Manitoba holds steady on economic map

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This article was published 03/07/2024 (468 days ago), so information in it may no longer be current.

Although it was slightly tongue-in-cheek, TD Bank’s recent provincial economic forecast includes a graph titled “Manitoba’s economy nearing deflation territory.”’

Rishi Sondhi, an economist at TD, says the use of the word “deflation” was for dramatic effect, noting Manitoba’s year-over-year consumer inflation was at 1.3 per cent in May — lowest in the country for the fifth consecutive month, according to Stats Canada.

“Everyone is fretting about inflation,” Sondhi said in an interview Wednesday.

“Clearly, the underlying economy in Manitoba would not be supportive of deflation because it is still growing.”

As well, Sondhi made it clear Manitoba’s ranking is almost certainly due to the temporary relief its NDP government is providing consumers with its pause on collecting a 14 cents per litre provincial gas tax. (A measure that has been extended to the end of September.)

TD expects the Manitoba economy to outperform the national numbers, but in these high-interest rate times, amid ongoing global unrest, growth is modest across the country.

The margin of difference: TD’s forecast GDP growth in 2024 for Manitoba is 1.3 per cent, compared to one per cent for Canada.

Three Maritime provinces and the two other Prairie provinces are forecast to have a slightly higher rate of growth than Manitoba this year. (In 2025, TD is forecasting 1.5 per cent growth in Manitoba, fourth-lowest among the provinces.)

It’s currently a very modest national economic landscape, Sondhi said. While the Bank of Canada recently reduced its key interest rate by 25 basis points, that’s not enough for the Canadian economy to feel it, he added.

“It will take even more easing,” Sondhi said in an interview. “It will need more time and rates to come down further before we start to see impacts on that front.”

However, Manitoba’s economy is showing off its resilience, as is often the case during slow growth or recessionary times.

For instance, Sondhi noted the local real estate market is on track for another decent year, with housing prices forecast to increase by six per cent this year, bettered only by Alberta and New Brunswick.

Pointing out a feature that has been the case in Winnipeg housing for some time, Sondhi said: “The market is not oversupplied by any means. Sales are holding up relatively well. It is tight from a supply/demand perspective.”

That means, relative to other jurisdictions, there are more buyers chasing relatively fewer properties, which tends to bid up prices over time.

“That’s what the numbers tell us right now,” he said.

TD has downgraded its forecast regarding the agricultural industry. Even though weather conditions are not constraining crop production, global commodity prices are poor, scuttling chances for a bigger payday for Manitoba farmers this year.

Sondhi pegs a large part of Manitoba’s current relative success on consumer spending that has held up slightly better than in the rest of the country.

On the job front, TD believes Manitoba continues to create a decent amount of employment, forecasting a 1.8 per cent bump, down from 2.5 per cent last year as employers work to fill an elevated level of vacancies.

Sondhi said the accommodation and food service sectors are still trying to get back to pre-COVID-19 pandemic levels of employment and a structural deficiency is starting to emerge across the country.

“Manitoba is particularly hard-hit in the transportation and warehousing sectors. For instance, the province is facing ongoing shortages for truck drivers,” he said.

TD believes Manitoba’s large manufacturing sector, which got off to a slow start, is expected to benefit from the combination of continued domestic growth, a solid U.S. economy and relatively low Canadian dollar.

The vigorous spending during the last months of the previous Progressive Conservative government’s term and maintained by the NDP has not been lost on TD economists.

In its provincial economic forecast, TD said: “The public sector is making a notable contribution to growth this year, consistent with ongoing solid hiring trends.”

martin.cash@freepress.mb.ca