November 2018 Economic Report Card

The Regina economy continues to slow…

 

In the first nine to ten months of 2018, the Regina economy has slowed. Only average year-to-date employment and industrial building permits have posted increases while all other monthly indicators are in decline: housing starts and total building permits dropped sharply combined with increases in the number of unemployed and unemployment rates.

• Despite a year over year drop of 800 positions, total average year-to-date employment in the Greater Regina Area was up 0.2% or 220 positions in January to October 2018 over the same period in 2017. At the provincial level, year-to-date employment advanced by 120 or 0.02%.
• Year-to-date employment in October 2018 was up over the same period in 2017 in Utilities (100), Construction (1,510), Finance, Insurance, Real Estate and Leasing (670), Business, Building and Other Support Services (1,590), Educational Services (1,560), Other Services (410), and Public Administration (90).
• Year-to-date employment in October 2018 was down in Agriculture (-440), Resource Extraction (-740), Manufacturing (-850), Wholesale and Retail Trade (-750), Transportation and Warehousing (-100), Professional, Scientific and Technical Services (-1210), Health Care and Social Assistance (-1150), Information, Culture and Recreation (-370), and Accommodation and Food Services (-120).
• After a weak performance in 2017, construction employment continues to bounce back in 2018. Year-to-date October construction employment is up by 1,510 positions from the same period in 2017 on the strength of non-residential construction.
• The average year-to-date unemployment rate increased to 6% in October 2018, up from 5.3% in October 2017. With limited job growth, the numbers of unemployed advanced sharply. Year-to-date, the number of unemployed is up from 7,840 in October 2017 to 9,040 in October 2018. By way of implication, increases in unemployed and the labour force (those working and actively seeking work) indicate that Regina is not experiencing out-migration of unemployed or the “discouraged worker” effect. Discouraged workers are those who want and are available to work, but have dropped out of the labor force because they believe there aren’t any jobs for them.
• September 2018 total year-to-date housing starts are down by -651 units or -41.4% as the market struggles with over supply and stricter borrowing rules. Year-to-date declines were widespread and encountered across all classes of dwelling units: singles (-266 units or -48.2%), semi-detached (-112 units or -60.2%), row (-64 units or -29.2%), and apartment and other types (-209 units or -34.0%).
• September 2018 year-to-date building permits, a leading indicator of construction activity, are down -30.8% over the same period in 2017. The only sub sector that posted an increase was industrial (112.5%). During the same time period, residential (-30.5%), commercial (-44.7%), and institutional and governmental (-52.9%) posted declines.
• The average year-to-date Housing Price Index Benchmark Price is down from $291,640 in October 2017 to $276,950 in October 2018.
• With the pace of GDP growth at the national level suggesting that the economy is operating at close to full capacity, the Bank of Canada raised the overnight rate to 1.75% in October, up from 1.5%. This represents the highest rate since December 2008. In September, rates were held constant but as, widely expected, a further quarter of a percentage point was added to the overnight rate on October 24 and more are likely to follow in 2019 with additional GDP growth stemming from the new United States-Mexico-Canada Agreement.
• 2017 Regina Census Metropolitan Area population was up 2.4% over 2016 to 253,220 on the strength of international and intra-provincial migration. This can be expected to continue through 2018 with continued, although slowing, employment growth spurring further in-migration.
• The Conference Board of Canada forecasts Regina’s economy to post a 2.2% real GDP gain in 2018, following a 1.5% increase in 2017.