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Northern B.C.'s economy somewhat less affected by COVID-19 than other regions: report

Northern Development Initiative Trust has released a new update on the region
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Northern B.C. forestry. (via Hanna Petersen, PrinceGeorgeMatters)

How is the economy in northern B.C. doing during COVID-19?

Northern Development Initiative Trust (NDIT) has sought out to answer this question in the latest edition of its Northern Dispatch newsletter.

NDIT employed MNP LLP, a chartered accountancy and business advisory firm, to create a snapshot of how things in our economy have played out so far.

“It goes without saying that COVID-19 hasn’t been good for the economy, but if we’re looking for silver linings – and these days it feels like we should be – the good news is that northern B.C. has been somewhat less affected by COVID-19 than other regions of the province,” said NDIT CEO Joel McKay in the newsletter.

“This is largely because we’re less reliant on service-sector employment than other parts of B.C. As well, the global need for the resources that are extracted, refined, manufactured and exported from our region has continued, meaning that our core industries are more likely to recover sooner than industries directly impacted by the pandemic, such as the retail, tourism and service sectors.”

He adds, however, that this doesn't discount the continued need for response and recovery initiatives in the north.

“Nor should it overwrite the fact that there was general weakness in the northern economy prior to the pandemic due to several regional and global factors that have hampered our resource sectors.”

The MNP data presented in Northern Dispatch digs into employment, forestry and major projects in the region.

Employment highlights:

MNP found that between February 2019 and February 2020, total employment in northern B.C. declined by approximately 2,700.

The decline reflected reductions in forestry employment and wood product manufacturing due to mill closures and curtailments in 2019 and a slowdown in construction activity.

Between February 2020 and May 2020, when COVID-19 restrictions were brought in, employment declined by approximately 12,100.

In June, following the move to Phase Two employment, levels in the Cariboo region increased by approximately 800 while further declines occurred in the North Coast-Nechako and the Northeast.

B.C. Employment in industries providing services related to tourism and events has declined by over 40 per cent while employment in construction and other services has declined by approximately 30 per cent.

Forestry highlights:

MNP says there were some promising signs in the North American construction market at the end of 2019, after a difficult period in which there were a number of permanent mill closures in B.C.

US housing starts were increasing and there was strength in the remodeling sector. However, by late February market conditions were weakening as COVID-19 spread and lumber prices declined.

Then in January and February production was down by approximately 14 per cent year-over-year and shipments were down by 23 per cent in the northern interior.

Year-over-year production and shipment declines continued in March, and in April, production fell by over 50 per cent year-over-year while shipments fell by 27 per cent.

Production trends in the northern interior were consistent with overall provincial trends, while shipments were down relatively more in the northern interior

MNP says the outlook for the B.C. forestry sector is mixed.

In April, lumber prices were at, or below, $300USD per thousand board feet and since then, have increased to above $500USD per thousand board feet as of July 3.

The research shows that while lumber prices have increased as mills return to production lumber, supply is expected to increase which could put downward pressure on prices.

In addition, physical distancing requirements are increasing the cost of harvesting in remote areas which could raise costs for some producers.

Less reliant on service-sector employment

The report concludes that the impact of COVID-19 restrictions has had a significant impact on B.C’s economy with sectors like hospitality, tourism and retail have seen unprecedented levels of job and revenue losses.

However, northern B.C. has been somewhat less affected by COVID-19 than other regions of the province, as the region is less reliant on service-sector employment which has been particularly impacted by COVID-19.

MNP states that many of the work camps at major project sites in northern B.C. were forced to close, leading to significant layoffs in March 2020 but beginning in May 2020, re-hiring began to ramp up and there are indications that employment levels at project sites may begin to approach pre-COVID-19 levels by the end of the summer.

You can read the full report in the August 2020 edition of Northern Dispatch.