Saskatchewan’s economic growth remains among the top economic performers in Canada despite some recent moderation, according to the Provincial Monitor report released by BMO Economics.
“Real GDP in Saskatchewan is on track to grow 2.4 per cent this year, before picking up to a 2.8 per cent pace in 2014,” said Robert Kavcic, Senior Economist, BMO Capital Markets. “Strong resource-sector activity is driving healthy population growth, which in turn has been a major support for housing.”
The resource sector is a key growth driver in the region. “BHP has maintained its commitment to the massive Jansen mine, expected to produce 8 million tonnes per year,” stated Mr. Kavcic. “Meanwhile, activity in the Bakken has quietly lifted oil and support activity to nearly 20 per cent of the province’s real GDP, while direct royalties from oil now outpace those from potash by a 3-to-1 margin.” Mr. Kavcic noted that the sector is not without its share of uncertainty, especially given scaled back potash production because of weaker foreign demand.
Construction activity is also a major growth driver, as homebuilders keep pace with a surging population. “Housing starts have flared to the highest level since the early-1980s in recent months,” noted Mr. Kavcic. “While population growth is running at its strongest clip since that period, the nearly 20 housing starts per 1,000 people in the province are quickly approaching levels previously seen only in Alberta in the boom days of 2007. The level of nonresidential activity is also firm despite some cooling in the commercial sector in recent months.”
“Across Saskatchewan, our commercial clients continue to express optimism about the economic environment for business growth,” said Pam Spady, Vice-President, Commercial Banking, Saskatchewan, BMO Bank of Montreal. Our customers, from just about every sector, have indicated a need to stay ahead of demand, which is a great position to be in.”
Employment growth remains strong in the province, rising 3.3 per cent year-over-year in the third quarter of 2013 - near the fastest pace in Canada. “Employment growth has been driven entirely by the private sector, and is broad-based across industries,” said Mr. Kavcic. “The jobless rate continues to trend down, sitting at 4.3 per cent in September, matching Alberta for the lowest in Canada. The tight labour market is driving above-average wage growth and, combined with relatively low living costs, is a major factor behind the strong population growth.”
The full Provincial Monitor can be downloaded at www.bmocm.com/economics.