Construction dragging in Saskatoon, however, but picking up in Regina
A modest recovery in oil prices will help pull the economies of Saskatoon and Regina out of recession this year, according to The Conference Board of Canada's Metropolitan Outlook: Spring 2017.
"Following two years of recession, Saskatoon and Regina's economies are finally on the road to recovery, although a return to the rapid growth seen during the resources boom is not in the cards," said Alan Arcand, associate director, Centre for Municipal Studies, The Conference Board of Canada.
Saskatoon's real GDP is forecast to rise by 1.6 per cent in 2017, following two years of contractions. The city's manufacturing sector, whose fortunes are closely tied to those of the province's resources industry, can expect a healthy output gain near 2 per cent in 2017 as oil prices post a modest recovery. The outlook for Saskatoon's services-producing industries is also improving, with all eight services industries expected to grow this year. Ongoing low interest rates and modest economic improvement this year should prevent further erosion in the resale market and prompt solid output growth in the finance, insurance and real estate sector. Meanwhile, the city's emerging high-tech sector is contributing to the buoyancy of the area's business series sector. In all, output growth in Saskatoon's services industries is forecast to hit 2.3 per cent in 2017.
On the other hand, sagging residential activity remains a drag on Saskatoon's construction sector. The area's new home inventories remain high. This is especially true for inventories of apartments started during the boom era, which continue to rise. Accordingly, further easing among both single and multiple units will cut total housing starts to roughly 1,600 this year – the fewest since the 2009 recession. In all, construction activity in Saskatoon is on tap to dip by 0.5 per cent this year.
The improved economic outlook should help strengthen Saskatoon's job market. Employment is forecast to grow 1.7 per cent in 2017 after dipping in 2016. The unemployment rate, however, will remain unchanged at 6.9 per cent this year as labour force growth matches job gains.
Like Saskatoon, Regina's economy is benefiting from the slight improvement in oil prices. Real GDP is poised to increase by 1.5 per cent in 2017, the first expansion since 2014. Local manufacturing will benefit from the recovery in the province's resources sector, allowing it to register stronger growth of 2.2 per cent this year. A turnaround is also in sight for Regina's construction industry. Ongoing work on a $1.9 billion bypass for the Trans-Canada Highway will help offset weak residential activity and allow Regina's construction sector to eke out growth of 0.7 per cent this year, after shrinking by 2.2 per cent in 2016.
Fuelled by output gains in all eight services industries, Regina's services sector will see growth of 1.7 per cent this year. Finance, insurance and real estate output growth should perk up slightly this year as erosion halts in both the new home and resale markets, while the area's slight economic improvement will support gains in the transportation and warehousing industry. On the other hand, retail sales growth is expected to remain tepid for another year.
Employment in Regina is forecast to rise 1 per cent in 2017 – the area's largest job gain since 2013. This will keep the labour relatively tight and the unemployment rate little changed at 5.2 per cent in 2017.