Don’t expect much change in unemployment: report

This despite expected rebound of local economy after two years of contraction

Saskatoon’s economy is expected to turn the corner this year and continue growing next year, but the inevitable lag means the city’s unemployment rate is projected to keep rising and remain above the two-decade average through 2018, according to a new report from the Conference Board of Canada.

After two years of economic contraction — the result of tanking oil, potash and uranium prices ripping through the commodity driven municipal economy — Saskatoon’s GDP is forecast to grow 3.6 per cent this year and two per cent in 2018, the Ottawa-based think-tank said in its latest Metropolitan Outlook, released Tuesday.

While soft commodity prices remain a threat, a return to steady growth should be a “tonic” for the job market, but it won’t prevent the city’s unemployment rate from peaking at 8.1 per cent this year before subsiding to 6.6 per cent next year, the report said.

According to Statistics Canada, Saskatoon’s unemployment rate stood at 7.8 per cent in September, up almost a full percentage point from September 2016 and well above the provincial average of 5.3 per cent — itself an improvement over the 6.9 per cent recorded 12 months previously.

The unemployment rate does not tell the whole story. As Sask. Trends Monitor publisher and statistician Doug Elliott reported earlier this month, the number of unemployed people and the unemployment rate dipped compared to a year ago, but the number of people who don’t have a job and aren’t looking for one jumped five per cent.

“So many of the unemployed have simply given up looking and have dropped out of the labour market,” Elliott said.

The worst appears to be over for one of the city’s hardest-hit sectors. Saskatoon’s construction industry contracted by 18 per cent in 2015 and an additional 13 per cent this year, said the report, as evidenced by a steep decline in the value of new building permits, which fell from a peak of $1.2 billion in 2015 to $867 million last year.

“Immediate improvement on the residential side is unlikely (as) builders continue to struggle with high inventories of unsold units,” the think-tank said in the report. However, the city’s construction sector is expected to display some signs of life with growth projected at one per cent this year and almost two per cent in 2018.

Other bright spots include a 3.6 per cent growth projected for the city’s service industry and continued in-migration.