital, Fredericton, is the smallest of the three. It is possible that the lack of a dominant urban centre makes New Brunswick less attractive to capital investment.

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