Following a soft landing, the Manitoba economy should take off gradually in 2010

December 14, 2009
Reed Construction Data
Written by: John Clinkard

Although it has been bruised by the global recession, the Manitoba economy appears to be in considerably better health than the rest of the country as it heads into 2010.

Although unemployment in the Keystone province has increased from 4.2% to 5.3% in the past 12 months, over this period it has averaged 5.1%.

This is well below the national average in this period of 8.1%, and second only to Saskatchewan where the unemployment rate has averaged 4.8%.

The secret to Manitoba’s relative strength is that, unlike its resource-dependent neighbours to the west, and its manufacturing-dependent neighbours to the east, the Manitoba economy is well diversified.

For example, despite a 7.7% year-over-year drop in employment in goods production, largely due to a 16% year-to-date drop in exports, employment in service-producing industries is up by 2.3% year over year.

This is the result of solid job gains in finance, insurance and real estate (+7.6% year over year); professional, scientific and technical services (+8.9%); education services (+9.1%); and transportation services (+5.4%).

The relative strength of employment against a background of improving consumer confidence and record low interest rates has, over the past three months, contributed to stronger consumer spending (+2.3%) and housing starts (+7.6%).

Looking forward, gains in the most recent Conference Board Survey of Online Job Postings for Manitoba point to stronger job growth over the near term.

In addition, the improving health of the U.S. economy should have a direct positive impact on Manitoba’s exports of industrial materials, agriculture products and energy over the next several quarters.

In addition to the prospect for a gradual pickup in residential building, fuelled by a pickup in full-time employment and net migration, non-residential construction should be supported by ongoing spending on commercial projects currently underway, including the Red River Community College, the United Way Building and the National Leasing Building.

Finally, engineering construction spending should be augmented by increased federal and provincial spending on infrastructure.

Gross domestic product – Manitoba vs total Canada

Data source: Statistics Canada/Forecast and chart: Reed Construction Data – CanaData.