A Closer Look At The Resource Boom in Western Canada

There is no doubt that when you read the business section of the newspaper, there will be something about resources.  We are told that Canada is a " resourced based country" " a petro dollar" etc.  With that said, 2 out of every 100 Canadians actually work in the resource sector.

Even though the percent of the labor force in resource employment in Canada has fallen over the years, western Canada has gained a larger percentage share, especially in Alberta, which holds almost half of all resource jobs in Canada.  The provincial share of the percent of the Canadian labor force that are employed in resources looks like this:

Alberta -48%
BC- 12%
Saskatchewan - 6%
Manitoba- 2%
Rest of Canada- 32%

There are just over 4 out of every 100 western Canadians employed in the resource sector.  The National average is 2%. ( see first graph)

Many sectors of the economy have piggybacked on the resource boom, and the housing boom is no exception as it is leading the pack in Western Canada.  Here is how housing related industries are doing right now.

Here is how average house prices look like from a few Western Canada cities since 1980.

How each housing market in Western Canada would hold up with a resource downturn remains to be seen. But consumer confidence would take a hit along with consumer spending as it is at all time highs throughout Canada.  BC yikes!

The bigger question is how would each economy hold up with a resource downturn, especially when resource employment, housing related employment and consumer spending are at or near all time highs.  A resource downturn would negatively affect all sectors which have piggybacked on the resource boom.  With record debt, many households are vulnerable.