This story is part of The COVID Economy, a CBC News series looking at how the uncertainty of the coronavirus pandemic is affecting jobs, manufacturing and business in regions across Canada.
It’s become cliché to describe Manitoba’s economy as diverse, but that’s what is giving Manitobans solace as the province’s economy is put through the wringer in a global pandemic
An assorted blend of industries from agriculture to manufacturing and transportation have previously cushioned the middle province from the economic blows of provinces more vulnerable to the whims of single industries, such as oil.
And that economic track record has given officials the belief they can weather the financial toll of COVID-19.
Premier Brian Pallister has clung to economic forecasts carrying the same optimism, citing one model last week from RBC that predicted Manitoba’s gross domestic product would collapse — but not as badly as any other province.
“We are projected by most of the analysts, whether in banks or bond rating companies, to be the province that is best positioned to come back from this pandemic, and we are going to make that happen,” Pallister said on Tuesday.
Forecasters not confident
One economist behind the RBC forecast, however, suggests that provincial rankings are nearly meaningless.
“I think we’re starting to split hairs here,” said senior economist Robert Hogue, whose report pegs Manitoba’s GDP as dropping 3.7 per cent this year, compared to a 1.1 per cent increase in 2019. Still, he projects Manitoba’s economy will perform better relative to other provinces due to its diversification.
Hogue said the grim picture demonstrates how quickly the economy collapsed in the month since officials urged isolation to quell the spread of COVID-19.
All non-essential businesses have been closed for three weeks and counting, while 60,000 people are believed to have filed for employment insurance, finance minister Scott Fielding said. The province said in a background document last week 26.7 per cent of the labour market is either temporarily laid off or unemployed.
Manitoba Premier Brian Pallister wants his government to be the first in Canada to safely reopen the economy. (John Woods/The Canadian Press)
The question now is whether Manitoba’s previously steady-as-she-goes economy can withstand an economic shock more unsettling than any downturn since the Great Depression.
It can in the short term, says University of Winnipeg economics professor Phil Cyrenne, while the province has a higher proportion of employees in goods-producing businesses and the public sector.
“But in the long-term, you need to have a vibrant private sector.”
Manitoba’s economy began to slow down in mid-March, shortly after the first confirmed case of COVID-19 on March 12.
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Buoyed by lower case numbers than less populated provinces like Saskatchewan and Nova Scotia, Pallister says he wants to be the first province to safely reopen the economy.
But the toll of the shutdown will be significant even if it is short, Cyrenne said.
He wonders if private businesses, especially in the battered restaurant and hospitality industries, can survive, and worries whether civil servants will lose work as an austerity-minded province teases layoffs.
Have-not province wants Ottawa’s aid
And he questions if a have-not province like Manitoba will face shrinking transfer payments from the federal government. Cyrenne mused Ottawa may cut transfers, the way it did in the 1990s, to control spiralling costs.
“That whole system, I think, is going to be in jeopardy — or at least there’s going to be lots of strains on it going forward.”
The Progressive Conservative government under Pallister spent its initial four years in government striving to whittle down its deficit from $850 million to an estimated $220 million by the end of this fiscal year.
Restaurants forced to close their dine-in services in Manitoba are relying on deliveries to maintain some semblance of their regular business. (Jaison Empson/CBC)
It has pushed austerity during the pandemic, as well, relying on the federal government to provide financial aid for struggling individuals and businesses, while calling on provincial departments and public-funded bodies to cut non-essential costs.
The province is now expecting a year-end deficit as high as $5 billion due to a combination of soaring health-care costs and slumping revenues amid the pandemic.
Stephen Dodds, another economist from the University of Winnipeg, said a diverse economy alone doesn’t make Manitoba immune to financial woes.
“We’re going to need support from different levels of government, specifically the federal government, to allow us to do the borrowing we need to do to support our public services and get us through this crisis in the short term,” he said.
The province, though, has been reluctant to borrow, with Pallister saying on Monday, “We can’t just borrow our way out of this mess.”
His government has threatened layoffs if Ottawa doesn’t agree to let civil servants on reduced hours collect employment insurance. So far, the federal government isn’t willing to pick up that tab.
“I think Manitoba does face some pretty serious kind of short-term fiscal pressures,” Dodds said.
The Conference Board of Canada, which forecasts Manitoba’s economy will contract by 3.9 per cent this year, attributes the province’s economy downgrade, in part, to declines in transportation equipment manufacturing.
As one example, Dodds referenced bus manufacturer NFI Group Inc. permanently laying off 300 employees and temporarily halting production at its facilities, leaving at least hundreds more people without work for the time being.
Other big Manitoba employers have cut staff: Winnipeg-based Dufresne Furniture and Appliances has temporarily laid off 1,000 employees across several provinces, and Palliser Furniture let go of 500 Winnipeg staff in the short-term.
Marshall Fabrics in Winnipeg has remained in operation by offering pickup services for customers. Non-essential businesses have been closed in the province since Apr. 1. (Ian Froese/CBC)
“Whether you serve your domestic market or an international market, we’ve seen demand really drop off a cliff,” said Conference Board of Canada economist Alicia Macdonald.
Ron Koslowsky, vice-president of the Manitoba division of the Canadian Manufacturers and Exporters, said the manufacturing sector is “surprisingly still holding its own.”
Food production is booming, and dozens of manufacturers have pivoted to making personal protective equipment for the health care field, he said, but depressed demand for transport and aerospace manufacturing is unmistakable.
“There’s no question that some [companies] will be altered,” Koslowsky said. “Some may not be around, although I don’t think they’ll be that many, unless things really tank.”
Manitoba Finance Minister Scott Fielding said he’s encouraged the province is moving toward loosening business restrictions after repeated days of few, or no, new cases of COVID-19.
It doesn’t mean the recovery, or the road to get there, will be painless, he said.
Manitoba Finance Minister Scott Fielding says he won’t sugar-coat the economic struggles his province is experiencing, but notes the province’s resiliency will likely help its recovery. (John Woods/The Canadian Press)
“Listen, I don’t want to sugar-coat this and say somehow this is going to be easy for anyone,” Fielding said in an interview.
“When you have the amount of people, the businesses that are completely shut down or partially shut down, the unemployment rate … it’s going to be some tough times for Manitobans, and really all Canadians,” he said.
Fielding also mentioned Manitoba’s diversified economy, and his hope in a financial system that has evaded the economic busts, but also the booms.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
