February 19, 2010
Economic Snapshot
Heading into 2010, Saskatoon’s economic health is second to none
JOHN CLINKARD
consulting economist, CanaData
Saskatoon appears to be leading the country in terms of overall economic health. Its rate of job creation in January was the second fastest among the 27 largest metro areas in the country. Saskatoon has the third lowest rate of unemployment.
Over the past 12 months, employment in the hub increased by 3.5%, more than any other major metro area in the country.
Across the key sectors of the Saskatoon economy, the principal sources of new jobs over the past 12 months have been: public administration (+20.0% year over year); education (+16.0%); forestry (+7.7%); professional, scientific and technical services (+7.0%); accommodation and leisure services (+5.5%); and health services (+3.0%).
These gains offset weakness in management and business services (-15.2%), manufacturing (-10.0%) and information services (-9.8%).
Against this background of sustained employment growth, housing demand in Saskatoon – fuelled by record low interest rates – started to recover in Q2/2009 following a sharp downturn that began in Q4/2008 and extended into Q1/2009.
Reflecting this stronger pattern of demand, housing starts in Q4/2009 were up by 49% year-over-year following a 57% year over year drop in Q3/2009.
It is worth noting that late in 2009 there were signs that Saskatoon’s economy had lost some of its momentum.
Consistent with the softening in labour demand over the past few months — as reflected by the Conference Board in Canada’s Metro Help Wanted Index — employment growth has trended steadily lower since November, while exisiting home sales declined in January (-11%) for the first time since May 2009.
Looking forward, a number of factors should cause Saskatoon’s economic pulse to beat more quickly as it moves through 2010.
First, the stronger outlook for commodity prices in general, and for potash and uranium in particular, should underpin a recovery in the metro area’s mining services sector.
Second, housing demand should benefit from a sustained pattern of net migration, which has averaged close to 4,500 individuals over the past three years.
Finally, the recent surge in non-residential building permits suggests that federal and provincial stimulus projects will give a significant boost to non-residential building that should extend into 2011.
John Clinkard has over 30 years’ experience as an economist in international, national and regional research and analysis with leading financial institutions and media outlets in Canada.
Data source: Statistics Canada/Chart: Reed Construction Data, CanaData
