Saskatchewan economy should remain strong


January 21, 2015

Here's the good news from Saskatchewan's leading analyst of the statistics that best measure how well we are doing.

Here's the good news from Saskatchewan's leading analyst of the statistics that best measure how well we are doing.

"2015 is not going to be the crunch year," says Doug Elliott, publisher of Sask Trends Monitor, who has spent the past 35 years poring over the good and bad of provincial job, population, wage, age and economic development numbers.

"I think it takes about a year for it (oil prices) to trickle into the economy," Elliott said. "It's almost immediate for government revenue, but it takes a longer time for the provincial economy to be affected."

Elliott noted that the fiscal reality began to sink in for the government several months ago. Public institution building permits declined by 44 per cent last year. Saskatchewan has seen such permits drop from $393 million in 2012 to $378 million in 2013 and to $210 million in the first 11 months of 2014.

So unless you work for government, which is going be hit far faster by the decline in oil prices and revenue than the rest of us, there is every reason to believe that this year should be relatively normal.

That said, Elliott is a realist about the impact of oil on our economic activity, so here is the bad news when it comes to the $50 US a barrel commodity: "It (the economic crunch) will be 2016," Elliott said.

As was the case in 2010 and 2011, when Saskatchewan's boom slowed down after the 2008-09 fall in the markets, it seems inevitable that the impact of falling oil prices will come in a year or so.

This is bad news for all - particularly Premier Brad Wall.

Wall will likely have to impose stiff measures in the upcoming 2015-16 budget, to be released in March, when it comes to government downsizing and other austerity measures.

And then - presuming that Prime Minister Stephen Harper sticks to his October election plans, thus preventing Wall from holding an earlier Saskatchewan vote in October - his Saskatchewan Party will have to face the electorate in April 2016, about the time an economic crunch may be hitting more than just the public sector.

But here is the really good news for Wall and the rest of us who recall the bad old days before the past decade of "have" prosperity: If the crunch comes in 2016, Elliott believes we now can more easily weather it. In fact, he said the risk of us going back to a "have-not" province is becoming increasingly remote.

To better understand this, one has to examine Saskatchewan's rather amazing turnaround.

"Without fear of contradiction, I can say this is the longest economic (prosperity) stretch," Elliott said.

Although he hesitates to pinpoint a precise date as to when this started, the statistician says the turning point was around 2005-06, when Saskatchewan began gaining more people from other provinces than it was losing. Since then, we have seen both steady and remarkable growth - depending on what statistical measure you use.

For example, as recently as 2007, Saskatchewan lagged at around fifth in average hourly wage - $19 an hour compared with a national average of $20.41 an hour. By 2008, Saskatchewan moved up to fourth and then to third in 2012.

Last year, Saskatchewan's average hourly wage of $25.36 an hour was second to Alberta and ahead of the national average of $24.63 an hour.

Other measures point to more steady growth. Consider Statistics Canada monthly job survey that shows Saskatchewan's job growth has been as follows: 2006, 1.8 per cent; 2007, 2.4 per cent; 2008, 1.7 per cent; 2009, 1.3 per cent; 2010, 0.9 per cent; 2011, 0.3 per cent; 2012, 2.1 per cent, 2013, 2.4 per cent, and; 2014, 1.9 per cent.

It amounts to 92,000 more working people here since 2006 - an average of roughly 1.8-per-cent, or 9.200 more jobs each year.

What Elliott believes is most important to note is the slip to 0.9-and 0.3-per-cent job growth in 2010-11, after the economic/oil downturn in 2009. It is a sign of Saskatchewan's ability to weather such slippages until oil prices rebound - something that Alberta has been rather good at and something that Saskatchewan should now be good at as a "have" province.

So by the time the rest of economy is impacted by low oil prices, those prices may rebound before Saskatchewan slips into an oilrelated recession, he said.

Elliott cautions that "so much of this stuff is psychological" - that a downturn could happen simply because people believe we are in a downturn.

But there are lot of statistical reasons to believe a downturn might just pass us by.

Mandryk is the political columnist for the Leader-Post.




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