Strong enough to ride out the storm?

It’s trying at times to make sense of all of the business news being reported recently; it seems that there is no end to the negativity. Whether it is geopolitical, climate-related, economic, or a host of other news – it all seems like its bad news. Take yesterday for example, Cameco Corporation reported a third quarter loss of $146M (although they had positive net earnings – down from last year). They also say that the (uranium) industry will continue to endure some challenging times. On top of that, the Bank of Montreal (BMO) just reported that agriculture-related commodity prices are down (wheat, canola, corn and soy bean in particular) and these will likely stay down in the year ahead. Compounded by the fact we can’t currently get our products to market due to the ongoing issue of poor rail access. Add to this the recent statement from the Petroleum Services Association of Canada (PSAC) that drilling for oil and gas wells is forecasted to decline in 2015 by 5% and the fact that the price of Potash is at a 5 year low.

Along with the weak outlook for commodities, the Canada Mortgage and Housing Corporation (CMHC) reporting today that housing starts for Saskatoon will moderate in 2015 and continue to moderate in 2016 – this after a record year for 2014. 2015 and 2016 will see lower housing starts as a result of slower employment growth and lower net migration into the region (the report also says this is expected across the prairie region so this will not only be a Saskatoon issue). With all this news, it’s difficult for organizations like SREDA – who are tasked with forecasting the economy to paint a clear picture of the economy as we start to look ahead to 2015.

But hold on! Just when you thought that the sky is falling in, along comes some good news to be optimistic about … two recent reports from the Fraser Institute and the C.D. Howe institute both suggested that the business environment in Saskatoon is great compared to other major Canadian cities. Indeed the C.D. Howe report released Wednesday calculated the total tax burden on new business investment and concluded that if property taxes were included in calculating the tax burden on new business investment, Saskatoon would be the second-most desirable place to do business in Canada! This is fantastic news! Adding to this good news, Saskatoon is still on track to reach 3.8% GDP growth this year. Not only do we still have a strong local economy, we also have a business friendly tax environment – this bodes well for new and existing businesses in the Saskatoon region. A business friendly tax environment will lead to new business which means more capital investment into the city – which means more people and more jobs – just the thing needed to counter-act the other not so good news.

So for those of you who are feeling a bit down, remember that Saskatoon’s economy remains strong. Along with this, Saskatoon continues to maintain a AAA/stable S&P credit rating which means we will be able to maintain a low business tax rate without jeopardizing our ability to invest in future infrastructure. All of this means we are in a much better position than many other regions across North America who have spent the last 5 years in a recession. The waters may still feel rough but the ships afloat!