Hey there, time traveller!
This article was published 18/5/2018 (463 days ago), so information in it may no longer be current.
The Manitoba economy is coming down off the highs achieved in 2017, but some economists do not see lower GDP numbers this year and the next two as necessarily a bad thing.
In its periodic deep dives into provincial economies, Scotiabank released its Provincial Pulse on Manitoba, forecasting Manitoba growth rates for the next two years of 2.0 per cent in 2018 and 1.8 per cent in 2019, down from the lofty heights of 2.9 per cent in 2017 (although Statistics Canada’s GDP by industry rate has it as 2.2 per cent for 2017).
Those are in line with Canadian averages, typical for the Manitoba economy. Scotiabank notes the provincial economy can rely on its "evolving" diversification to continue to support solid but "easing" growth.
Among the strengths of this economy, the Scotiabank report highlights the provincial economy’s successful experience in absorbing newcomers into the workforce — the best in the country since the beginning of the decade.
With an immigrant employment rate of about 82.5 per cent from 2010 to 2017, it far exceeds the national average of 76.9 per cent in that regard.
"We have done some work on immigration internally and Manitoba has a really strong track record with respect to absorption and retention," said Marc Desormeaux, part of Scotiabank’s economics group.
Narendra Budhia, the province’s director of economic and fiscal analysis, said that’s a data point the province has not seen before.
"It is amazing," he said. "When you look at how newcomers will be integrated into the labour market, you look at how it might affect unemployment rates when you are adding so much new labour supply."
The province has been taking on between 13,000 and 15,000 new immigrants a year, for more than a decade.
"The amazing thing is for a few years in a row unemployment rates have been consistent at about 5.4 per cent," Budhia said. "It shows me that the integration of newcomers is working absolutely perfectly in the labour market. It is not disrupting it by increasing the unemployment rate. The immigrants that are coming here are very employable."
Budhia said the Scotiabank’s overall forecast is in line with the average of nine economic forecasters for the next two years.
With housing and construction coming down from very strong years in 2017 — provincial housing starts hit a 30-year high — and the winding down of major projects such as Bipole III, True North Square and Seasons of Tuxedo this year, the provincial economy is settling back into a longer-term average levels.
"Maybe we have not seen quite as many of the big upswings in the four per cent range (in Manitoba) that you might see in B.C.," Desormeaux said, "but that is a positive story about stability. Look at the financial crisis in 2009 when all the big province were losing two-to-three per cent Manitoba just had a very small decrease and then got right back to it the next year."
On the housing front, the race to obtain building permits to beat last year’s implementation of the impact fee — as well as the Office of the Superintendent of Financial Institution’s new mortgage stress tests that came into effect at the beginning of this year — juiced up the housing starts for the year. But there is expected to be a return to more normal levels this year and next.
"The dominating trend is about interest rates rising which is instilling more caution in the consumer," Desormeaux said. "There is uncertainty related to NAFTA and a number of high-level trends affecting populations all over Canada. So housing starts will return to sustainable levels in Manitoba and that’s a good thing."
Scotiabank expects increases in housing prices and rents in the three to four per cent range over the next two years, slightly below the 2010–17 annual average, which Desormeaux says is consistent with a balanced market.
"I live in Toronto and I know full well a booming housing sector can be a double-edged sword," he said. "You get the capital investment and the building but then you start to get affordability pressures. When we look at Winnipeg, affordability is just not a concern."
The report describes a mixed outlook in the resource sector, with mine closures but a pick up in oil production underway. Job creation, which also shot up in 2017 to a 15-year high of 1.7 per cent, will return to sub-1.0 per cent levels. Exports are expected to grow by 2.25 per cent in 2018-2019 up from 1.75 range last year and machinery shipments during the first quarter of this year were up almost 10 per cent compared to last year.
Martin Cash has been writing a column and business news at the Free Press since 1989. Over those years he’s written through a number of business cycles and the rise and fall (and rise) in fortunes of many local businesses.