April 15, 2010
Economic Snapshot
From an economic perspective, Saskatchewan’s big sky looks bright
JOHN CLINKARD
consulting economist, CanaData
Saskatchewan’s unemployment rate, currently at 4.3%, is back to below where it was a year ago, and employment there has been trending higher over the past four months.
It is clear that the wheat province’s economy has moved firmly into expansion mode following a brief hiatus in the third quarter of 2009.
As has been the case across much of Canada, the key driver of economic growth has been a resurgence of domestic demand fuelled primarily by record low interest rates.
For example, growth of consumer spending, as reflected by retail sales, has averaged 3.3% year over year in the past two months; seasonally adjusted wholesale sales jumped 18.1% month over month in January.
With housing starts in the first two months of 2010 up by 55% year over year, residential construction in the province has also exhibited a vigorous recovery.
More recently, there is evidence that the province is benefiting from stronger external demand, driven by a growing global/U.S. appetite for Saskatchewan’s natural resources.
Over the past two months, total exports are up by 4.2% year over year, primarily due to increases in foreign sales of energy products and industrial goods products.
Looking forward, the outlook for the Saskatchewan economy appears bright for three principle reasons.
First, the effects of resurgent global/U.S. growth should continue to support commodity prices and contribute to the strengthening of resource-related investment in the province.
These include ongoing projects such as the NuCoal Energy Polygeneration Plant, Potash One’s Belle Plane Extraction/Treatment Facility and the Northland Power Plant in North Battleford.
Second, Saskatchewan should continue to attract both international as well as inter-provincial migrants, both of which should underpin residential and commercial construction.
Third, spending on infrastructure projects – originally planned to start in 2009 under the auspices of the federal government’s stimulus program – should boost institutional and engineering construction spending well into 2010.
Finally, stronger global demand for food should help to underpin the province’s agriculture sector and give a much-needed boost to farm incomes.
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 (actuals): Statistics Canada.
Forecasts and chart: Reed Construction Data – CanaData.
