Western Canada: Struggling to Break Free From Low Commodity Price Shackles
Manitoba placed third in 2015 for ‘real’ (i.e., inflation-adjusted) gross domestic product (GDP) growth among all of Canada’s provinces. Manitoba’s +2.3% performance was only a small step behind Ontario’s +2.5%, although British Columbia was the clear first-place finisher, at +3.0%. The national average GDP rise, 2015 over 2014, was +1.1%. (2016 over 2015 for Canada as a whole is expected to be +1.3%. 2017/2016 and 2018/2017 will be better at +2.3% in each instance.)
Manitoba has also been standing out for population growth. The latest year-over-year (i.e., April 1, 2015 to April 1, 2016) increase in resident count was +1.5%. That was an acceleration over the prior three-year average of +1.2% and it was also faster than for all-Canada, +1.1%.
Manitoba maintains a slight lead over Saskatchewan for its share of the country’s total population, 3.6% compared with 3.2%. Added together, Manitoba and Saskatchewan, at 6.8%, account for a marginally thicker slice of Canada’s total citizenry than the Atlantic Region, 6.6%.
As of July of this year, the province was doing a little better than the nation as a whole in terms of low unemployment rate (6.2% versus 6.9%) and year-over-year jobs gain (+0.7% versus +0.4%). In rankings of those two yardsticks for the 33 largest population centers in the country, Winnipeg, with a jobless rate of 6.4% and zero year-over-year jobs growth (0.0%), has been in the middle of the pack.
Winnipeg resale home prices are presently (July 2016) +0.4% year over year, according to the Canadian Real Estate Association (CREA). Housing starts so far in 2016 are -7% in the provincial capital and -8% throughout the entire province.
While leaning heavily towards raw materials in agriculture and metals and mining, the province also has a much more diverse economic base than may be generally known. For example, manufacturing’s share of provincial GDP, at 11%, is almost on a par with the sector’s relative importance in Ontario (12%). (Quebec is number one at 14%.) Buses, trucks, pharmaceuticals and airplane parts all roll off production lines in Manitoba.
Saskatchewan is one of the four provinces in Canada — along with Newfoundland and Labrador, Alberta and British Columbia — that has been particularly buffeted by the collapse in the global price of oil. The province’s GDP change in 2015 was -1.4%. The dollar volume of its energy exports to date in 2016 has shrunk by a staggering -53% (i.e., more than half).
Saskatchewan has also seen a reduction by one-third in its metals and minerals exports through June in 2016. Shipments to foreign customers of ‘pink gold’, the nickname given to potash, have especially declined, -33% (i.e., down by one-third). Agricultural product export sales in the province have also fallen, but not nearly as severely, -6%.
The province’s annual average population increase of +1.5% from 2013 to 2015 has slipped by a gentle amount to +1.4% over the latest 12-month period. As proof of the stagnant economic conditions currently prevailing in Saskatchewan, total provincial employment in July 2016 was the same as in July 2015. The jobless rate, however, remains respectable at 6.3%.
Resale home prices in Saskatchewan’s two signature cities are essentially flat on a year-over-year basis, with Regina +0.1% and Saskatoon -0.1%. New home starts province-wide are -19% year to date. Residential groundbreakings have been a little worse in Regina (-21%) than in Saskatoon (-18%).
Despite the regional economy’s trials and tribulations, consumers in the province have stayed active. Their current (July 2016) year-over-year retail sales purchases in ‘current’ (i.e., not adjusted for inflation) dollars are +2.7%, the same as for all of Canada, although not as buoyant as in next-door Manitoba (+4.7%).
Figuratively and literally Alberta has been at the epicenter of whatever economic storms have been besetting Canada in recent times. Possibly the costliest natural disaster in the country’s history happened in May when a giant wildfire swept through portions of Fort McMurray, destroying homes, stores and other businesses, and forced many major oilsands producers to temporarily cease operations. On the plus side for the province, though, is the stimulus that is already coming from rebuilding efforts.
The new NDP government in Alberta, in recognition of the hard times being experienced by the province’s most important industrial sector, energy, has been more cautious and slower off the mark in introducing some environmental protection and more-stringent taxing and royalty measures than thought likely when it was first voted into power.
This is an excerpt from The Leaders – Canada’s Best in Construction: 2016 Edition – published in November by ConstructConnect. For more information, please visit www.leadersinconstruction.ca.