Saskatoon Greater Chamber of Commerce gives local economy C+ grade
Executive Director says hard to compete with the growth of previous years
It's a passing grade but with plenty of room for improvement.
That's Kent Smith-Windsor's outlook when he gives Saskatoon's economy a C+. The Executive Director of the Greater Saskatoon Chamber of Commerce said the city's economy is having a hard time stacking up to previous years.
"What I mean by that grade is while we're still seeing pockets of growth, clearly the elements that were creating the amazing cycle from 2006 and 2014 have lost some momentum."
Smith-Windsor said the city's economy is still expected to grow this year by 1.9 per cent. That is close to the annual average for Saskatoon, but falls short of the three per cent annual growth seen between 2006 and 2014.
"That is a level of performance that we always want to see enhanced," said Smith-Windsor.
Reasons for the slowdown
The fall in oil and gas prices, a decline in people moving to Saskatoon, more international competition and a recession are all reasons, Smith-Windsor noted, for the cooling off of the local economy.
Although, when it comes to oil and gas, it might be some time before local companies involved in oil projects, in Alberta for example, feel the effects of lower prices.
"The projects that were put into motion two or three years ago will continue and the projects attached to that will continue," said Smith-Windsor. "What will happen, however, is that fewer of those projects will be on the drawing board and moved to implementation. So there will be a delay in that."
Fewer people moving to Saskatoon
The rate of people moving to Saskatoon is also slowing down. Royal LePage real estate agent Norm Fisher said the past ten years have seen the city's population grow by 15 per cent, leading to a hot housing market.
That's not the case in 2015.
"In the first quarter of this year, there was a net migration of 500 or 600 people. That's compared to 5100 people for the same quarter a year ago. That's what is creating a bit of a different dynamic in the housing market," said Fisher.
A different dynamic does not mean people have stopped buying and selling houses in Saskatoon. 2200 homes have exchanged hands so far this year, but Fisher said it is a buyer's market.
"Those that are probably feeling this market the worst are home sellers because there's also a lot more for sale than there was a year ago. Right now, we're sitting around 2000 active MLS listings compared to 1500 last year."
Fisher also said fewer homes are being built in Saskatoon right now, which means the wait for plumbers, contractors and electricians will be shorter for those looking to do renovate their current homes.
Not all doom and gloom
There are reasons for optimism when it comes to Saskatoon's economy.
University of Saskatchewan economist Joel Bruneau notes not having all your economic eggs in one basket is good during challenging times.
"Saskatchewan is a little bit more diversified in its production mix [compared to Alberta]. Less reliant on oil and gas and perhaps more reliant on agriculture and minerals such as potash and uranium," he said.
Smith-Windsor agrees diversification is important, but he hopes industries and businesses in Saskatoon realize they need to focus and work harder to compete against the world.
"Diversification helps but often it's intensification. Doing what you're doing better. Sometimes people think diversification is doing something way different than you ever have. But often, your globally competitive competence is built on what you know already," he said.