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SREDA – Confidence in Saskatoon economic recovery high

With provincial public health restrictions lifted July 11th, SREDA is keeping a rating of B- for the Saskatoon Region economy in Q2 of 2021. Here’s why:

  1. More than 65% of those eligible are fully vaccinated, although vaccination rates have stalled.
  2. Consumer and business confidence is high. The Business Outlook Survey (BOS) indicator reached its highest level on record and the Canadian Survey of Consumer Expectations shows spending growth near a survey high.
  3. Real estate continues to expand – the Canada Mortgage and Housing Corporation (CMHC) is forecasting housing starts in Saskatoon to increase further in 2021.
  4. Some financial strain is apparent. The MNP Consumer Debt Index found that four in 10 Saskatchewan households are not confident about being able to cover all living and family expenses in the next 12 months without spending on credit.
  5. GDP forecasts are optimistic. Forecasts have shown a higher level of recovery than anticipated.  

Economic Forecast: Saskatoon Region

Steady growth of 1.2% is expected for Q2, followed by 1.1% in the next quarter (Table 1).

Table 1: Economic Growth Forecast for Saskatoon CMA

Q1 2020Q2 2020Q3 2020Q4 2020Q1 2021Q2 2021Q3 2021Q4 2021
Quarterly GDP (%)-0.3-8.95.82.61.21.21.11.1

Source: Conference Board of Canada

Economic Forecast: Saskatchewan

According to the average of six major Canadian financial institutions and Canada’s leading economic think tank, growth of 5.7% is expected for 2021, up from the 5.3% forecasted last quarter. This is anticipated to be followed by growth of 3.7% in 2022 (Table 2).

Table 2: Consensus Economic Growth Forecast for Saskatchewan (%)

Financial Institutions20192020f2021f2022f
RBC-0.7-5.25.74
TD-0.8-5.25.74
BMO-0.7-4.55.33.2
CIBC-0.7-5.25.63.4
Scotiabank-0.7-5.25.53.6
National Bank of Canada-0.7-5.25.43.5
Conference Board of Canada-0.9-5.26.44.3
Consensus Economic Growth-0.7-5.15.73.7

Source: RBC, TD, BMO, CIBC, Scotiabank, NBC and CBoC

Looking Ahead

Agriculture, manufacturing and housing have contributed to a large part of the growth seen in the first half of 2021. Although GDP is expected to recover before the end of the year, there are still sectors well below pre-pandemic levels. Growth for the remainder of the year is currently expected, as the Saskatchewan economy has now fully reopened.

Sources

https://royal-bank-of-canada-2124.docs.contently.com/v/provincial-economies-reaching-the-other-side-of-the-valley-pdf

https://economics.td.com/provincial-economic-forecast

https://economics.bmo.com/media/filer_public/39/a2/39a2e3f7-be85-4e84-85be-fdb1b8c4af4a/outlookprovincial.pdf

https://economics.cibccm.com/cds?id=d25059dc-5b66-4a39-b1d2-83c3696a6c28&flag=E

https://www.scotiabank.com/ca/en/about/economics/economics-publications/post.other-publications.the-provinces.scotiabank-s-provincial-outlook–june-16–2021-.html

https://www.collierscanada.com/en-ca/research/saskatoon-office-market-report-2021-q2

https://connect.deloitte.ca/story/june21-economic-outlook_en/?utm_source=website-En

https://www.bankofcanada.ca/2021/07/business-outlook-survey-summer-2021/

https://www.bankofcanada.ca/2021/07/canadian-survey-of-consumer-expectations-second-quarter-of-2021/

https://assets.cmhc-schl.gc.ca/sites/cmhc/professional/housing-markets-data-and-research/market-reports/housing-market/housing-market-outlook/2021/housing-market-outlook-61500-spring-2021-en.pdf?rev=4c3c8563-6ed2-417a-98c0-82085815893f

https://covid19tracker.ca/provincevac.html?p=SK

https://leaderpost.com/news/saskatchewan/saskatchewan-to-spend-over-10-million-to-battle-labour-shortfalls

https://mnpdebt.ca/en/resources/mnp-debt-blog/four-in-10-saskatchewan-and-manitoba-residents-doubtful-they-can-cover-living-expenses-this-year

https://www.ft.com/content/b9551dfb-cabb-40aa-bd02-5b1fff3afb64

https://www.mpamag.com/ca/mortgage-industry/guides/what-falling-lumber-prices-mean-for-canadas-housing-market/287588

https://saskatoonhomebuilders.com/isl/uploads/2021/05/SRHBA_JointReport_Q12021.pdf

https://www.collierscanada.com/en-ca/research/saskatoon-office-market-report-2021-q2

https://www.bnnbloomberg.ca/bank-of-canada-warns-home-buyers-rates-will-eventually-rise-1.1606377

Tyler Nguyen

Specialist, Economic Intelligence
(306) 664-0724