Provincial Economic Momentum Indexes

We have updated our in-house Provincial Economic Momentum Indexes. The index values synthesize growth rates of six monthly seasonally adjusted economic indicators.

According to Ontario Ministry of Finance, real GDP grew at an annual rate of 2.2% in Q1 (Canada: +1.9%). But Ontario’s momentum index was flat in Q2, as the positive contribution of manufacturing sales was offset by a drop in housing starts. There is seemingly more momentum in Quebec’s economy, but it has to be said that the rise in Quebec’s index is partly fed by employment data which returned to a normal level in April and May after an unexplainable dive in Q4. Otherwise, only wholesale trade contributed substantially to the province momentum index.

In our previous report, we highlighted the lack of economic momentum in the three Maritime Provinces, but there has been a turnaround in Q2 in two of them. Non-residential building permits contributed the most to the rise in Prince Edward Island’s index, the largest gain among the ten provinces in Q2, but housing starts also contributed substantially. The momentum index also rose strongly in New Brunswick, fed by employment, housing starts and wholesale trade. At the opposite, Nova Scotia’s index, which dropped 0.2% in Q1, lost 0.3% in Q2, mostly due to employment and manufacturing sales. It is, however, too soon to call a recession there, due to the good handoff in Q4.

Saskatchewan’s economy was red hot in Q2, and is one of the provinces where none of the six indicators covered in the index contributed negatively. Newfoundland & Labrador kept the momentum gathered through the previous quarters. Economic momentum was also strong in British Columbia, where none of the indicators covered declined in Q2. Economic momentum gathered some pace in Alberta where only manufacturing sales were a drag. Manitoba’s index was the sole to decline in Q2, a first since Q4 2009.