TD Bank economists say that economic growth is well poised to strengthen in most provinces in 2002, but job markets are expected to remain in the doldrums for the better part of the year.

“Just as employment trends are lagging the downturn in economic activity this year, we believe that the improvement in job markets will trail the upturn,” says Derek Burleton, senior economist at TD. Burleton notes that evidence has been building that the worst may be yet to come on the provincial job fronts.

Though we do not expect unemployment rates to approach the double-digit levels reached during the 1990-91 recession,” Burleton says. “It will probably not be until the second half of next year that we see provincial job machines begin to rev up again, even though news on the economic front starts to improve in the first or second quarters of 2002.” As a result, the pace of job creation in the provinces for 2002 is projected to be close to nil or negative.

The major implication of the sour near-term outlook for jobs is that the recent improving trend in household living standards is likely to come to a screeching halt next year. “With dismal prospects for job creation for 2002, few additional cuts to personal tax rates in the pipeline, and a sizeable hike in CPP premiums on tap for January 1, household living standards will likely decline in most provinces next year,” says Burleton.

TD Economics expects the largest drop to be recorded in Ontario, while only Newfoundland and Labrador, Saskatchewan and Manitoba will see increases in living standards.

BC’s economy is expected to record the weakest growth among the provinces in 2002, as government spending cuts offset any positive effects on the economy from next year’s scheduled tax cuts, and as ongoing softness in the U.S. housing market delays a recovery in the province’s forestry sector. A cooling in oilpatch activity will put a temporary damper on real GDP growth in Alberta’s economy in 2002. Saskatchewan’s economy should begin to expand modestly again in 2002. Manitoba’s economy will post a gradual acceleration in growth in the 2002-2003 period, fuelled by a firming North American demand for the province’s exports.

Stability should return to Ontario’s manufacturing sector in the first half of 2002, it says, but it will not be until the second half of next year that the province’s economy and job markets see any meaningful expansion. Only a slight pickup in growth is expected in Quebec’s economy in 2002.

New Brunswick’s economy should see only a tepid recovery in 2002. Rebounds in construction and non-energy mining should propel a modest acceleration in Nova Scotia’s real GDP growth in 2002. The outlook for P.E.I.’s economy is mildly brighter for 2002, as the agricultural sector begins to recover. Economic growth in Newfoundland is projected to surge to almost five times the national average next year, with the oil and gas sector expected to gear up again in 2002, led by both the Terra Nova and Hibernia offshore oilfields.