Quarterly Economic Update – Q3 2016 Page | 1

SREDA’s Economic Rating for the Saskatoon Region

“The Saskatoon Region economy continued to demonstrate strength and resilience over the previous quarter. Despite the ongoing weakness in commodity prices, several key economic indicators pointed to stability and, in some cases, modest growth compared to Q2. Given recent improvements in local economic data SREDA remains cautiously optimistic on the near-term economic outlook and is maintaining its “C” rating for the Saskatoon Region economy”. Alex Fallon, President & CEO, SREDA

A broad array of economic indicators have shown signs of improvement over the previous quarter, indicating that perhaps the worst of the recent economic slowdown is behind us. Employment data for the Saskatoon Region showed a gain in total jobs during Q3. In addition to the jobs gain, spending on non-residential construction continued its growth trajectory with overall Q3 investment up 2.3% from Q2’s already strong number. Provincial readings on wholesale trade (see graph) and manufacturing shipments were also on pace to show growth in Q3 relative to the first half of 2016.

On the back of actions taken by OPEC, oil prices have stabilized and seem to be holding in the $US50 per barrel (WTI) range. While the recovery phase is still its infancy, this higher price bodes well for continued investment in Saskatchewan’s relatively low cost oil and gas assets.

While many indicators have improved from early 2016 lows, some continue to languish. Residential construction remains subdued compared to recent historical levels (although

C

1.5

1.6

1.7

1.8

1.9

2

2.1

2.2

2.3

2.4

Aug-14 Feb-15 Aug-15 Feb-16 Aug-16

SASKATCHEWAN WHOLESALE TRADE

Source: Statistics Canada

$Billions, Seasonally Adjusted

-2.5

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

3

Sep-14 Mar-15 Sep-15 Mar-16 Sep-16

SASKATOON EMPLOYMENT MONTHLY CHANGE

Note: Data is seasonally-adjusted, 3-month moving averageSource: Statistics Canada

Thousands of Jobs

Quarterly Economic Update – Q3 2016 Page | 2

it also picked up in Q3 relative to Q2). Retail trade, while largely unchanged from a year ago, dropped slightly in Q3, indicating that Saskatchewan residents are still feeling some hesitance to spend freely. Prices for potash and uranium remain at low levels, resulting in further announcements of production cuts.

SREDA is maintaining its Q3 2016 Saskatoon Region economy rating of “C”, unchanged from Q1 and Q2. Although this grade is unchanged, considering the recent improvements in aforementioned indicators SREDA is cautiously optimistic for the near-term outlook. In line with other private and public sector forecasts, SREDA expects Saskatoon Region real GDP to expand at a moderate rate of approximately 1% in calendar 2016. Looking forward to 2017, economic growth is projected to improve to 2% as commodity prices continue their gradual climb higher and neighbouring provincial economies continue their recovery.

Alex L. Fallon President & CEO Saskatoon Regional Economic Development Authority Inc.

Q3 2016SASKATOON REGION ECONOMIC DASHBOARD

GDP & POPULATION

EMPLOYMENT

0.0% Change from Q2 2016

Alex Fallon, President & CEO, SREDA

$17.6BGROSS DOMESTIC PRODUCT

311,700CMA POPULATION

-0.4% Change from Q2 2016

6.5%UNEMPLOYMENT RATE

“The growth driving components of our business mix have changed significantly over the past nine months. Overall employment is essentially flat year on year and population growth continues. These facts offer stability for our economic prospects. While some components of the business community are experiencing growth, other portions of Saskatoon's business base are experiencing lower activity levels.” - Kent Smith-Windsor, Executive Director of the Greater Saskatoon Chamber of Commerce.

0.5% Change from Q2 2016

258,100POPULATION AGE 15+

0.5% Change from Q2 2016

65.0%EMPLOYMENT RATE

0.2% Change from Q2 2016

“Although there has been some business contractions and employee reductions in the marketplace, the majority of Saskatoon businesses have withstood the lower activity and volume relatively unscathed. With oil prices becoming consistently stronger and companies ramping up production, there is cautious optimism that the trough is now behind us.” - Keith Moen, Executive Director of the North Saskatoon Business Association.

HOUSING

$557.5MBUILDING PERMITS (YTD)

-19.6% Change from Q3 2015-9.3% Change from Q3 2015

1,501HOUSING STARTS (YTD)

$357,879AVERAGE HOME PRICE

2.3% Change from Q3 2015

1,451EXISTING HOME SALES (YTD)

-3.2% Change from Q3 2015

“Inventory levels of existing housing stock are slowly being reduced, currently sitting at 13% above the five year average. This is due to above average sales in August and a reduction in the number of additional units to the MLS system. Recent Federal changes affecting buyers qualifying for high ratio mortgages will likely impact sales in the weeks ahead.” - Jason Yochim, CEO of the Saskatoon Region Association of Realtors.

“CFOR THE SASKATOON REGION

“SREDA’S ECONOMIC RATING

179,400LABOUR FORCE

0.4% Change from Q2 2016

69.5%PARTICIPATION RATE

-0.1% Change from Q2 2016

”

The Saskatoon Region economy continued to demonstrate strength and resilience over the previous quarter. Despite the ongoing weakness in commodity prices, several key economic indicators pointed to stability and, in some cases, modest growth compared to Q2. Given recent improvements in local economic data, SREDA remains cautiously optimistic on the near-term economic outlook and is maintaining its “C” rating for the Saskatoon Region economy.

AGRICULTURE

Rain and snow in October delay harvest and lower crop quality

China lifts parts of 13-year ban on Canadian beef

Richardson Pioneer to build three new crop input facilities in Sask

China agrees to an extension in the canola dispute

Canadian crop production forecast increased to 34.2 million tonnes, second-largest ever

Federal Minister of Agriculture announces expanded market access for Canadian beef into Mexico

CONSTRUCTION

Construction on $300-million condominium, hotel and office tower project at River Landing to begin in October

Work is underway on a 220-room complex containing two separate hotels as part of the UofS College Quarter development

SaskPower completes a $330 million transmission line in northern Sask

Sask. home renovations up 34% year-over-year from 2015Q1

Drywall prices shoot through the roof after the federal government imposes preliminary anti-dumping tariffs of up to 276% on gypsum board products imported from the United States

Sask. needs $51B worth of infrastructure over the next 10-20 years (CMC Saskatchewan Report)

MANUFACTURING

Federated Co-op announces new fertilizer plants in Hanley and Brandon, Slated to open early 2017. Combined cost to be $75M

Mitsubishi Hitachi announces closure of Saskatoon plant. More than 150 employees given layoff notices

Great Western Brewing Company filed an action in court seeking to have Alberta’s markup on their beer declared unconstitutional

WHOLESALE AND RETAIL TRADE

Preston Crossing's fifth phase takes shape

Ikea opens 'collection point' in Saskatoon

International flights from Canada are the most expensive in the world

Vehicle sales in Saskatchewan continue to taper off as the economy cools

Q3 2016

SECTOR NEWS

ENERGY

MINING

OPEC agrees to limit production (range of 32.5 to 33 million bpd)

Oil climbs above US$50 in early October for first time since June 2016

Husky oil spill creates water issues for Prince Albert and other northern communities

Revenue from Sask. land rights sales fell to $34M year-to-date in October, down from $46M in 2015 and $180M in 2014

Renewable energy now accounts for 11% of Canadian energy

PotashCorp and Agrium announce intention to merge, resulting in US$36B agricultural giant

Weil Group Resources began operations at its helium plant in Manko

Potash production at Legacy potash mine delayed six months after equipment collapse

De Beers to begin drilling for diamonds in northern Saskatchewan

Belaruskali signs deal to deliver potash to China for $219/tonne in July

“A soft July was followed by enhanced performance in the later part of Q3. Air passenger numbers remained close to record levels. Total tourism volume was slightly off 2015 numbers. Recent Statistics Canada Data received in August confirmed tourism expenditures of $541 million annually.” - Todd Brandt, CEO of Tourism Saskatoon.

OTHER INDICATORS - Saskatoon

Saskatchewan (August YTD)

SCIENCE ANDTECHNOLOGY

7Shifts Inc. wins the 2016 Startup Canada Award for high-growth entrepreneurship

A new $63 million Collaborative Science Research Building is to be constructed at the UofS.

UofS researchers develop vaccine for deadly pig virus ((PEDV)

A new SRC initiative aimed at developing and commercializing new oil extraction technologies could provide oil producers with access to the billions of barrels of crude buried deep beneath west-central Sask

-0.7% Change from Q3 2015

292NEW BUSINESS LICENCES (Q3)

1.096MYXE PASSENGER TRAFFIC (Q3 YTD)

-0.1% Change from Q3 2015

0.4% Change from 2015

$984WEEKLY EARNINGS (JULY YTD)

$15.54BWHOLESALE TRADE

-12% Change from 2015

$1.41BNEW CAR SALES

-3.4% Change from 2015

$12.5BRETAIL SALES

0.9% Change from 2015

Q3 2016

TOP NEWS

SASKATOON REGION SASKATCHEWAN CANADA

Saskatoon ranked third-best city for business in Canada by Canadian Business magazine and ProfitGuide.com

Save-On-Foods to open 3 Saskatoon supermarkets within the next 18 months

Saskatoon hosts World Indigenous Business Forum August 23 - estimated to generate $3 million in economic spin-off

University of Saskatchewan announces plan for new $41-million rink

Saskatoon civic election held October 26

Potash Corp and Agrium announce plans to merge creating new $36 billion agriculture giant

2016 crop volumes projected to be well above average although wet and cold October dampens optimism as harvest slows and crop quality declines

According to BMO, our provincial economy is expected to grow a 0.5% this year, partially reversing the 1.4% decline in 2015. Rebound to nearly 2% growth expected in 2017

SLGA announced they're removing some barriers for craft beer manufacturers in the province, including allowing craft brewers the ability to direct deliver their products to Saskatchewan retailers

IMF projects Canadian economic growth of 1.2% in 2016 and 1.9% in 2017

Federal Government announced new mortgage rules requiring stress-testing for insured mortgages

Federal Government announced implementation of a $10/tonne carbon tax starting in 2018, rising to $50/tonne by 2022

Fort McMurray set for highest home construction activity in 20 years according to CMHC

INTERNATIONAL

Britain is expected to start Brexit process by March; sterling falls to 3-decade low

Bayer agrees to buy Monsanto in $66 billion deal that could reshape agriculture

Enbridge announces intention to purchase Spectra Energy. Deal expected to create 'energy infrastructure colossus' with $48 billion of future projects

U.S. labour market continues to firm, adding 156k jobs in September, while inflation remains benign

U.S. economy grows less than expected in Q2 as inventories fall for first time since 2011

WTO cuts 2016 world trade growth forecast to 1.7%

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Saskatoon, Saskatchewan

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SREDA Quarterly Economic Update Quarter 3 - 2016

Saskatoon Region Economic StatisticsQuarter 3, 2016

Key Results

2016Q3 2016Q2 Difference % Change 2015Q3 Difference % ChangeReal GDP, Saskatoon CMA *($ millions) 17,594 17,587 7 0.0% 17,282 312 1.8%Population, Saskatoon CMA (000s) 311.7 310.1 1.6 0.5% 305.7 6.0 2.0%Working Age Population (000s) 258.1 256.8 1.3 0.5% 252.8 5.3 2.1%Unemployment Rate 6.5% 6.9% -0.4% - 6.0% 0.5% -Building Permits - city ($000s) 174,372 257,405 -83,033 -32.3% 251,660 -77,288 -30.7%Existing Home Sales 1,451 1,573 -122 -7.8% 1,499 -48 -3.2%Average Existing Home Price ($) 357,879 350,302 7,577 2.2% 349,805 8,074 2.3%New Business Licences 292 349 -57 -16.3% 294 -2 -0.7%

Gross Domestic Product (GDP) in Millions - Saskatoon CMA

2016Q3 2016Q2 Difference % Change 2015Q3 Difference % ChangePrimary and Utilities 3,701 3,694 7 0.2% 3,743 -42 -1.1%

1,815 1,835 -20 -1.1% 1,750 65 3.7%Manufacturing 1,407 1,402 4 0.3% 1,389 18 1.3%

Goods Producing Industries 6,923 6,931 -9 -0.1% 6,882 40 0.6%Transportation and Warehousing 1,098 1,096 2 0.2% 1,090 9 0.8%Information and Cultural Industries 312 313 0 -0.1% 315 -3 -0.8%Wholesale and Retail Trade 2,121 2,128 -6 -0.3% 2,003 118 5.9%Finance, Insurance and real Estate 2,634 2,623 11 0.4% 2,603 32 1.2%Business Services 821 816 5 0.6% 803 18 2.2%Personal Services 803 799 4 0.5% 827 -24 -2.9%Public Administration and Defence 843 841 3 0.3% 761 83 10.9%Non-Commercial Services 2,039 2,041 -2 -0.1% 1,999 39 2.0%

10,672 10,656 16 0.2% 10,400 272 2.6%17,594 17,587 7 0.0% 17,282 312 1.8%

Source: Conference Board of Canada (CBofC)

Labour Force Statistics - Saskatoon CMAQuarterly Annual

2016Q3 2016Q2 Difference % Change 2015Q3 Difference % ChangeEmployment (000s) (Stats Canada - Table 282-0135) 167.8 166.6 1.23 0.7% 171.9 -4.1 -2.4%Unemployment (000s) 11.7 12.2 -0.5 -4.4% 11.0 0.7 6.0%

179.4 178.8 0.7 0.4% 182.9 -3.5 -1.9%78.7 78.0 0.7 0.9% 69.9 8.8 12.6%

258.1 256.8 1.3 0.5% 252.8 5.3 2.1%Unemployment Rate (%) 6.5% 6.9% -0.4% - 6.0% 0.5% -Participation Rate (%) 69.5% 69.6% -0.1% - 72.4% -2.8% -Employment Rate (%) 65.0% 64.9% 0.2% - 68.0% -3.0% -

Primary and Utilities 9.9 9.7 0.2 1.8% 8.5 1.4 17.0%17.5 17.2 0.3 1.8% 20.4 -2.9 -14.2%

Manufacturing 8.5 8.3 0.2 2.5% 9.0 -0.5 -6.1%35.8 35.1 0.7 2.0% 37.8 -2.0 -5.3%

Transportation and Warehousing 9.0 8.9 0.1 1.3% 8.8 0.2 2.7%Information and Cultural Industries 2.2 1.8 0.4 25.0% 3.1 -0.8 -26.8%Wholesale and Retail Trade 25.0 24.7 0.3 1.2% 25.4 -0.4 -1.7%Finance, Insurance and real Estate 10.0 10.2 -0.3 -2.5% 8.4 1.6 18.8%Business Services 15.3 15.2 0.1 0.8% 14.9 0.3 2.3%Personal Services 25.3 25.3 -0.1 -0.2% 24.6 0.7 2.7%Public Administration and Defence 7.9 8.1 -0.1 -1.8% 7.1 0.8 12.0%Non-Commercial Services 37.5 37.0 0.5 1.3% 39.2 -1.7 -4.3%

132.2 131.2 1.0 0.8% 131.5 0.7 0.5%Employment by Industry (000s) CBofC 168.0 166.3 1.7 1.0% 169.3 -1.3 -0.8%Source: Statistics Canada - Table 282-0116: 3-month moving average, unadjusted; Conference Board of Canada (CBofC)

Construction

Service-Producing IndustriesTotal GDP ($ millions)

Labour Force (000s)Not in Labour Force (000s)Working Age Population (000s)

Employment by Industry (000s) (CBofC Estimates)

Construction

Goods Producing Industries

Service-Producing Industries

Quarterly Annual

Quarterly Annual

SREDA Quarterly Economic Update Quarter 3 - 2016

Building Permits ($000)- City of Saskatoon - Quarterly

2016Q3 2016Q2 Difference % Change 2015Q3 Difference % Change33,306 50,843 -17,537 -34.5% 31,868 1,438 4.5%

847 1,002 -155 -15.5% 4,761 -3,914 -82.2%28,060 19,344 8,716 45.1% 104,695 -76,635 -73.2%

5,592 109,786 -104,194 -94.9% 8,609 -3,017 -35.0%1,500 148 1,352 - 1,689 -189 -11.2%

Subtotal Non-Residential 69,305 181,123 -111,818 -61.7% 151,622 -82,317 -54.3%Subtotal Residential 105,067 76,282 28,785 37.7% 100,038 5,029 5.0%Total Building Permits Quarterly ($000) 174,372 257,405 -83,033 -32.3% 251,660 -77,288 -30.7%Source: City of Saskatoon

Building Permits ($000)- City of Saskatoon - Year to Date

2016Q3 2015Q3 Difference % Change 2014Q3 Difference % Change96,046 92,691 3,355 3.6% 115,689 -19,643 -17.0%

2,620 38,625 -36,005 - 14,781 -12,161 -82.3%58,832 159,227 -100,395 -63.1% 61,502 -2,670 -4.3%

122,330 18,901 103,429 547.2% 40,289 82,041 203.6%1,685 11,610 -9,925 -85.5% 4,316 -2,631 -61.0%

Subtotal Non-Residential 281,513 321,054 -39,541 -12.3% 236,577 44,936 19.0%Subtotal Residential 276,024 372,077 -96,053 -25.8% 488,799 -212,775 -43.5%Total Building Permits Year -to-Date ($000) 557,537 693,131 -135,594 -19.6% 725,376 -167,839 -23.1%Source: City of Saskatoon

Housing Starts - Year to Date

2016Q3 2015Q3 Difference % Change 2014Q3 Difference % Change

556 521 35 6.7% 836 -280 -33.5%648 832 -184 -22.1% 1300 -652 -50.2%

261 252 9 3.6% 377 -116 -30.8%36 50 -14 -28.0% 158 -122 -77.2%

817 773 44 5.7% 1,213 -396 -32.6%684 882 -198 -22.4% 1,458 -774 -53.1%

Total Housing Starts 1501 1655 -154 -9.3% 2,671 -1,170 -43.8%Source: CMHC

MLS Statistics - City of Saskatoon

2016Q3 2016Q2 Difference % Change 2015Q3 Difference % Change1,451 1,573 -122 -7.8% 1,499 -48 -3.2%

New Listings 3,577 4,293 -716 -16.7% 3,877 -300 -7.7%Average Sale Price $357,879 $350,302 $7,577 2.2% $349,805 $8,074 2.3%Source: Saskatoon Region Association of Realtors

New Business Licenses

2016Q3 2016Q2 Difference % Change 2015Q3 Difference % Change110 118 -8 -6.8% 113 -3 -2.7%

Home Based Business 182 231 -49 -21.2% 181 1 0.6%Total New business Licenses 292 349 -57 -16.3% 294 -2 -0.7%Source: City of Saskatoon

YXE Airport Statistics - Year to Date

2016Q3 2015Q3 Difference % Change 2014Q3 Difference % ChangeTotal Passenger Traffic 1,096,312 1,097,421 -1,109 -0.1% 1,111,772 -15,460 -1.4%

Commercial

Annual Two Year

Quarterly Annual

Sales

Quarterly Annual

Multiple Family

Misc./Temp

Annual Two Year

City of SaskatoonSingle DetachedMultiple Family

Surrounding AreasSingle DetachedMultiple Family

Single DetachedSaskatoon CMA

Annual Two Year

CommercialInstitutionalIndustrialAssembly

CommercialInstitutionalIndustrialAssemblyMisc./Temp

Quarterly Annual