Prosperity Saskatchewan

Conference Board of Canada predicts moderate growth for Saskatoon and Regina in ’17

‘Worst appears over’ for Saskatoon economy

Conference Board of Canada predicts moderate growth for city, Regina in ’17

Ongoing weakness in oil, potash, and agricultural markets will limit Regina’s economic growth to 1.3 per cent this year, while construction and services strength will offset the effects of weak resource prices, helping Saskatoon’s GDP grow by 1.7 per cent in 2016, according to the Conference Board of Canada’s latest forecast.

But the “worst appears to be over,’’ the Ottawa-based economics forecasting agency said Monday. Next year, both cities should perform better, with Regina’s economy projected to grow by 1.8 per cent and Saskatoon’s by two per cent in 2017, said the board’s metropolitan autumn outlook.

While much improved from the 0.5 per cent contraction last year, Regina’s projected GDP growth for 2016 and 2017 “pales in comparison with average growth rates exceeding four per cent during the decade to 2014, including a huge 6.6 per cent output jump in 2011,’’ the report said. “And even such modest growth prospects hinge on improvements in commodity prices, which are slow in coming.”

Accordingly, Regina’s real GDP is forecast to grow less than two per cent in both 2018 and 2019. Employment has held up surprisingly well, advancing nearly one per cent in 2015, although this gain was modest by boom-era standards. Similar job growth is on tap for 2016, but only a small advance is expected in 2017.

The unemployment rate is forecast to average 5.4 per cent in 2016, up from 4.4 per cent in 2015 and an unusually low 3.7 per cent in 2014. Next year, the rate is forecast to pull back to 5.2 per cent. “Although these expected rates are high by recent standards, they remain below those of the late 1980s and early 1990s — a signal of Regina’s general economic improvement,’’ the report said.

Ongoing net in-migration is another positive sign, the report said. Although inflows have fallen since 2012-2014, Regina should see more than 3,000 newcomers both this year and in 2017.

Output of Regina’s manufacturing sector is on track to expand 1.2 per cent this year and two per cent next year, following a 1.8 per cent dip in 2015.

Saskatoon’s projected real GDP growth of 1.7 per cent this year follows a 0.4 per cent drop in 2015, the first decline since the 2009 recession and a sharp drop from GDP hikes averaging just under six per cent in the previous five years.

Employment rose just 0.5 per cent in 2015, and jobs will be lost this year, although 2.2 per cent employment growth is on tap for 2017. Recent job weakness has shown up in a higher unemployment rate, which jumped 1.6 percentage points to 5.8 per cent in 2015 and is forecast to rise to 6.3 per cent for 2016, but forecast job growth will trim the unemployment rate to 5.6 per cent in 2017.

Weak employment conditions have slowed but not reversed net migratory inflows, which peaked at over 9,300 people in 2012. “We expect net arrivals nearer 4,000 people annually both this year and in 2017, trimming population growth to roughly two per cent,” the report said.

Saskatoon’s manufacturing output is poised to decline for a third straight year in 2016, although stronger three per cent output growth is on tap for 2017. Manufacturing employment has fallen 18 per cent in the past two years, including an 11 per cent drop last year.