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Manitoba Finance: July 2018 Province of Manitoba 1 Economic Update
Manitoba Finance: July 2018
Province of Manitoba
1
Economic Update
Topics for Today
Overview of the Manitoba Economy
Recent Economic Performance
Economic Indicators
• Population
• Labour Market
• Manufacturing Sales
• Exports
• Housing
• Investment in Buildings
Economic Outlook
2
Overview: Manitoba Economy
Manitoba is centrally located in North America and has an extensive manufacturing, wholesale trade, transportation, and warehousing network that produces and distributes raw materials, manufactured goods and services across Canada and globally.
Diversified industrial base, with a majority of medium-sized industries.
Economic output and jobs are not concentrated in one particular sector or area. As a result, long-term progress is balanced by growth across different sectors.
Almost half of the provincial exports are destined for foreign markets while the other half are destined for Canadian provincial markets. This distribution is the most balanced among provinces.
Diversity in markets and in production lowers Manitoba’s external trade exposure for locally produced goods and services as well as jobs.
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Manitoba Economy: Consistent Growth
Manitoba generates relatively stable annual economic growth over time, even during periods of increased volatility in financial and commodity markets.
Over the long-term, the province maintained consistent average annual growth in most key economic indicators.
Manitoba’s 10-year average annual real GDP growth has been relatively stable over the last 15 years, while the national average has declined.
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2.4 2.2
3.5
1.6
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2002 2004 2006 2008 2010 2012 2014 2016
Manitoba Canada
10-Year Average Annual Growth in Real GDP: Manitoba and Canada, 2002 - 2016 (Compounded Average Annual Per Cent)
Source: Statistics Canada
Strength in Industrial Diversity
Sources: Statistics Canada and Manitoba Finance
Note: Excludes imputed rent
Agriculture, Forestry and Fishing 3.8%
Mining, Oil and Gas 4.7%
Utilities 3.0%
Construction 8.1%
Manufacturing 9.6%
Wholesale 6.3%
Retail 5.7%
Transportation and Warehousing 6.7%
Finance and Insurance5.7%
Real Estate, Rental and Leasing 3.7%
Information, Culture, Administration and
Management of Companies 4.8%
Professional and Scientific 3.1%
Accommodation, Food, Arts and Entertainment and Other Services 4.5%
Public Administration7.6%
Health and Social Services7.9%
Education Services 5.4%
GDP By Industry Shares, 2017
Commercial Services
Goods-Producing
Non-Commercial Services
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Recent Economic Performance
Momentum built following the oil/commodity price shock.
Most key economic indicators showed improvement in growth in 2017.
Factors contributing to growth:
Strengthening international and interprovincial exports.
Strong population growth.
Record capital spending on commercial, industrial, and residential properties.
Strong employment gains.
Bumper crop.
Canada Summer Games.
6
2.5
2.92.8
2.0
1.2
1.7
2.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2011 2012 2013 2014 2015 2016 2017
Manitoba Annual Real GDP Growth, 2011 – 2017 (Per Cent)
Source: Manitoba Bureau of Statistics
Industry Based Growth in 2017
7
-2.2
-0.2
0.4
0.7
1.3
1.5
1.8
1.9
2.1
2.3
2.7
4.2
4.9
5.3
7.9
8.6
Mining, Oil and Gas
Information, Culture, Admin. and Management of Companies
Utilities
Finance and Insurance
Education Services
Public Administration
Manufacturing
Accommodation, Food, Arts and Entertain. and Other Services
Professional and Scientific
Health and Social Services
Real Estate, Rental and Leasing
Retail
Transportation and Warehousing
Wholesale
Construction
Agriculture, Forestry and Fishing
Real GDP Growth in 2017
Source: Statistics Canada
Population Boom
Highest population growth in Canada over last three years.
Population growth averaging 1.2% annually over past decade.
Factors contributing to growth:
Successful Provincial Nominee Program.
Stable labour market.
Affordable living costs.
Baby Boom (echo cohort).
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Ten Year Average
Growth 1.2%
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
2000 2004 2008 2012 2016
Population Growth, 2000 – 2017 (Per Cent)
Source: Statistics Canada
Components of Population Growth
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Ten Year Average
6,200
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2000 2004 2008 2012 2016
Net Natural Increase, 2000 – 2017 (Persons)
Source: Statistics Canada
Ten Year Average 10,600
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2000 2004 2008 2012 2016
Total Net Migration, 2000 – 2017 (Persons)
Labour Market
Manitoba’s labour market is the most stable in Canada.
Labour supply (labour force) and demand (jobs) growing at a steady 1.0% annual pace since 1976.
Labour market is absorbing a record increase in workers, while maintaining a relatively low unemployment rate and a high labour force participation rate.
Working age labour force population surpassed 1,000,000 workers in 2017.
Strong employment gains in 2017.
Total employment up 10,500.
Private sector jobs up 11,800.
Full-time jobs up 9,200.
Part-time jobs up 1,300.
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1.5%-0.4%
1.7%
620,000
625,000
630,000
635,000
640,000
645,000
650,000
Employment Level, Jan 2015 – Jun 2018 (12-Month Moving Average in Number of Workers)
Source: Statistics Canada
Employment by Industry Change in 2017
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-1,000
-900
-300
200
300
500
500
600
700
900
1,000
1,100
1,200
1,200
1,600
3,100
Utilities
Other Services
Agriculture
Public Administration
Manufacturing
Mining, Fishing and Forestry
Health Care and Social Assistance
Information, Culture and Recreation
Professional, Scientific and Technical Services
Accommodation and Food Services
Educational services
Transportation and Warehousing
Construction
Business, Building and Other Support Services
Retail and Wholesale Trade
Finance, Insurance and Real Estate
Employment Change in 2017, (000`s)
Source: Statistics Canada
Employment by Industry Change in 2018
12
-2,900
-2,000
-1,700
-1,200
-800
-600
-600
-300
200
700
1,000
1,900
2,300
2,600
3,000
3,300
Manufacturing
Utilities
Construction
Retail and Wholesale Trade
Mining, Fishing and Forestry
Finance, Insurance and Real Estate
Public Administration
Information, Culture and Recreation
Professional, Scientific and Technical Services
Transportation and Warehousing
Business, Building and Other Support Services
Educational services
Accommodation and Food Services
Health Care and Social Assistance
Agriculture
Other Services
Year-To-Date Employment Change In 2018, (000`s)
Source: Statistics Canada
Source: Statistics Canada 13
3.3% -1.1%2.0%
6.7%
15,500
16,000
16,500
17,000
17,500
18,000
18,500
19,000
19,500
20,000
Dec-13 Dec-14 Dec-15 Dec-16 Dec-17
Manitoba Manufacturing Sales, Jan 2014 – May 2018 (A 12-Month Moving Total of Monthly Sales in Millions of Dollars)
Manufacturing sales rebound in 2017 and
accelerate in 2018
Significant Pick-Up in Manufacturing Sales
Manufacturing Sales Rebound in 2017
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-1.3
-0.6
1.6
4.7
4.8
6.7
8.4
9.1
9.2
13.0
14.2
Furniture (3%)
Wood Products (2%)
Printing (3%)
Primary Metals (11%)
Chemicals (8%)
Total Sales
Food (25%)
Fabricated Metals (5%)
Transportation Equipment (16%)
Electrical Products (1%)
Machinery (11%)
Manufacturing Salesin 2017, (%)
Source: Statistics Canada
Strengthening Manufacturing Sales in 2018
15
-2.3
0.5
0.9
1.0
2.6
3.8
8.8
10.7
12.9
15.3
23.2
Printing (3%)
Primary Metals (11%)
Wood Products (2%)
Electrical Products (1%)
Furniture (3%)
Machinery (11%)
Total Sales
Transportation Equipment (16%)
Food (25%)
Fabricated Metals (5%)
Chemicals (8%)
Year-To-Date Manufacturing Sales in 2018, (%)
Source: Statistics Canada
0
100
200
300
400
500
600
700
800
2006 2008 2010 2012 2014 2016 2018i
Growing Productive Manufacturing Capacity
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Acceleration of capital spending on value-added processing within Canada
Capital Investment In Manufacturing, 2006-2018i (In Millions of Dollars) • HyLife is expanding its Integrated
Pork Production and Processing
System. Adding more processing
capacity and up to four finisher sites.
• Roquette is building the world’s
largest pea-protein processing facility
in Manitoba.
• Simplot plans to more than double its
food processing capacity for frozen
french fries and formed potatoes.
Increasing farm diversification and
employment, especially in rural areas.
Broadening Manitoba’s export base and
improving agriculture competitiveness
and profitability.
i – Capital spending intention for 2018Source: Statistics Canada
Source: Statistics Canada 17
7.2%
2.2%-2.0%
2.7%
11,500
12,000
12,500
13,000
13,500
14,000
14,500
15,000
Dec-13 Dec-14 Dec-15 Dec-16 Dec-17
Manitoba International Merchandise Exports, Jan 2014 – May 2018 (A 12-Month Moving Total of Monthly Export Sales in Millions of Dollars)
International Exports
Increasing global demand lifting export sales
New Housing
Positive trend since the early 2000’s.
Housing starts topped the 7,000 mark in 2012, 2013 and 2017, the strongest since the mid-1980’s.
Factors contributing to momentum:
Record international immigration.
Echo boom purchasing homes.
Low mortgage rates and income growth.
Demand for independent housing for seniors.
General affordability of housing
Housing starts should average 6,200 in 2018 and 6,500 in 2019.
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0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2000 2004 2008 2012 2016
Housing Starts, 2000 – 2017 (Units)
Source: Statistics Canada
Housing Affordability
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191,808 204,462245,472 255,989
294,199 302,490 313,372
402,354
573,396
716,259
Canadian Average 495,797
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
NB PE NS NL SK MB QC AB ON BC
Average Price of Homes Sold in June 2018 (Dollars)
Source: Canadian Real Estate Association
“Winnipeg was one of only two markets on our list that saw a small improvement in affordability in the first quarter [2018]” Housing Trends and Affordability, RBC, July 2018.
Building Boom
Source: Statistics Canada 20
Expanding productive capacity with investment in commercial
and industrial buildings
Manitoba Investment in Non-Residential Building Construction, Q4 2013 – Q2 2018 (Quarterly at Annualized Total in Millions of Dollars)
Commercial
Industrial
Institutional and Governmental
15.0%
9.4%-7.0%
9.6%
-
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
Q4 2013
Q4 2014
Q4 2015
Q4 2016
Q4 2017
Real GDP Growth, 2013 – 2019f (Per Cent)
Economic Growth Comparison
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2.5
2.9
1.0
1.4
3.0
2.01.9
2.8
2.0
1.2
1.7
2.5
1.91.7
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2013 2014 2015 2016 2017 2018f 2019f
Canada
Manitoba
Following a recovery from a commodity price shock, growth expected to moderate in the near-term
Forecast
f – Forecast based on Manitoba Finance Survey of Economic ForecastsSources: Statistics Canada, Manitoba Bureau of Statistics and Manitoba Finance Survey of Economic Forecasts
f – Forecast based on Manitoba Finance Survey of Economic ForecastsSource: Manitoba Finance Survey of Economic Forecasts
Economic Outlook, 2018f-2019f
Manitoba Finance Survey of Economic Forecasts(As at July 2018)
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2018f 2019f
Manitoba Canada Manitoba Canada
Percent Growth Unless Noted
Real GDP 1.9 2.0 1.7 1.9
Nominal GDP 3.9 4.2 3.7 4.1
Employment 0.6 1.2 0.7 0.9
Unemployment Rate (%) 5.8 5.8 5.6 5.8
Consumer Prices 2.4 2.3 2.0 2.1
Key Message
Growth in Canada is forecast to slow in 2018 and 2019.
Manitoba and Canada are both projected to grow at a similar pace.
Economic indicators are showing mixed results in 2018, some strengthening
(manufacturing, exports and vehicle sales), others at a similar pace to last year
(average weekly earnings, labour income and building permits) and some
slowing (housing starts, home sales, base metal output and employment).
Primary production is expected to slow in 2018, due to mine closures and
following a bumper crop.
Several major projects and events support growth: Roquette’s new $400
million pea-protein production facility; Simplot’s $460 million expansion;
Canadian National Railway’s announced $130 million in capital spending in 2018;
and the Winnipeg Jets’ playoff run.
Global growth is in line with expectations.
U.S. near-term growth is strengthening, but projections have been revised down
for the euro area, Japan, and the United Kingdom.
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Uncertainties
Potential Opportunities
Stronger than expected increase in global demand.
Stronger than expected support to domestic demand from strong population growth.
Stable government infrastructure spending profile.
Positive spillovers from U.S. fiscal stimulus (tax cuts)
Higher base metal prices (+46%; nickel: +40%) have the potential to offer upside surprises
to the economic outlook.
Potential Risks
The U.S. decision to challenge Canada’s retaliatory tariffs at the World Trade Organization
adds a new unexpected dimension to trade tensions.
Rising interest rates and major tax changes in the U.S. and Canada could have a material
impact on capital and labour mobility.
NAFTA negotiations could significantly alter trade flows.
Federal housing measures could destabilize a relatively balanced housing market in
Manitoba.
Extreme weather conditions.
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Latest Economic and Financial Reports are available online:
Manitoba Finance: http://www.gov.mb.ca/finance/
Economic Highlights: http://www.gov.mb.ca/finance/pubs/highlights.pdf
Economic Statistics: http://www.gov.mb.ca/finance/pubs/statistics.pdf
Manitoba Provincial Budget: https://www.gov.mb.ca/budget2017/index.html
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