TD’s recent report shows Canada’s economic forecast for provinces in the upcoming year. The report analyzed the economic results of each Canadian province on the basis of various factors related to the environment and politics. This way, Canada will better understand the performance over the upcoming year.
The economic indicators within the report
The TD report predicts the following seven economic indicators:
- Yearly change in percentage of Real GDP.
- Change in annual percentage of Nominal GDP;
- Yearly change in Employment rate;
- Housing Starts;
- Yearly percentage change in available home costs; and
- Change in annual percentage of home sales.
Canada’s economic forecast for provinces in the upcoming year – Breakdown of provinces with their results
Alberta – Economic Performance
Even with the short decline in oil industry activity brought on by severe wildfires and general 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 production, the lowest since 2016. Notwithstanding the delays in the Trans Mountain Pipeline’s startup, a swift rebound in production in the fall might support the expansion of oil output in 2024.
Housing Performance
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 solid 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.
Labor Market Performance
In terms of employment growth in 2023, Alberta is just behind PEI. The province’s employment growth is outpacing gains in the labor force, as indicated by the stable unemployment rate. However, a recent drop in open positions suggests that labor demand has peaked, indicating an impending hiring slowdown.
Spending patterns of consumers
Reduced oil production has no adverse 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, potentially reducing consumer spending in the coming months.
British Columbia – Economic status
The British Columbia (B.C.) economy has not seen an adjustment to its predicted growth for the remainder of 2023. This is despite the impact of a big port workers strike and severe wildfires. This resilience is due to persistent consumer spending and the housing sector’s strong performance. But in 2024, the province’s GDP is likely to contract, following a year in which it matched the 1.2% growth rate of the national economy.
Housing Performance
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 might stagnate in 2024 before marginally recovering in the year’s second half. This is due to rising interest rates and ongoing affordability difficulties.
Spending pattern of the consumers
Although they started the year cautiously, consumers in the British Columbia province have shown resilience. Following a minor decline in the previous quarter, retail spending saw a robust recovery in the second quarter. According to internal TD data, households continued to spend heavily into July and August. But this spending spree might not last long for the province’s households, who are already facing the highest average debt in the nation and rising interest rates.
Labor market performance
There has been a discernible slowdown in the BC labor market. Job growth was only 1.3% yearly from January to August, which was slower than the national average. It is also likely that employment growth will continue to slow down in the upcoming quarters while labor force growth will pick up speed. As a result, the province’s unemployment rate might be rising to a high of about 6.4% by the following year.
Manitoba – Economic Performance
From 2023 to 2024, Manitoba’s economy is likely to increase moderately, placing it in the middle of the range compared to other provinces. The substantial public sector in Manitoba, which has increased employment by 2% this year, contributes to this growth. In an attempt to close a projected 0.2% GDP deficit, public sector contributions might fall in step with provincial spending estimates. Thankfully, Manitoba was able to avoid some of the worst economic effects of weather-related disruptions that have befallen other provinces.
Housing Performance
The Manitoba real estate market has remained resilient in the face of rate hikes by the Bank of Canada, as evidenced by double-digit growth in sales since May. The market remained reasonably priced because the province did not see the same spike in home prices during the pandemic as other areas did. Consequently, there will be significant increases in property prices through the end of 2023 and into 2024.
Labor Market Performance
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 primary provincial export market. However, growth rates may decline due to lower activity as the U.S.
Spending pattern of the consumers
Rising borrowing costs are expected to put further pressure on Manitoba’s highly indebted households, slowing the province’s consumption. TD’s internal credit and debit card data provides evidence of this slowness. To increase household incomes, the province has, nevertheless, significantly lowered taxes in its budget. The combination of this intervention and the property market’s ongoing resiliency ought to offset the decline in consumption.
New Brunswick’s Economic Performance
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 pressure on economic growth, even in the face of possible foreign threats.
Housing Performance
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 points 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 Performance
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 pandemic. It’s important to note that steady employment growth is predicted until the end of the year, with the market stabilizing in 2024.
Spending pattern of the consumers
Compared to other provinces, New Brunswickers have the lowest average debt-to-GDP ratio, which protects them from future rises in borrowing costs. Furthermore, despite possible setbacks, consumer spending has continually improved the province’s economic performance. However, the anticipation of increased borrowing prices may put up some obstacles to consumer spending.
Newfoundland and Labrador – Economic Performance
As a result of weak 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.
Housing Performance
The resumption of Terra Nova was a prerequisite for the oil sector’s recovery; nevertheless, its postponement until next year has curtailed projected growth. This setback and scheduled maintenance to White Rose and Hebron have hampered expected gains in NL’s crude production, accounting for about 30% of the province’s GDP.
Labor Market Performance
The mining industry witnessed a sharp decline in iron ore, nickel, and copper prices from their highest point in the previous year. Mineral shipments 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.
Spending habits of the consumers
Strong employment and population growth have kept consumer spending afloat, allowing domestic-oriented industries to hold their footing despite the Bank of Canada’s vigorous rate-hiking campaign. According to data on credit and debit transactions, the year-to-date growth in spending by NL households has surpassed that of all other provinces. The unemployment rate might even hit a historic low in the upcoming months despite the fact that domestic expenditure and job growth will probably decelerate.
Nova Scotia – Economic Performance
Population growth in Nova Scotia is still occurring at an exceptional rate, which supports GDP growth estimates that are higher than those in Canada. High levels of immigration, a rise in temporary residents, and internal movement are the main drivers of this expansion. Future growth, nevertheless, might be slowed by issues including the effect of the Bank of Canada’s interest rate hike campaign on consumers and a less favorable trade environment.
Housing Performance
Strong population growth in Nova Scotia has boosted the building industry and kept housing demand strong. In August, home values were almost 70% higher than before the outbreak, and they are still rising even as the Bank of Canada is raising interest rates.
Labor Market Performance
Because of Nova Scotia’s remarkable population growth, businesses might access a broader pool of prospective workers, which has led to a significant increase in employment and a more relaxed labor market than in other Canadian regions.
The spending patterns of Consumers
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.
Ontario – Economic Performance
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 marginally improved in April and June compared to the Canadian economy because of its robust export industry, reviving housing market, and consistent job creation.
Housing Performance
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 home sales, the biggest since the Bank of Canada started hiking rates in June. Shortly, 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 home 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 Performance
The province of Ontario’s labor market is expected to have difficulties in the coming year due to anticipated declines in auto assembly and industrial exports. The fall in global demand and plant shutdowns for retooling in preparation for the production of electric vehicles will cause these decreases. The manufacturing of automobile parts is expected to rise in 2023 and 2024 despite these obstacles, especially with the launch of the Windsor EV battery plant.
Spending patterns of consumers
Short-term government support payments have augmented household incomes and spending while rising auto sales have stimulated consumption. However, because Ontario’s households have high levels of debt, rising 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 growth.
Prince Edward Island – Economic Performance
Prince Edward Island (PEI) has performed well this year, largely due to the island’s notable population growth. 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.
Labor Market Performance
The immigration wave has significantly impacted the housing market in PEI. Since the beginning of 2016, there has been a 30% increase in rentals, mostly due to the presence of international students. Furthermore, the increase in population has contributed to keeping home prices roughly 40% higher than they were prior to the pandemic.
Spending patterns of consumers
Household spending has also increased as a result of PEI’s population expansion. An inflation-adjusted growth of roughly 7% in 2023 is evident through internal TD card consumption statistics. On the other hand, a predicted rise in borrowing costs may lower consumption, which might affect hiring and raise the unemployment rate.
Quebec – Economic Performance
The economy of Quebec suffered a severe blow in the second quarter of 2023; its GDP probably fell more sharply than the little national decline. A portion of this decline is a result of 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 likely to occur shortly.
Housing Performance
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, residential development has decreased despite modest population growth. High financing rates have also resulted in a drop in home sales, which impacts the residential building industry. It’s conceivable that this subpar performance will carry over into the upcoming year.
Labor Market Performance
Another major engine of Quebec’s economic growth, the manufacturing sector, has also been somewhat impacted by the housing sector’s decline. The production of resources required in construction, including metal, mineral, and wood products, has decreased, and the external demand for goods has weakened. These sectors, which account for 15% of Quebec’s GDP, appear to have a challenging future. According to the recent estimate, Quebec’s unemployment rate would rise because of a declined economic progress.
Spending patterns of consumers
Because of the cooling labor environment and increased borrowing prices, consumer expenditure in Quebec may drop. Previously, Quebecers had depleted their savings to maintain their high consumption levels, 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.
Saskatchewan – Economic Performance
A notable economic downturn of 1.1 percent might occur in Saskatchewan’s economy in 2023, translating into an estimated 1.3% GDP growth. As a result, the province’s economic growth is the poorest compared to its peers. In fact, the GDP estimate for this year is almost in line with the national average. But in 2024, the province is likely to recover and lead provincial growth.
Housing Performance
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 Performance
The job market in Saskatchewan underwent a lot of turbulence. This is because of the sluggish consumer spending prevalent in the province’s meek employment growth. Additionally, it is likely that principal crop production—a major employment category—will decline by almost 20%, primarily as a result of unfavorable growing circumstances. This could lead to an employment effect within the sector.
The spending patterns of consumers
The employment growth picture in Saskatchewan is similar to the consumer spending outlook. In addition, 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 will strengthen the next year after an anticipated uptick in activity starting in 2024.
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