The Cariboo Development Region includes the regional districts of the Cariboo and Fraser-Fort George.
It has a combined population of about 160,000, spanning localities of Prince George, Mackenzie, 100 Mile House, Quesnel, Valemount, McBride, and surrounding areas.
Typical of many northern regions, the Cariboo is natural-resource oriented, which feeds into its industry concentrations of manufacturing, activity related to natural resource extraction and transportation, and warehousing.
The economic environment in the Cariboo is highly cyclical and dependent on the health of external economic conditions.
While there were upswings and downdrafts over the past decade, underlying employment growth has lagged the provincial performance. After peaking in 1996, employment fell 10 per cent through 2002 before rebounding to near peak levels in 2007.
During the depths of the recession, estimated employment fell nine per cent in 2009, while provincial employment fell by a more modest two per cent.
Although regional employment has since staged a rebound, total employment in 2011 was only marginally higher than that observed early in the decade. This contrasted with a provincial employment gain of just under 18 per cent over the same period.
Despite a diversification towards mining and services, forestry continues to be a key driver of economic activity in the region. Much like other forestry-dependent regions in the province, the Cariboo experienced a substantial number of mill closures over the past decade due to industry consolidation.
The United States housing bust led to further contractions in the industry through permanent mill closures, production curtailments, and employment contractions. Although the U.S. housing market remains a drag on the local economic environment, increased diversification to emerging market economies, particularly China, has provided a needed boost to the industry.
A surge in demand from China for British Columbia wood products, such as lumber and pulp, and increased processing of mountain pine beetle killed timber, contributed to the re-opening of idled mills in hard-hit areas such as Mackenzie.
Moving forward, forestry product demand will continue to improve over the medium term, as demand from emerging markets continues, and a U.S. housing market recovery takes root.
However, long-term improvements to forestry will be tempered by the lasting impacts of the mountain pine beetle epidemic, which will decrease fibre availability for some mills, potentially lowering long-term output.
While forestry remains in flux, mining exploration has increased. Major projects currently under construction include the $1.3-billion Mt. Milligan copper and gold mine near Mackenzie, the Gibraltar mine expansion near Williams Lake, and the Western Coal expansion in Prince George. Major proposed mining projects include the Spanish Mountain mine and Prosperity mine, both near Williams Lake.
A modest improvement in forestry and continued shift to mining provides a positive backdrop for the medium-term regional economic outlook.
Strengthening base industries, such as mining and forestry, will provide stability for downstream businesses and provide demand for services in the local urban areas.
However, economic gains this year will be modest before activity gathers steam in 2013. Employment trends are forecast to remain positive in both 2012 and 2013, and expand by one to 1.5 per cent per year.
Labour-force gains will fail to keep pace on tempered population growth, driving the average unemployment rate to seven per cent in 2011 and less than 6.5 per cent in 2013.
Improvements in economic conditions in the broader Cariboo region will further benefit growth in Prince George area. Prince George is the central service hub for the Cariboo region and part of the Nechako.
As a result, improvements in general economic conditions and population gains will promote increased commerce and business formation in the Prince George region, and necessitate gains in regional services and infrastructure to serve the broader region.
Following a decade of net outflows in the population, positive economic factors look to temper the net outflow of individuals to other parts of Canada and B.C. The Cariboo’s regional population is forecast to rise 0.3 per cent in 2012 and 0.8 per cent in 2013.
Modest gains in employment and population will provide a boost to housing market conditions, pushing resale transactions up nearly 10 per cent in 2012 and 13 per cent in 2013.
Despite these gains, transaction levels will just approach pre-recession levels from 2008 and remain well below peaks observed in the mid-2000s. Housing market conditions will generate little growth in the median price level in 2012 and modest gains of about two per cent in 2013.
Bryan Yu is an economist with Central 1 Credit Union.