TD published its province-by-province economic prediction last month. With an eye toward better understanding how Canada’s provinces would do over the coming year, TD’s analysis forecasted economic activity for the remaining months of 2023 and 2024. It did this by estimating each province’s economic production based on performance metrics as well as broader environmental and political issues.
Which economic metrics were taken into account in the report?
The seven economic indices listed below are projected by the TD report:
The variables under consideration are the annual percentage changes in Real GDP, Nominal GDP, employment rate, unemployment rate, housing starts, existing house prices, and home sales.
The province-wise results are listed below for:
- Canada Alberta
- Columbia in Britain
- The Manitoba
- Nova Scotia, Ontario, New Brunswick, Newfoundland and Labrador
- Island of Prince Edward
- Canada Saskatchewan
Canada Alberta
Financial Results:
Even with the short decline in oil industry activity brought on by catastrophic wildfires and regular maintenance shutdowns earlier in the year, Alberta is still dominating the province in GDP growth in 2023. The second quarter had a 15% decline in oil output, which was the lowest since 2016. Notwithstanding the delays in the Trans Mountain Pipeline’s startup, a swift rebound in production in the fall is anticipated to support the expansion of oil output in 2024.
Residence Efficiency:
Given that Alberta has the second-fastest growth rate among provinces, its housing market is probably a factor in the rise in immigration. A significant number of home starts, reasonable housing prices, and strong economic prospects have all contributed to the influx of newcomers—of whom thirty percent are interprovincial. The real estate market in Alberta depends heavily on this growing population.
Performance of the Labor Market:
In terms of employment growth thus far in 2023, Alberta is just behind PEI. The province’s job growth is outpacing gains in the labor force, as indicated by the stable unemployment rate. But a recent drop in open positions indicates that labor demand has peaked, pointing to an impending slowdown in hiring.
Consumer Outlays:
Reduced oil output has no negative effect on real GDP because of persistent consumer demand. Strong population increase and employment creation are the main drivers of this need. However, the extra tightening implemented by the Bank of Canada in mid-2023 may have had a disproportionately negative impact due to Albertans’ high average debt levels, perhaps resulting in a reduction in consumer spending in the months to come.
British Columbia’s Financial Results
The British Columbia (B.C.) economy has not seen an adjustment to its predicted growth for the remainder of 2023, despite being affected by a big port workers strike and devastating wildfires. This resilience may be attributed to both persistent consumer spending and the housing sector’s strong performance. But in 2024, the province’s GDP is predicted to contract, after a year in which it matched the 1.2% growth rate of the national economy.
Residence Efficiency
The Bank of Canada’s decision to postpone an interest rate hike contributed significantly to the housing sector’s revival in British Columbia during the first half of 2023. With a 30% quarter-over-quarter increase, house resale volumes surged in the second quarter, surpassing all provinces, and housing listings went back to what they were prior to the pandemic. Despite this, the housing industry is expected to stagnate in 2024 before marginally recovering in the second half of the year due to rising interest rates and ongoing affordability difficulties.
Customer Expenditure
Although they started the year cautiously, consumers in the province of British Columbia have shown resilient. Following a little decline in the previous quarter, retail expenditure saw a robust recovery in the second quarter. According to internal TD statistics, households continued to spend heavily throughout July and August. But this spending spree could not last long for the province’s families, who are already facing the highest average debt in the nation and rising interest rates.
Labor Market Outcomes
There has been a discernible slowdown in the BC labor market. Job growth was just 1.3% year over year from January to August, which was slower than the national average. It is anticipated that employment growth will continue to slow down in the next quarters while labor force growth will pick up speed. This might result in the province’s unemployment rate rising to a high of about 6.4% by the following year.
The economic performance of Manitoba
From 2023 to 2024, Manitoba’s economy is expected to increase moderately, placing it in the center of the range when compared to other provinces. The substantial public sector in Manitoba, which has increased employment by 2% so far this year, contributes to this growth. In an attempt to close a projected 0.2% GDP shortfall, public sector contributions are expected to fall in step with provincial expenditure estimates. Thankfully, Manitoba has avoided some of the worst economic effects of weather-related disruptions that have befallen other provinces.
Residence Efficiency
The Manitoba real estate market has remained resilient in the face of rate hikes by the Bank of Canada, as seen by double-digit growth in sales since May. Because the province did not see the same spike in home prices during the pandemic as other areas did, the market remained reasonably priced. Because of this, it is expected that there will be significant increases in property prices through the end of 2023 and into 2024.
Labor Market Outcomes
Although the manufacturing sector in Manitoba has had a strong year, a significant amount of its success may be attributed to a significant increase in the transportation equipment industry as a result of enhanced global supply chains. Interprovincial (trade between provinces) trade prospects are also likely to diminish as the national economy slows down—especially in Ontario, Manitoba’s main provincial export market. However, growth rates may reduce owing to lower activity as U.S.
Customer Expenditure
Rising borrowing prices are expected to put further pressure on Manitoba’s highly indebted families, slowing the province’s consumption. The internal credit and debit card data from TD provides evidence of this slowness. To increase household earnings, the province has, nonetheless, significantly lowered taxes in its budget. The combination of this action and the property market’s ongoing resiliency ought help offset the decline in consumption.
New Brunswick’s Financial Results
Following a 2022 decline in GDP relative to the national average, New Brunswick’s economy is expected to rise at an average rate in 2023 and 2024. The region’s strong population growth and resilient consumer spending are characteristics that may prevent any negative impact on economic development, even in the face of possible foreign threats.
Residence Efficiency
The city of Moncton has had a noteworthy 5.4% gain in population, indicating rapid growth in the labor force and the creation of job prospects. However, a rebound in job openings in recent months is highlighting some stress spots in Manitoba’s economy. Even so, as the year draws to an end, there may be above-average job prospects; by the next year, everything should settle down.
Labor Market Outcomes
Population growth has supported the strength of the workforce and employment, with numbers closely tracking national highs. Jobs in New Brunswick have risen above the national average, even with some resurfacing recently, after falling during the COVID-19 epidemic. It’s important to note that steady employment growth is predicted until the end of the year, with the market stabilizing in 2024.
Customer Expenditure
Compared to other provinces, New Brunswickers have the lowest average debt-to-GDP ratio, which protects them against future rises in borrowing rates. Furthermore, consumer spending has continually improved the province’s economic performance even in the face of possible setbacks. However, the anticipation of increased borrowing prices may put up some obstacles to consumer spending.
Performance of the Newfoundland and Labrador Economy
As a result of sluggish activity in the mining and oil sectors, Newfoundland and Labrador’s (NL) real GDP shrank last year, making it the only province to experience regression. With expectations of a more significant growth spike in 2024, the oil and mining sector’s lackluster performance will continue to fuel underperformance relative to the rest of the nation in 2023.
Residence Efficiency
The resumption of Terra Nova was a prerequisite for the oil sector’s revival; nevertheless, its postponement until next year has curtailed projected growth. This setback, along with scheduled maintenance to White Rose and Hebron, has hampered expected gains in NL’s crude production, which accounts for about 30% of the province’s GDP.
Labor Market Outcomes
The mining industry witnessed a sharp decline in iron ore, nickel, and copper prices from their highest point in the previous year. Mineral exports suffered as a result, and a fall of 10% to 15% is predicted for 2023. Notwithstanding this setback, the mining industry is still expected to develop over the medium term, with investments in mineral exploration reaching a record-breaking $243 million in 2022.
Customer Expenditure
Strong employment and population growth have kept consumer spending afloat, allowing domestic-oriented businesses to hold footing despite the Bank of Canada’s vigorous rate-hiking campaign. The year-to-date rise in spending by NL households has surpassed that of all other provinces, according to data on credit and debit transactions. It is anticipated that this year will see a record low for the unemployment rate, despite the fact that domestic expenditure and job growth will probably decline in the following months.
The economic performance of Nova Scotia
Population growth in Nova Scotia is still occurring at an exceptional rate, which supports GDP growth estimates that are higher than Canada as a whole. High levels of immigration, a rise in temporary residents, and internal movement are the main drivers of this expansion. Future growth, nevertheless, may be slowed by issues including the effect of the Bank of Canada’s interest rate hike campaign on consumers and a less favorable trade climate.
Residence Efficiency
Strong population growth in Nova Scotia has boosted the building industry and kept home demand strong. In August, home values were almost 70% higher than they were before the outbreak, and they are still rising even as the Bank of Canada is raising interest rates.
Labor Market Outcomes
Because to Nova Scotia’s remarkable population growth, businesses now have access to a wider pool of prospective workers, which has led to a significant increase in employment and a more relaxed labour market than in other Canadian regions.
Customer Expenditure
In Nova Scotia, which has received over 40,000 additional prospective customers in the last year, consumer spending has remained high. However, because of the impact of the Bank of Canada’s interest rate hikes, consumption is anticipated to decline in 2024 and the second half of this year.
The Economic Performance of Ontario
This year, Ontario’s economic growth got off to a very strong start. Nonetheless, the second quarter saw a discernible slowdown. Despite this, Ontario’s economy did somewhat better in April and June than the Canadian economy as a whole because of its robust export industry, reviving housing market, and consistent employment creation.
Residence Efficiency
Ontario’s population is growing at a rate that has reached multi-decade highs, largely due to immigration and temporary residents. However, the province has seen a 14% decline in house sales, the most since the Bank of Canada started hiking rates in June. In the near future, it is anticipated that average house prices would level out in the third quarter before declining toward the end of the year. Even if a decline in interest rates is predicted to spur a rise in house sales and prices in 2024, this growth will probably be limited by the lowest levels of affordability seen in at least 35 years.
Labor Market Outcomes
The province of Ontario’s labor market is expected to have difficulties in the next year as a result of anticipated declines in car assembly and industrial exports. The fall in global demand and plant shutdowns for retooling in preparation for the manufacturing of electric vehicles will cause these decreases. The manufacture of automobile parts is expected to rise in 2023 and 2024 despite these obstacles, especially with the launch of the Windsor EV battery facility.
Customer Expenditure
Short-term government assistance payments have augmented household earnings and expenditure, while rising vehicle sales have stimulated consumption. However, because Ontario’s families have high levels of debt, growing debt payment costs are putting the stability of household spending to the test. These households will have to devote a sizeable amount of their income to debt repayment in the upcoming year, which is predicted to erode consumer spending and restrict the province’s potential for development.
Prince Edward Island’s Financial Results
The province of Prince Edward Island (PEI) has performed well this year, mostly due to the island’s notable population increase. The current national trend of an aging population is being reversed by this expansion, which is mostly attributable to an influx of younger foreign immigrants. The resilience of the province has changed dramatically as a result of this tendency and other factors.
Residence Efficiency
The housing market in PEI has been significantly impacted by the immigration wave. Since the beginning of 2016, there has been a 30% rise in rentals, mostly due to the presence of international students. Furthermore, the increase in population has contributed to keeping home prices around 40% higher than they were prior to the pandemic.
Labor Market Outcomes
The newcomers have brought major benefits to PEI’s job economy. The province has had the second-fastest rise in employment in the country. Due to the growing population and the needs that come with it, hiring is probably going to be strong even with the anticipated downturn in household expenditure.
Customer Expenditure
Household expenditure has also grown as a result of PEI’s population expansion. An inflation-adjusted growth of around 7% in 2023 is shown by internal TD card consumption statistics. On the other hand, a predicted rise in borrowing rates may lower consumption, which might affect hiring and raise the unemployment rate.
Quebec’s Financial Results
The economy of Quebec suffered a serious blow in the second quarter of 2023; its GDP probably fell more sharply than the little national decline. A portion of this decline can be ascribed to the mining industry’s slowdown brought on by wildfires. From an optimistic standpoint, given the continuous fiscal support payments that are increasing household incomes and spending, a recovery in this sector’s activity is anticipated shortly.
Residence Efficiency
Quebec’s housing market has experienced a significant deceleration in growth since the latter part of the previous year. After a period of high activity, home development has decreased despite modest population increase. High financing rates have also resulted in a drop in home sales, which has an impact on the residential building industry. It’s conceivable that this subpar performance will carry over into the upcoming year.
Labor Market Outcomes
Another major engine of Quebec’s economic development, the manufacturing sector, has also been somewhat impacted by the housing industry’s decline. The production of resources required in construction, including as metal, mineral, and wood products, has decreased, and the external demand for goods has weakened. These industries, which account for 15% of Quebec’s GDP, appear to have a difficult future. Despite having the lowest unemployment rate in the nation, Quebec’s sluggish economic development is likely to cause it to rise.
Customer Expenditure
Because of the cooling labor environment and increased borrowing prices, consumer expenditure in Quebec may drop. Previously, Quebecers have depleted their savings to maintain their high levels of spending, but this is now expected to decline. Notably, compared to other regions of Canada, consumption in Quebec is not being as well supported by population increase; this tendency is probably going to persist in the years to come.
The economic performance of Saskatchewan
A notable economic downturn of 1.1 percent is projected for Saskatchewan’s economy in 2023, translating into an estimated 1.3% GDP growth. As a result, compared to its peers, the province’s economic growth is the poorest. In fact, the estimated GDP for this year is almost in line with the national average. But in 2024, the province is anticipated to recover and lead provincial growth.
Residence Efficiency
When compared to other jurisdictions, Saskatchewan’s housing market offers more favorable affordability. Even while the section doesn’t specifically address how the housing industry contributes to the entire economy, this is nonetheless crucial in terms of driving demand.
Labor Market Outcomes
The work market in Saskatchewan has underperformed, as sluggish consumer spending has been reflected in the province’s meek employment growth. Additionally, it is anticipated that primary crop production—a major job category—will decline by almost 20%, mostly as a result of unfavorable growing circumstances. This might have an effect on employment within the sector.
Customer Expenditure
The employment growth picture in Saskatchewan is closely linked to the consumer spending outlook, and it hasn’t been great, at least not this year. Although consumer spending has been minimal thus far, there is optimism that the province’s economy would strengthen the next year after an anticipated uptick in activity starting in 2024.