Fighting the Fiction That Prospects Are Nothing but Rosy in Western Canada
Since population growth these days is being largely driven by immigration, it seems that Manitoba is finally being ‘found’ by foreigners. At +1.6%, the province has experienced Canada’s fastest year-over-year increase in residents in the country.
A positive payoff has been the +61.0% year-to-date climb in housing starts. Winnipeg’s residential groundbreakings are +50.0%.
Winnipeg is also one of four Canadian cities cited by commercial real estate analysts when they speak about office building markets around the world that are especially buoyant. The other three metros in Canada falling into this upbeat category are Toronto, Vancouver and Ottawa.
The numero uno signal of ‘buoyancy’ in office markets is a vacancy rate that is falling. (Calgary and Edmonton have lost a lot of ground on this score.)
Manitoba’s unemployment rate of 5.0% is lowest in the land. Its year-over-year climb in employment, at +2.1%, is exactly keeping pace with total Canada.
The Prairie provinces of Manitoba and Saskatchewan are paying close attention to how Enbridge Energy is faring in a bid to win U.S. approval for its $8 billion Line 3 project. This oil pipeline replacement work will nearly double capacity from 390,000 barrels per day to 760,000.
Crude will be pumped from Hardisty, Alta., all the way across Saskatchewan (staying south of Regina), then through southwest Manitoba, before it crosses the border into America.
Once in the U.S., it will touch on upper eastern North Dakota and move through Minnesota to Wisconsin. Regulators in Minnesota are examining the impacts of potential oil spills on native American resources.
Saskatchewan’s well-respected Premier, Brad Wall, has announced his retirement. He’s been a feisty fixture on the Canadian political scene for a decade. The past couple of years can’t have been fun for him. The province has struggled due to depressed commodity prices.
Potash companies, which were once the darlings of the investor set on the TSX, have thudded back to earth. Their rarefied valuations have crumbled. The hope now is that a newly-merged Potash Corp and Agrium will be able to seize more market control.
Saskatchewan is, however, enjoying an improvement in its export sales year to date. Receipts from shipments of energy products have soared +56.3%. While not showing improvement to the same stunning degree, ‘metals and minerals’ exports are +13.4% and ‘farm products’, +4.2%.
Despite impediments imposed by its provincial government — i.e., in the form of higher taxes, penalties for carbon emissions and a scheduled minimum wage hike — the Alberta economy has been clawing its way out of a deep hole. The improvement in oil price, from a low near $30 USD per barrel to between $45 and $50, has been a big help.
There’s no escaping the conclusion, however, that Alberta’s dominant oil patch needs greater access to markets beyond Canada’s borders. The U.S. President Donald Trump Administration’s go-ahead for the Keystone XL pipeline expansion is highly encouraging, but there are still hurdles to be overcome with state authorities.
And owners with pipeline proposals to ship oil to Asia and Europe must first stickhandle their way through the opposition of some other provincial governments (Energy East has just been nixed).
Alberta’s population of 4.3 million comprises 12% of Canada’s total. The province’s share of total ‘architectural, engineering and related services’ jobs in Canada — i.e., 41,500 out of a total 196,000 — has been a considerably higher 21%. A remarkable history of energy-related mega-project construction in the oilsands has accounted for the large community of workers in the design professions.
Alberta’s proportion (21%) of architectural and engineering services job in Canada is second only to Ontario’s (35%), although its lead over Quebec (20%) is slight. It should also be noted that during the most recent 12 months, the number of design services jobs in Alberta has contracted by nearly 2,000 in nominal terms, or by -4.5%.
Alberta is finally emerging into the light, but a string of legacy negatives is having unfortunate consequences. To combat the dire situation in hydrocarbon markets, Edmonton ramped up deficit spending. The marked increase in the debt load has caused S&P to lower the province’s credit rating by two rungs, from AA to A-.
There has been quite a turnaround in Alberta housing starts this year. Year-to-date and province-wide, they are +28%. In Calgary, they are +35% and in Edmonton, +22%.
This is an excerpt from The Leaders – Canada’s Best in Construction: 2017 Edition – published in November by ConstructConnect.