Watson Lake is the regional service and business centre for the southeastern Yukon, and has a diversified economy. Primary industries provide some support for the local economy. This includes some forestry, and energy exploration provides economic activity. Business travel and commercial transportation, linked to resource exploration and to Watson Lake's role as a transportation hub, are also important. Tourism, despite slower activity since September 11, 2001, has been increasing in importance to Watson Lake.
The government services sector is a major source of employment, providing 17 percent of employment. The trade sector and the accommodation and food services sector provide employment for about 15 percent of the work force, significantly higher than the Yukon-wide share of 9.0 percent. Construction provides a further 9 percent of total employment, a little above the Yukon average. Construction employment varies from year to year, depending on the number and type of projects.
Since Watson Lake provides community services to the surrounding area, the share of employment in health and education services is fairly close to the overall Yukon pattern.
