THE BOTTOM LINE
Will we see economic growth in our province in 2017?
What goes up must come down. Isaac Newton’s
theory certainly applies to the Saskatchewan
economy of recent years.
The ebbs and flows here have led to record growth and revenue,
but have also delivered job cuts and ballooning deficits. Of course,
international markets and fluctuating commodity prices have
played significant roles.
Challenging financial times are upon us and navigating through
the storm will require patience, strategic planning and maybe a lit-tle
bit of good fortune. Perhaps something to hold onto is news of a
possible upward trend when it comes to spending in Saskatchewan.
Could it lead to something positive?
Another of the major banks recently added its voice to the chorus
forecasting a return to economic growth in Saskatchewan in 2017.
Scotiabank says the province will see expansion of 1.7 per cent this
year and a further two percentage points next year. That puts us in
the middle of the pack in the Scotiabank forecast, which suggests a
gradual strengthening in oil prices. Scotiabank actually projects it
in the mid-$50 range. However, they suggest oil companies will be
cautious in hiring as the sting of the past two years is still very vivid.
Potash will continue to face headwinds in their report but they
are pointing to investment, especially infrastructure spending, as
one of the highlights in the near to midterm. Ottawa’s plans to in-vest
in new infrastructure will likely result in the provinces joining
in, although these types of projects take a while to work their way
through the system.
Scotiabank also notes that provincial governments appear to be
doing a better job at matching spending to revenues with five pro-jecting
balanced budgets in the next year or two.
And when it comes to spending, there’s no time like Christmas for
consumers to give their credit and debit cards a workout. Consumer
spending in the province in the past year and a half has not changed
much – up a bit, down a bit, but more frequently down. But there
may have been something of a modest breakout in November 2016.
We now have the latest figures for that month, and they show an
annual increase of five per cent on an unadjusted basis and about
half that when seasonally adjusted. Those are relatively solid num-bers
and represent a departure from earlier reports that showed
consumers were sitting on their wallets.
Statistics Canada’s monthly report on consumer or retail spend-ing
patterns also showed fairly widespread improvements. Only a
few categories – clothing and household goods like furniture and
electronics – were down compared to the same month a year earlier.
All the other sub-groups posted increases, especially in the automo-tive
field, the building supply sector and food and beverage.
The strength in home building supplies and motor vehicles sig-nals
that consumers are not shying away from bigger ticket items or
in trying to enhance assets such as personal properties. Further to
that, the momentum we’ve been seeing in the province’s manufac-turing
sector also grew in November. That’s the latest data available
from Statistics Canada that shows the province’s manufactur-ing
sector – led by food production and wood products – generat-ed
revenues that were 12 per cent higher than a year earlier. That
compares favourably with the national numbers, which showed a
two per cent improvement, enough to put us at the top of the pack
among the provinces in terms of growth.
This segment has been seeing steady growth for the last half of
2016 with increases in the previous five months. The value of the
Canadian dollar may have played a role in this strength; howev-er,
given that the national numbers are less impressive, this prob-ably
has more to do with Saskatchewan’s product mix than foreign
Revenues for the industry are running in the $15-billion-a-year
range and are edging up as November saw sales for these businesses
top $1.2 billion for the fourth month in a row.
BY PAUL MARTIN, MARTIN CHARLTON COMMUNICATIONS
Perhaps something to hold onto
is news of a possible upward
trend when it comes to spending
in Saskatchewan. Could it lead
to something positive?
52 Think BIG | Quarter 1 2017 | saskheavy.ca