Based on the fact that it has the third lowest unemployment rate in the country, there is clear evidence that Manitoba’s economic pulse is beating faster than the national average mid-way through the second half of 2012.
By far the major contributor to this relative strength in labour demand has been a very healthy (2.7% year-over-year (y/y)) gain in full-time employment which more than offset an 8.5% y/y decline in part time hiring. The other positive aspect of Manitoba’s employment picture is that all of the jobs added over the past twelve months have been in the private sector offsetting declines in both public sector hiring (-1.5% y/y) and in self-employment (-6.1%).
Fuelled by the solid growth of full time employment, persisting record low interest rates and despite evidence of more moderate growth of net migration, housing demand reflected by sales of existing homes is up by 2.8% year to date in 2012.
At the same time, average house prices in the province are have risen 4.8% year-to-date. Further, given that the month supply of homes for sale has exhibited little change over the past year, there is no evidence the existing housing market is unbalanced in terms of supply and demand.
Consistent with the stronger pattern of existing home sales, solid job growth and despite a moderate deterioration in affordability reported by the most recent Royal Bank’s Housing Trends and Affordability Report, total housing starts in the province are up by 36.6% year-to-date largely due to a very strong 82.3% year-to-date gain in multiple unit starts together with a more modest 8.2% year-to-date increase in starts of single family units.
Looking ahead, the healthy year-over-year gains in applications to build new dwelling units over the past three months suggest that residential construction will continue to make a significant positive contribution to growth through the remainder of 2012 and into 2013.
The prospect for sustained growth of residential construction in Manitoba is complemented by an improvement in the near term outlook for both industrial and commercial building intentions.
Specifically, year-to-date, applications to build industrial construction projects are up 96.2% while commercial building plans have risen by 50.1% over the same period. This improvement in commercial building plans is consistent with the relative strength in office-based employment in the province as a whole (+3.3%) and specifically in Winnipeg where office based employment rose by 5.5% y/y in October.
Looking forward, the Manitoba economy should continue to expand, faster than the national average in 2013, in the range of 3% to 3.5% contingent on three factors. First, assuming that weather conditions are favourable, agricultural production should continue to make an important contribution to farm incomes in the province. Second, providing it does not experience a fiscal crisis, the sustained expansion of the U.S. economy (the market for 60% of the province’s exports, should underpin the growth of both manufacturing and petroleum production. Finally, assuming that China, the province’s second largest trading partner, continues to picks up speed in 2013, it should drive foreign sales of metals and minerals as well as agricultural products.
Gross Domestic Product (GDP) Growth – Manitoba vs Total Canada