Alberta dropped to the No. 2 position in provincial economic rankings for the first half of 2002, ending its 18-month stand at the top, says a new report.

Newfoundland now has the greatest economic momentum of all provinces, according to the RBC Financial Group’s Provincial Trends report released Aug. 29.

Despite the drop, Alberta is set to achieve growth in the 3.5-per-cent range this year and 4.5 to 5 per cent in 2003, up from last year’s 2.9 per cent, says the report. “The only dark cloud on the forecast horizon is agriculture – a shortage of feed due to the severe drought is having a potentially devastating impact on the province’s large livestock industry,” said Carlos Leitao, RBC senior economist and the report’s author.

Two weeks ago, BMO Financial Group economists forecast the Alberta economy would grow by 3.8 per cent this year and expand by 5.5 per cent in 2003, to once again top the country’s provincial growth charts.

Provincial Trends ranks the provinces according to seven economic indicators available on a monthly basis: employment, unemployment rate, retail sales, housing starts, residential unit sales, manufacturing shipments and international exports.

Newfoundland remains No. 1 in employment and has improved its ranking considerably from six months ago in housing starts, sales of existing homes, manufacturing shipments and international exports.

While Alberta’s overall ranking was hurt by its drop to the bottom in the categories of manufacturing shipments and exports, and the slump in energy prices, it still has the lowest unemployment rate in the country, the strongest retail sales and the second-fastest rate of job creation.

“Alberta’s outlook is very positive,” said Leitao. “Consumer spending is healthy, and activity in the energy sector is picking up as prices bounce back.”

In the 12-month period to the end of June, Alberta created 26,400 net new jobs – nearly all full-time positions, according to the report.

Construction, trade and the public sector, mainly health and education, account for most of the gains, while mining and agriculture were the main areas of weakness. With the labour force growing a little faster than job growth in the first six months of 2002, the unemployment rate in Alberta increased slightly to 5.6 per cent in June 2002 from December 2001, but still remains one of the lowest in Canada.

On a regional basis, job gains have been concentrated in the Calgary area. Employment outside the Calgary-Edmonton corridor is down slightly in the year to June 2002.

A revival in consumer spending in the first half of the year boosted the Canadian economy, with all provinces experiencing a lift in performance so far in 2002, according to the RBC Financial Group’s report.

The report is available online at www.rbc.com/economics/ market/pdf/provtrend.pdf