Is Saskatchewan’s stalled economy finally firing on all cylinders?

  • 20 Aug 2016
  • Leader-Post
  • BRUCE JOHNSTONE

Is Saskatchewan’s stalled economy finally firing on all cylinders?

Recent economic indicators seem to indicate that Saskatchewan’s moribund economy is on the mend. For example, manufacturing sales hit $1.17 billion in June, a 4.3 per cent increase from May — the fourth consecutive month of increased sales and the biggest percentage increase among the provinces.

Sales of new vehicles were also up in June — 6.2 per cent to 5,383 units — the first increase in 12 months and the highest monthly sales since 5,481 cars, trucks and SUVs were sold in September 2015.

Need more evidence the economy is starting to turn the corner?

Building permits, a key economic indicator, totalled $288 million in June — up 28 per cent from $225 million in June 2015 — the largest percentage increase among the provinces and up an astounding 72 per cent from $167 million in May.

Retail sales in June were nearly $1.6 billion, up 2.1 per cent from May, the highest percentage increase among the provinces.

What about the all-important housing sector? In July, housing starts were up across the province, with 436 total starts, up 13 per cent from 385 in July 2015.

Even the resale housing market, in Regina at least, is on the rebound after three years of falling prices and flagging sales. In fact, the Regina real estate market has fully recovered the seven per cent drop in prices between the spring of 2012 and the fall of 2015 and gained about three per cent since last year.

Another positive economic indicator is that the Ministry of the Economy is back pumping out press releases, boasting about our nation-leading retail sales, building permits and manufacturing sales these days after a hiatus of several months.

So are happy days here again, as the old Depression-era song goes? Is Saskatchewan back on the road to prosperity after driving in the ditch for the past couple of years?

To hear Economy Minister Bill Boyd talk, the past year or two are just a tiny blip on the Saskatchewan Party government’s unblemished track record of economic growth. “The mark of a diversified economy is one that shows growth and activity in sectors unrelated to other industries,’’ Boyd said in a news release announcing the province’s top-ranked manufacturing sales growth in June.

“One of the benchmarks of an economy is the state of retail sales and this increase is a positive indicator of other factors, such as consumer demand and confidence,’’ Boyd said in a release boasting about the province having the best retail sales growth in the country.

Of course, that’s Boyd’s opinion and he’s entitled to it. And he has some facts to back up his assertion that Saskatchewan’s economy is getting back on track. But let’s ask someone who crunches these numbers for a living.

Doug Elliott, publisher of Sask Trends Monitor, a monthly statistical newsletter, isn’t convinced that Saskatchewan’s economy has turned the corner just yet. While he concedes that recent economic indicators, like manufacturing sales, retail sales, housing starts and building permits, are looking better than they have in months, if not years, he’s not prepared to say the economy is completely out of the woods.

“It’s too early to say that,’’ Elliott said. “The steady doom-and-gloom has been replaced by a couple of green shoots here and there. Whether or not that’s the bottom of the trough here and we’re starting on the way out is hard to say.’’

Elliott noted that “some of the bigger numbers — employment, capital investment, stuff like that’’ — haven’t turned the corner yet. For example, he says employment is very much a mixed bag.

While the province created 800 more jobs in July than during the same period last year, the total of 576,100 employed persons was down 6,100 from June.

Even taking seasonal adjustments into consideration, employment was down 500 jobs in July compared with June.

And Elliott said the quality of jobs being created (part-time, low-paying) isn’t comparable to the quality of jobs (high-paying, full-time) being lost. Moreover, unemployment is rising, Employment Insurance recipients are up 20 per cent year over year in June, average earnings are falling and payroll employment is down.

So while evidence is mounting that the economy is getting stronger, the fundamentals — labour market, capital investment, commodity prices — are still weak. In other words, that light at the end of the tunnel could just be a flickering candle, not a roaring fire.

 

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on August 22, 2016, in agriculture, economic impact, miscellaneous, oil, other minerals, political, potash, uranium and nuclear. Bookmark the permalink. Leave a comment.

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