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Manitoba & Canadian Economic Forecast - Robert Hogue
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Manitoba & Canadian Economic Forecast - Robert Hogue

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A global and general economic outlook with a focus on the Manitoba/Winnipeg market.

A global and general economic outlook with a focus on the Manitoba/Winnipeg market.


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  • 1. RBC ECONOMICS I RESEARCH The economic outlook for Manitoba More of the same in store for 2014? Robert Hogue Senior Economist, RBC robert.hogue@rbc.com Manitoba Home Builders Association Housing Forum Winnipeg, November 6, 2013
  • 2. Many good news in Manitoba: agricultural is doing well,… Cash receipts are up 13% y/y Farm cash receipts: Manitoba vs. Canada % change, year-over-year 60 Manitoba 50 Canada 40 30 20 10 0 -10 -20 -30 -40 2001 2002 2003 2004 2005 2006 2007 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 2 2008 2009 2010 2011 2012 2013
  • 3. …with bumper crops this year Manitoba’s major crops are set for record year; yields are excellent Crop production: Manitoba Wheat, canola, soybeans, corn,barley, million tonnes 12 10 8 6 4 2 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013p Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 3
  • 4. Non-residential construction sector still very busy Many projects on the go; spending rising at a double-digit clip Non-residential building construction: Manitoba % change, year-over-year 40 30 20 10 0 -10 -20 -30 -40 2001 2002 2003 2004 2005 2006 2007 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 4 2008 2009 2010 2011 2012 2013
  • 5. Residential investment leveling off but at an all-time high… New home construction still growing; renovation slowing a little Residential investment: Manitoba Billion $, 4-quarter trailing sum 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1991 1993 1995 1997 1999 2001 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 5 2003 2005 2007 2009 2011 2013
  • 6. …and is likely to pick up in the latter part of this year Housing starts strengthened again in the third quarter Manitoba housing starts Thousand units, quarterly averages, SAAR 9 8 7 6 5 4 3 2 1 2000 2001 2002 2003 2004 2005 2006 Source: CREA, RBC Economics Research ECONOMICS I RESEARCH 6 2007 2008 2009 2010 2011 2012 2013
  • 7. The services sector continues to make headway,… It is growing at nearly twice the pace of the goods-producing sector Payroll employment: Manitoba % change, year-over-year 6 4 2 0 -2 -4 Services Goods -6 -8 2002 2003 2004 2005 2006 2007 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 7 2008 2009 2010 2011 2012 2013ytd
  • 8. …driven by real estate, and accommodation and food Service industries focusing on both consumers and businesses Payroll employment: Manitoba % change, year-to-date 2013 Real estate and leasing Accommodation and food services Professional and technical services Arts and entertainment Health care and social assistance Finance and insurance Total services 2 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 8 4 6 8 10
  • 9. International exports are bouncing back,… Merchandise exports are up 8.3% year to date; strong gains in the US Merchandise exports: Manitoba % change, year-over-year 25 20 15 10 5 0 -5 -10 -15 -20 -25 2000 2001 2002 2003 2004 2005 2006 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 9 2007 2008 2009 2010 2011 2012 2013ytd
  • 10. …boosted by booming oil exports Energy almost doubling; now accounting for 15% of Manitoba’s exports Top commodity exports: Manitoba % change, year-to-date 2013 Energy Consumer products Total merchandise exports Motor vehicles and parts Farm products Aircraft/other transportation equipment Metallic products Machinery -10 10 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 10 20 30 40 50 60 70 80 90 100
  • 11. On a softer note, Manitoba’s factory sales moderated… Wood, machinery, chemicals up; transportation equipment down Manufacturing shipments: Manitoba % change, year-over-year 25% Manitoba Canada 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% 2001 2002 2003 2004 2005 2006 2007 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 11 2008 2009 2010 2011 2012 2013
  • 12. …and retail trade has yet to show sustained vigour,… Retail sales track only 2.2% higher than last year; showed volatility Retail sales: Manitoba vs. Canada % change, year-over-year 15 10 5 0 -5 Manitoba -10 2001 2002 2003 2004 2005 2006 2007 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 12 Canada 2008 2009 2010 2011 2012 2013
  • 13. …partly because job creation slowed in the province Employment has grown by less than 1% year-to-date Employment: Manitoba vs.Canada SA, % change, year-over-year 4.0% 3.0% Manitoba 2.0% 1.0% 0.0% -1.0% Canada -2.0% -3.0% 2004 2005 2006 2007 2008 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 13 2009 2010 2011 2012 2013
  • 14. Nonetheless, Manitoba’s unemployment rate remains low,… At 5.5%, it is the third lowest in the country Unemployment rate: Manitoba vs. Canada %, 3-month moving average 10 9 Canada 8 7 6 5 Manitoba 4 3 2 1 0 2000 2001 2002 2003 2004 2005 2006 2007 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 14 2008 2009 2010 2011 2012 2013
  • 15. …which attracts immigrants,… Net international and interprovincial migration near decades-high Manitoba net migration Persons, trailing 4-quarter sum 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 -2,000 -4,000 -6,000 1993 1995 1997 1999 2001 2003 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 15 2005 2007 2009 2011 2013
  • 16. …and which, in turn, boosts population growth Running at close to 30-year high; no longer lags the Canadian average Population growth % change 2.0 Canada 1.5 1.0 0.5 Manitoba 0.0 -0.5 -1.0 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 16
  • 17. Overall, Manitoba economy is sustaining a decent pace… One of Canada’s fastest growing provinces for the second year running Real GDP: Manitoba % change, year-over-year 6 Forecast 4 2.7 2.5 2.6 2 0 -2 Manitoba Canada -4 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 * 1997 - 2007 GDP is Mil. Chn. 2002; 2008 - current is Mil. Chn. 2007 ** Canada GDP is Mil. Chn. 2007; 2012 GDP is actual Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 17
  • 18. …and is expected to continue to do so next year Fairly steady growth forecasted; other provinces will pick things up Provincial real GDP growth in 2014 Annual % change ALTA. 4.1 SASK. 2.7 CANADA 2.7 MAN. 2.6 ONT. 2.6 B.C. 2.6 N.S. 2.3 QUE. 1.9 P.E.I. 1.7 N.B. 1.5 N.& L. 1.3 0 1 2 3 Sources: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 18 4 5
  • 19. Manitoba exporters will benefit from stronger US growth,… Gains in auto and construction sectors; confidence will rebuild; politics U.S. real GDP Quarter-over-quarter annualized % change 10 Forecast: 8 6 4 2 0 -2 -4 Annual Growth Rates -6 -8 Real GDP 2011 2012 1.8 2.8 2013f 2014f 1.6 2.6 -10 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Bureau of Economic Analysis, RBC Economics Research ECONOMICS I RESEARCH 19
  • 20. …a slightly weaker loonie… The Canadian dollar will stay close to parity; still very volatile Canadian dollar forecast US$/C$ 1.10 Forecast 1.00 Parity 0.90 0.80 End of period rates 2012 2013f 2014f 0.98 1.00 0.95 US$/C$ 0.70 0.60 95 96 97 98 99 00 01 02 03 04 05 Source: Bank of Canada, RBC Economics Research Forecasts ECONOMICS I RESEARCH 20 06 07 08 09 10 11 12 13 14
  • 21. …and a brighter global growth outlook next year Expansion of emerging economies to sustain demand for commodities World GDP growth Year-over-year % change 6 IMF Forecast 5 4 3.2 3 3.6 2.9 2 1 -1 -2 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: International Monetary Fund, RBC Economics Research ECONOMICS I RESEARCH 21
  • 22. Improving export picture also will help the rest of Canada Net trade gains will offset stable housing and the effect of fiscal restraint Canadian real GDP growth composition Percentage points 2.0 2012 2013f 2014f 1.5 1.0 0.5 0.0 -0.5 -1.0 Consumer spending Government spending Residential investment Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 22 Non-res. investment Net trade Inventories
  • 23. Canadian real GDP growth to move above its potential rate However, some economic slack will persist until 2015 Canada's real GDP growth Quarter-over-quarter % change, annualized rate Forecast: 8 6 4 2 0 -2 -4 Annual Growth Rates -6 -8 Real GDP 2012 2013f 1.7 1.7 2014f 2.6 -10 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 23
  • 24. Interest rates will remain low We expect the Bank of Canada to keep its rate unchanged in 2014 Interest rates: Canada % 7 Forecast 10 Year Bond Yield 6 5 4 3 2 BoC Overnight Rate 1 0 2000 2001 2002 2003 2004 2005 2006 2007 Source: Bank of Canada, RBC Economics Research Forecasts ECONOMICS I RESEARCH 24 2008 2009 2010 2011 2012 2013 2014
  • 25. Non-residential investment to be a catalyst in Manitoba still Engineering spending likely to crest; ICI building has room to grow Non-residential capital expenditure: Manitoba and Canada % change, year-over-year 20 Manitoba 15 Forecast 10 5 0 -5 Canada -10 -15 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Statistics Canada, Haver Analytics, RBC Economics Research ECONOMICS I RESEARCH 25
  • 26. Conditions will be conducive to further job creation,… Employment growth to accelerate slightly to 1.3% in 2014 Employment growth: Manitoba Year-over-year, % change 3.0% Forecast 2.5% 2.0% 1.5% 1.3% 0.9% 1.0% 0.5% 0.0% -0.5% 2002 2003 2004 2005 2006 2007 2008 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 26 2009 2010 2011 2012 2013 2014
  • 27. …and some easing in the unemployment rate,… Relatively good job prospects will be positive for confidence, immigration Unemployment rate: Manitoba vs. Canada %, SA 9 Canada 8 Forecast 7 6 5 Manitoba 4 3 2 Canada Manitoba 1 Annual Rate 2011 2012 7.4 7.2 5.4 5.3 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 2013f 2014f 7.1 6.8 5.4 5.1 27
  • 28. …which will support stronger consumer spending… Growth in retail sales forecasted to pick up modestly Retail sales: Manitoba % change, year-over-year 12 Forecast 10 8 6 4.4 4 2.6 2 0 -2 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Statistics Canada, RBC Economics Research ECONOMICS I RESEARCH 28
  • 29. …and demand for housing Home resale activity to remained quite stable at historically high levels Manitoba home resales Thousand units 16 14.0 13.9 14.3 14 12 10 8 6 4 2 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: CREA, RBC Economics Research ECONOMICS I RESEARCH 29
  • 30. Disclaimer The material contained in this report is the property of Royal Bank of Canada and may not be reproduced in any way, in whole or in part, without express authorization of the copyright holder in writing. The statements and statistics contained herein have been prepared by RBC Economics Research based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This publication is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities. ®Registered trademark of Royal Bank of Canada. ©Royal Bank of Canada. ECONOMICS I RESEARCH 30