The Manitoba Chambers of Commerce recently held its latest MBiz Breakfast on February 7. The event drew key business leaders and government ministers from across the province. Dawn Desjardins, Deloitte’s Chief Economist, delivered a keynote which offered an insightful overview of the economic landscape at a global, Canadian, and Manitoban level. She highlighted that Manitoba is ahead of the Canadian average in several key areas including inflation, unemployment, and housing costs.
Here are some key takeaways:
Desjardins noted that the inflation rate in Manitoba is the lowest in Canada at 1.7%; roughly half that of the Canadian average. However, high interest rates are adversely affecting Manitoban consumers. Manitoban consumers, saddled with the country’s fourth-highest debt-to-income ratio, have begun restricting their spending due to escalating debt servicing costs. This reduction in consumer demand will lead to a reduction in business investment.
Manitoba’s total employment figures have been steadily increasing, thanks to the influx of immigrant workers filling newly created job opportunities. This has resulted in Manitoba having the lowest unemployment rate in country, beating the Canadian average of 5.8% by over 1%. Real wage growth has been in line with Canadian average despite this labour market tightness, with wage growth exceeding inflation by 2.5%. This is leading to some cost pressures for businesses as noted in the 2023 Manitoba Business Outlook survey.
While rent costs in Manitoba have seen a year-over-year jump of over 5%, they remain below the Canadian average increase of 8%. Desjardins does not see much improvement in housing supply, with Manitoba housing starts predicted to be in line with past years. Given the recent increases in immigration, Desjardins does not see rent cost pressures relieving in 2024.
Although Manitoba’s economic growth is projected to outperform the Canadian average in 2024, the increase is expected to be modest, at under 1%. GDP growth is expected to occur only in the second half of the year, triggered by interest rate cuts from the Bank of Canada. Desjardins noted that services prices will be the key indicator for the Bank of Canada to monitor as other components of the consumer price index will take longer to return to target policy levels.