TORONTO, Sept. 17, 2013 /CNW/ - Disappointing growth in the
manufacturing sector is expected to hold back Manitoba's economic
recovery, according to the latest RBC Economics Provincial Outlook released today. RBC forecasts a provincial real GDP growth rate of 2.5
per cent for 2013, down from 2.7 per cent previously projected, and
holds its forecast for 2014 unchanged at 2.6 per cent.
Despite manufacturing sales turning slightly positive in the second
quarter of 2013, the level of activity over the first half of the year
is still down from 2012 levels, RBC says. In part, this reflects weak
recovery in the U.S. economy due to tax hikes and government
expenditure cuts earlier this year, prompting RBC to halve its forecast
for manufacturing output growth to 1.5 per cent in 2013.
"The disappointing outlook for Manitoba's manufacturing activity this
year is a key factor restraining the province's economic recovery,"
said Craig Wright, senior vice-president and chief economist, RBC. "As
fiscal restraint eases in the second half of this year, strengthening
demand for provincial machinery and transportation equipment will boost
manufacturing output to 3.5 per cent, reviving the sector as one of
Manitoba's key economic drivers."
RBC notes that stronger than anticipated electricity production will
help offset the weakness in Manitoba's manufacturing sector to a
degree. Data from the first half of the year points to an increase in
electricity production of nearly double the 5.0 per cent implied after
the first quarter, which prompted RBC to more than double its utilities
output growth forecast to 6.0 per cent.
With respect to the agriculture sector, initial estimates for production
of wheat and canola suggest an increase of 6.0 per cent, building on
the 50 per cent surge which occurred in 2012 following poor harvests
the previous two years. However, RBC notes this is consistent with
expectations that agricultural growth will slow from the near 15 per
cent jump in 2012, to 3.5 per cent in 2013 and 2.0 per cent in 2014.
Construction spending will remain a mainstay of growth for Manitoba's
economy this year and next, rising close to 6.0 per cent each year on
average. RBC says this strength likely reflects ongoing non-residential
construction spending this year, such as the expansion of the RBC
Convention Centre Winnipeg, new mining projects and various office,
hotel and condo developments in downtown Winnipeg.
RBC expects residential construction in Manitoba to moderate, with
housing starts falling to 7,100 units in 2013 and 5,700 units in 2014,
down from a record 7,200 in 2012. Despite this decline, the forecast
remains above the 10-year average of 5,300 units.
The RBC Economics Provincial Outlook assesses the provinces according to
economic growth, employment growth, unemployment rates, retail sales,
housing starts and consumer price indices. The full report and
provincial details are available online as of 8 a.m. ET today at rbc.com/economics/economic-reports/provincial-economic-forecasts.html.
SOURCE RBC
