City's steady economy gets a blast of energy: CIBC

IT'S official -- Winnipeg's economy has some momentum behind it.

The city jumped eight positions in CIBC World Markets' latest Canadian Metropolitan Economic Activity Index rankings, rising to fourth position from 12th among the 25 largest metropolitan areas.

The ranking factors in nine macroeconomic variables into an index that CIBC deputy chief economist Benjamin Tal says serves as a proxy for gross domestic product (GDP) for cities.

Because Winnipeg's economy is diversified, the normal dynamic is stability. But sometimes there are pieces that are more important than others.

When it comes to the CIBC index, the charging construction sector -- both residential and non-residential -- as well as strong growth in manufacturing exports has made the difference.

"I was a little surprised by the magnitude of the increase," Tal said of Winnipeg's strong showing. "I think a lot has to do with the two engines -- service and manufacturing -- working at the same time."

The CIBC index notes housing starts in the city rose 50 per cent in the year ending September 2012 and non-residential development activity in Winnipeg rose at a rate second only to Saskatoon.

Also, the restructured U.S. economy is coming back, which has greatly assisted the city's transportation and agricultural equipment and parts manufacturers.

Tal's report also notes consumer fundamentals in the city are in good shape with a relatively healthy labour market and the nation's second-lowest personal bankruptcy rate.

"But you have to remember," Tal said, "When you are starting from a relatively low level it is easier to get momentum. When you are already running fast it is harder to accelerate."

That's why it is impressive Toronto has taken the top spot for the second year in a row. Calgary was solidly in second position and Regina, in third place, was only marginally ahead of Winnipeg in the ranking, which in turn was only slightly ahead of Saskatoon.

The acknowledgement of such a strong trajectory is not a surprise to Greg Dandewich, vice-president at Economic Development Winnipeg.

"When you look at the key economic drivers... you have continued strong population growth... which translates into more available labour and that translates into opportunities for companies looking to expand because the market may be turning for them and they have that available pool," Dandewich said.

He said exports to the U.S. were up 13 per cent in the second quarter thanks in part to investment in technology and increased productivity.

"We are in a hotbed in the northern great plains region that is going extremely well. There is a significant amount of manufacturing (in the region that includes Manitoba, Saskatchewan, Minnesota, North and South Dakota and Nebraska) particularly with farm implements."

The CIBC index is structured in a way that approximates the change in each city's economic activity. The data points compare the end of the third quarter 2012 to the previous year. Variables used to develop the index are:

-- population growth;

-- employment growth;

-- unemployment rate;

-- full-time share in total employment;

-- personal bankruptcy rate;

-- business bankruptcy rate;

-- housing starts;

-- MLS housing resales; and

-- non-residential building permits.

Winnipeg scored in the top half of all of the variables except growth in full-time share in total employment. Winnipeg had the second-best growth in non-residential building permits, second-lowest consumer bankruptcy rate and fourth-best housing starts.

Dandewich says diversity creates stability. "You don't benefit from the significant spikes, for instance on a resource-driven basis, but we do not do those nosedives as well," he said.

"As long as there is a variable skilled labour and continuing growth in the international market for our exporting companies we continue to hold our own," he said.

martin.cash@freepress.mb.ca

CIBC Metropolitan Economic Activity Index (2012 Q3)

Rank CMA 3Q Moving Average

1. Toronto 20.6

2. Calgary 19.5

3. Regina 18.4

4. Winnipeg 18.4

5. Saskatoon 18.2

6. Edmonton 17.8

7. Ottawa 16.8

8. Vancouver14.0

9. Halifax13.8

10. Saguenay12.2

11. Montréal 11.2

12. Québec City10.5

13. London 10.4

14. Hamilton 9.6

15. Kitchener 9.4

16. Kingston 9.1

17. Trois-Rivières 8.6

18. Thunder Bay7.3

19. Victoria6.8

20. St. John's6.6

21. St. Catharines-Niagara 6.0

22. Windsor4.0

23. Saint John-0.8

24. Sherbrooke-0.8

25. Sudbury -2.4

CIBC Metropolitan Economic Activity Index - 2012

Rank CMA Ave

1. Toronto 23.0

2. Edmonton 20.0

3. Kitchener 18.0

4. Halifax 16.8

5. Vancouver 15.5

6. Ottawa 15.2

7. Montréal 14.9

8. Regina 13.8

9. Calgary 13.1

10. Trois-Rivières 11.7

11. Québec City 11.5

12. Winnipeg 11.1

13. St. John's 11.0

14. Hamilton 10.7

15. Sherbrooke 9.5

16. Kingston 7.5

17. Saint John 7.1

18. Sudbury 6.7

19. Saskatoon 6.4

20. Victoria 5.9

21. St. Catharines-Niagara 5.6

22. London 5.2

23. Windsor 0.4

24. Saguenay -1.8

25. Thunder Bay -3.4

Republished from the Winnipeg Free Press print edition January 4, 2013 B4