Poor economic outlook for most Atlantic cities in 2016: Conference Board
August 17, 2016 by Conference Board of Canada
Aug. 16, 2016 – Despite slower GDP growth of 1.2 per cent expected in Moncton, N.B., this year, the city’s economy will continue to outpace the provincial average.
It will also outperform the other Atlantic Canadian cities featured in this report. Economic growth in Saint John, N.B., is forecast to remain flat, while it is projected to reach a meager 0.6 per cent in St. John’s, N.L., according to The Conference Board of Canada’s Metropolitan Outlook: Summer 2016.
“The economies of Moncton and Saint John will be both hurt by declines in manufacturing and construction activity this year,” said Alan Arcand, associate director, Centre for Municipal Studies, The Conference Board of Canada. “St. John’s economy, along with that of Newfoundland and Labrador as a whole, continues to be hit hard by weak prices for oil and other commodities.”
Highlights of the outlook include:
• Moncton’s economy is expected to grow a modest 1.2 per cent in 2016, down from 2.4 per cent growth in 2015.
• Real GDP growth in Saint John is on track to be flat this year.
• St. John’s economy should grow by a meagre 0.6 per cent, following a 3.8 per cent decline in 2015.
Among the Atlantic metropolitan cities covered in this report, Moncton should boast the fasting growing economy this year, although it is only expected to expand by a modest 1.2 per cent, down from a solid 2.4 per cent gain in 2015. The overall economy will continue to be held back by declines in both manufacturing and construction, continuing a five-year trend. Although the export-oriented manufacturing sector is benefiting from a weaker Canadian dollar and moderate demand from south of the border, it will not be enough to lift the sector out of its downturn until 2017. Thankfully, the services sector is expected to post decent growth this year, helping to offset the goods sector weakness. Still, the slowing economy is bad news for the local job market, as employment is expected to edge down by 0.5 per cent this year, the first decline in three years. Fortunately the Conference Board expects the economy to get back on track in 2017 and expand by a healthier two per cent.
Still within New Brunswick, 2016 is shaping up to be another poor year for the Saint John economy. The city’s economic growth is projected to be stagnant this year, due to declines in all three good-producing industries — primary and utilities, manufacturing, and construction. In particular, output in the manufacturing sector is expected to decline by 1.4 per cent, mainly due to a reduction in the production of refined petroleum products, while construction output is forecast to tumble by 4.2 per cent, as the residential market remains soft. Saving the day will be decent expansions in a number of services-producing industries, including wholesale and retail trade and business and personal services. Next year, widespread gains across the goods and services sectors are expected to lead to a 1.5 per cent growth in real GDP. The job market should follow a similar pattern — a 0.5 per cent decline in employment in 2016 will be nearly offset by a 0.4 per cent gain in 2017.
Similarly, the St. John’s economy, along with that of Newfoundland and Labrador, is also struggling, as it continues to be hit hard by declines in prices for oil and other commodities. As a result, real GDP is expected to grow by only 0.6 per cent in 2016 following a 3.8 per cent contraction in 2015. Lower offshore production from maturing oil wells also added to last year’s woes. This year, a return to more normal oil production levels will boost primary and utilities output by 4.6 per cent, offsetting further declines in the construction sector, lower manufacturing output, and muted activity in the services sector. The primary and utilities industry’s longer term outlook is brighter as the new Hebron field is expected to come online by next year. Employment is expected to fall in 2016 and the unemployment rate is projected to climb, and a weaker job market will discourage consumer spending. The Conference Board predicts real GDP will edge down by 0.2 per cent in 2017, as an even weaker services sector activity is anticipated next year as the government’s austerity measures continue.