Although greater public health restrictions were introduced in the fall, the Saskatoon Region economy has experienced smaller economic losses in Q4 compared to other towns and cities in Saskatchewan. The Conference Board of Canada estimates that the Saskatoon CMA saw growth of 1.2% in the last quarter of the year.
Table 1: Economic Growth Forecast for Saskatoon CMA
|Q1 2020||Q2 2020||Q3 2020||Q4 2020||Q1 2021||Q2 2021||Q3 2021||Q4 2021|
|Quarterly GDP (%)||-0.8||-8.9||6.9||1.2||2.0||1.4||1.3||1.2|
Source: Conference Board of Canada
A key component of Saskatoon’s relative resilience is its housing market, which has been fueled by low interest rates. RE/MAX expects a shift to a seller’s market in early 2021, with prices increasing by 5.0%. Rising demand has also increased residential construction by 158.9% between the beginning of April and November 2020, compared to a decline of 36.1% in non-residential construction in that same period.
As employers consider the future of the workplace, Saskatoon’s downtown vacancy remains high, at just below 15.5%, according to ICR Commercial. This continues to contribute to lower investment in the non-residential construction sector.
Saskatchewan’s Year in Review
Saskatchewan ended 2020 with an overall economic contraction of 5.2%, according to an average of forecasts from six major Canadian financial institutions and Canada’s economic think-tank. Future recovery is widely expected, as the economic consensus anticipates average growth of 4.5% and 4.0% for 2021 and 2022, respectively.
Table 2: Consensus Economic Growth Forecast for Saskatchewan (%)
|National Bank of Canada||1.2||-0.7||-5.0||4.5|
|Conference Board of Canada||1.6||-0.8||-5.1||4.9||3.6|
|Average Economic Growth||1.3||-0.7||-5.2||4.5||4.0|
Source: RBC, TD, BMO, CIBC, Scotiabank, NBC and CBoC
After a modest labour recovery in Q3, Saskatchewan lost 11,100 jobs in Q4 as new pandemic restrictions were implemented. Saskatchewan’s full-time employment is down by 20,600 since the start of the pandemic, while part-time is down by 6,800.
Economic recovery over 2020 has been uneven, with notable challenges across the province’s key industries. Uranium, oil and gas have remained sluggish, though demand is expected to increase in the coming years. By contrast, Saskatchewan’s housing market is on track to record the sharpest increase in home sales and housing starts this year relative to other provinces.
Agriculture continues to be a bright spot for the economy, with exports up for the year primarily because of surging international demand for agricultural and food exports; this is a notable feat given that seven provinces have seen at least a 10% drop in exports for the year. Higher crop prices are also expected to bolster demand for potash, driving prices higher in 2021.
There is no doubt that economic recovery depends on the course of the coronavirus pandemic and the distribution of vaccines. According to economists in a Reuters poll, Canada’s economy will experience roadblocks in the first quarter of 2021 before gaining momentum in the next.
Saskatchewan is expected to make a solid recovery of 4.5% real GDP growth as 2021 progresses, thanks to a strong agri-food sector and higher capital investment spending. The Government of Saskatchewan has boosted its capital spending plan to $7.5 billion over two years, significantly increasing spending on roads, municipal infrastructure and schools. This is expected to create an estimated 10,000 jobs and provide sizeable stimulus to the economy.
Table: Key Indicators of the Saskatchewan Economy
|Real GDP (y/y % change)||1.3||-0.7||-5.2||4.5||4.0|
|Nominal GDP (y/y % change)||3.2||0.1||-8.3||7.4||6.9|
|Employment (y/y % change)||0.4||1.7||-4.7||3.9||2.1|
|Housing Starts (x 000s)||3.6||2.4||3.1||3.4||3.9|
|Retail Sales (y/y % change)||-0.4||-0.3||-1.0||4.1||2.9|
|CPI (y/y % change)||2.3||1.7||0.6||1.7||1.9|
Source: RBC, TD, BMO, CIBC, Scotiabank and NBC
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