Manitoba & Canadian Economic Forecast - Robert Hogue
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Transcript of Manitoba & Canadian Economic Forecast - Robert Hogue
More of the same in store for 2014?The economic outlook for Manitoba
RBC ECONOMICS I RESEARCH
Robert HogueSenior Economist, [email protected]
Manitoba Home Builders Association Housing ForumWinnipeg, November 6, 2013
2ECONOMICS I RESEARCH
Cash receipts are up 13% y/y
Many good news in Manitoba: agricultural is doing well,…
-40
-30
-20
-10
0
10
20
30
40
50
60
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Manitoba Canada
Source: Statistics Canada, RBC Economics Research
% change, year-over-year
Farm cash receipts: Manitoba vs. Canada
3ECONOMICS I RESEARCH
Manitoba’s major crops are set for record year; yields are excellent
…with bumper crops this year
2
4
6
8
10
12
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013p
Wheat, canola, soybeans, corn,barley, million tonnesCrop production: Manitoba
Source: Statistics Canada, RBC Economics Research
4ECONOMICS I RESEARCH
Many projects on the go; spending rising at a double-digit clip
Non-residential construction sector still very busy
-40
-30
-20
-10
0
10
20
30
40
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Statistics Canada, RBC Economics Research
% change, year-over-year
Non-residential building construction: Manitoba
5ECONOMICS I RESEARCH
New home construction still growing; renovation slowing a little
Residential investment leveling off but at an all-time high…
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Billion $, 4-quarter trailing sumResidential investment: Manitoba
Source: Statistics Canada, RBC Economics Research
6ECONOMICS I RESEARCH
Housing starts strengthened again in the third quarter
…and is likely to pick up in the latter part of this year
1
2
3
4
5
6
7
8
9
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Thousand units, quarterly averages, SAARManitoba housing starts
Source: CREA, RBC Economics Research
7ECONOMICS I RESEARCH
It is growing at nearly twice the pace of the goods-producing sector
The services sector continues to make headway,…
-8
-6
-4
-2
0
2
4
6
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013ytd
Services Goods
Source: Statistics Canada, RBC Economics Research
Payroll employment: Manitoba% change, year-over-year
8ECONOMICS I RESEARCH
Service industries focusing on both consumers and businesses
…driven by real estate, and accommodation and food
2 4 6 8 10
Total services
Finance and insurance
Health care and social assistance
Arts and entertainment
Professional and technical services
Accommodation and food services
Real estate and leasing
Payroll employment: Manitoba% change, year-to-date 2013
Source: Statistics Canada, RBC Economics Research
9ECONOMICS I RESEARCH
Merchandise exports are up 8.3% year to date; strong gains in the US
International exports are bouncing back,…
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-20
-15
-10
-5
0
5
10
15
20
25
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013ytd
Source: Statistics Canada, RBC Economics Research
Merchandise exports: Manitoba% change, year-over-year
10ECONOMICS I RESEARCH
Energy almost doubling; now accounting for 15% of Manitoba’s exports
…boosted by booming oil exports
-10 10 20 30 40 50 60 70 80 90 100
Machinery
Metallic products
Aircraft/ other transportation equipment
Farm products
Motor vehicles and parts
Total merchandise exports
Consumer products
Energy
Top commodity exports: Manitoba% change, year-to-date 2013
Source: Statistics Canada, RBC Economics Research
11ECONOMICS I RESEARCH
Wood, machinery, chemicals up; transportation equipment down
On a softer note, Manitoba’s factory sales moderated…
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Manitoba Canada
Source: Statistics Canada, RBC Economics Research
% change, year-over-year
Manufacturing shipments: Manitoba
12ECONOMICS I RESEARCH
Retail sales track only 2.2% higher than last year; showed volatility
…and retail trade has yet to show sustained vigour,…
-10
-5
0
5
10
15
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Manitoba Canada
Source: Statistics Canada, RBC Economics Research
% change, year-over-year
Retail sales: Manitoba vs. Canada
13ECONOMICS I RESEARCH
Employment has grown by less than 1% year-to-date
…partly because job creation slowed in the province
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Statistics Canada, RBC Economics Research
Employment: Manitoba vs.CanadaSA, % change, year-over-year
Manitoba
Canada
14ECONOMICS I RESEARCH
At 5.5%, it is the third lowest in the country
Nonetheless, Manitoba’s unemployment rate remains low,…
0
1
2
3
4
5
6
7
8
9
10
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Statistics Canada, RBC Economics Research
%, 3-month moving average
Unemployment rate: Manitoba vs. Canada
Canada
Manitoba
15ECONOMICS I RESEARCH
Net international and interprovincial migration near decades-high
…which attracts immigrants,…
-6,000
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Persons, trailing 4-quarter sumManitoba net migration
Source: Statistics Canada, RBC Economics Research
16ECONOMICS I RESEARCH
Running at close to 30-year high; no longer lags the Canadian average
…and which, in turn, boosts population growth
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
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
% change
Population growth
Canada
Manitoba
17ECONOMICS I RESEARCH
One of Canada’s fastest growing provinces for the second year running
Overall, Manitoba economy is sustaining a decent pace…
2.62.52.7
-4
-2
0
2
4
6
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Manitoba
Canada
* 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
Real GDP: Manitoba% change, year-over-year
Forecast
18ECONOMICS I RESEARCH
Fairly steady growth forecasted; other provinces will pick things up
…and is expected to continue to do so next year
4.1
2.7
2.7
2.6
2.6
2.6
2.3
1.9
1.7
1.5
1.3
0 1 2 3 4 5
ALTA.
SASK.
CANADA
MAN.
ONT.
B.C.
N.S.
QUE.
P.E.I.
N.B.
N.& L.
Sources: Statistics Canada, RBC Economics Research
Provincial real GDP growth in 2014Annual % change
19ECONOMICS I RESEARCH
Gains in auto and construction sectors; confidence will rebuild; politics
Manitoba exporters will benefit from stronger US growth,…
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-8
-6
-4
-2
0
2
4
6
8
10
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Forecast:
Source: Bureau of Economic Analysis, RBC Economics Research
U.S. real GDPQuarter-over-quarter annualized % change
Annual Growth Rates
20122.8
20111.8
2014f2.6Real GDP
2013f1.6
20ECONOMICS I RESEARCH
The Canadian dollar will stay close to parity; still very volatile
…a slightly weaker loonie…
0.60
0.70
0.80
0.90
1.00
1.10
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Forecast
Source: Bank of Canada, RBC Economics Research Forecasts
Parity
Canadian dollar forecastUS$/ C$
End of period rates
2013f0.95
20121.00US$/C$
2014f0.98
21ECONOMICS I RESEARCH
Expansion of emerging economies to sustain demand for commodities
…and a brighter global growth outlook next year
3.2 2.9
3.6
-2
-1
1
2
3
4
5
6
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Year-over-year % changeWorld GDP growth
Source: International Monetary Fund, RBC Economics ResearchSource: International Monetary Fund, RBC Economics Research
IMF Forecast
22ECONOMICS I RESEARCH
Net trade gains will offset stable housing and the effect of fiscal restraint
Improving export picture also will help the rest of Canada
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
Consumerspending
Governmentspending
Residentialinvestment
Non-res.investment
Net trade Inventories
2012 2013f 2014f
Source: Statistics Canada, RBC Economics Research
Percentage points Canadian real GDP growth composition
23ECONOMICS I RESEARCH
However, some economic slack will persist until 2015
Canadian real GDP growth to move above its potential rate
-10
-8
-6
-4
-2
0
2
4
6
8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: Statistics Canada, RBC Economics Research
Canada's real GDP growth Quarter-over-quarter % change, annualized rate
Forecast:
Annual Growth Rates
20121.7
2014f2.6
2013f1.7Real GDP
24ECONOMICS I RESEARCH
We expect the Bank of Canada to keep its rate unchanged in 2014
Interest rates will remain low
0
1
2
3
4
5
6
7
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: Bank of Canada, RBC Economics Research Forecasts
%
Interest rates: Canada
10 Year Bond Yield
BoC Overnight Rate
Forecast
25ECONOMICS I RESEARCH
Engineering spending likely to crest; ICI building has room to grow
Non-residential investment to be a catalyst in Manitoba still
-15
-10
-5
0
5
10
15
20
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: Statistics Canada, Haver Analytics, RBC Economics Research
Canada
Manitoba
% change, year-over-yearNon-residential capital expenditure: Manitoba and Canada
Forecast
26ECONOMICS I RESEARCH
Employment growth to accelerate slightly to 1.3% in 2014
Conditions will be conducive to further job creation,…
0.9%
1.3%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Year-over-year, % change Employment growth: Manitoba
Source: Statistics Canada, RBC Economics Research
Forecast
27ECONOMICS I RESEARCH
Relatively good job prospects will be positive for confidence, immigration
…and some easing in the unemployment rate,…
1
2
3
4
5
6
7
8
9
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: Statistics Canada, RBC Economics Research
Manitoba
Canada
%, SAUnemployment rate: Manitoba vs. Canada
Forecast
Annual Rate
2012
7.2
5.3
2011
7.4
5.4Canada
Manitoba
2014f
6.8
5.1
2013f
7.1
5.4
28ECONOMICS I RESEARCH
Growth in retail sales forecasted to pick up modestly
…which will support stronger consumer spending…
2.6
4.4
-2
0
2
4
6
8
10
12
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: Statistics Canada, RBC Economics Research
Retail sales: Manitoba % change, year-over-year
Forecast
29ECONOMICS I RESEARCH
Home resale activity to remained quite stable at historically high levels
…and demand for housing
14.0 13.9 14.3
2
4
6
8
10
12
14
16
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Thousand unitsManitoba home resales
Source: CREA, RBC Economics Research
30ECONOMICS I RESEARCH
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