In light of the fact that unemployment rates in Regina (4.1%), Edmonton (5.4%), Saskatoon (5.4%), and Calgary (5.7%) have consistently averaged well below the national average (7.3%) over the past six months, it is not all that surprising that the Conference Board in Canada expects that economic growth in the largest metro areas in Alberta and Saskatchewan will continue to outpace activity in the rest of the country over the next 12 to 18 months.
It’s worth noting that in its latest (12/2011) Provincial Outlook, the Royal Bank of Canada also presented a relatively upbeat outlook for growth in those two provinces. This outlook is based primarily on the sustained rise in the global demand for commodities.
Topping the Conference Board’s list of the 27 metro areas is Saskatoon with a projected growth in 2012 of 4.0%, followed by Calgary (+3.6%), Edmonton (+3.4%) and Regina (+2.9%).
Driven by a steady strengthening of demand from Asia, the Vancouver economy will probably grow in the range of 2% to 2.5% in 2012.
However, growth in 2013 should accelerate to +3.5% as the impact of the recently-announced $8 billion federal government contract to build navy support vessels and an Arctic icebreaker contributes to a significant 1,000+ gain in employment in manufacturing.
Despite the headwinds for manufacturing posed by the relative strength of the Canadian dollar vis-à-vis the U.S. currency, the Conference Board expects that the effects of sustained growth of private sector residential and non-residential investment together with a pickup in exports, will underpin economic growth in several metro areas in Ontario including Oshawa (+2.7%) and Toronto (+2.6%), Kitchener-Cambridge-Waterloo (+2.5%) and Windsor (+2.5%) through 2012 and into 2013.
Moving further east, the drop by 69,500 in total employment in Quebec in the final quarter of 2011 suggests that the province’s economy got off to a very slow start in 2012.
Consequently, several of the province’s major metro area will probably exhibit sub-par growth over the next several quarters into 2013. For example, following a gain of 1.4% in 2011, growth in Montreal is projected to average a modest 2% in 2012 compared to an expected increase of 2.4% for the country as a whole.
In Quebec City, growth will probably remain close to 2% over the near term while Sherbrooke’s economy is expected to expand by a modest 1.8% in 2012 following a gain of 1.5% in 2011.
With the notable exception of Halifax, growth in most of Atlantic Canada’s major metro areas in 2012 and 2013 should also be below the national average.
In Newfoundland, slowing new infrastructure construction and moderating growth of residential construction will probably sideswipe the St. John’s economy while efforts to shrink New Brunswick’s fiscal deficit are likely to put a drag on growth in Saint John.
Turning to Halifax, although the timing out of government infrastructure spending will temporarily weigh on its growth early in 2012, the recently announced Irving Shipbuilding contract to build 21 combat ships over the next 30 years should provide a significant boost to the metro area’s manufacturing sector in 2013 as well as to many of the support services in the area over the longer term.
Projected GDP Growth by Major Metro Area