Impact Regina - January 2019

Impact Regina

Sources of Population Growth Special Edition: January 2019

Executive Summary The Regina economy continues to slow in the final quarter 2018. Only industrial building permits have posted increases with all other monthly indicators in decline. In construction, housing starts and total building permits dropped sharply. Employment is also dropping, with the number of unemployed and unemployment rates increasing.

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With a year-over-year drop of 1,700 positons, total average yearto-date employment in the Greater Regina Area was down only 0.05% or 67 positions in January to December 2018 over the same period in 2017. At the provincial level, year-to-date employment advanced by 2,367 or 0.4%.

Year-to-date employment in December 2018 was up over the same period in 2017 in Utilities (125), Transportation and Warehousing (267), Finance, Insurance, Real Estate and Leasing (392), Business, Building and Other Support Services (1,383), Educational Services (1,783), and Other Services (217).

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Year-to-date employment in December 2018 was down in Agriculture (-317), Resource Extraction (-750), Manufacturing (-983), Wholesale and Retail Trade (-867), Professional, Scientific and Technical Services (-1,292), Health Care and Social Assistance (-900), Information, Culture and Recreation (-225), Accommodation and Food Services (-133), and Public Administration (-200).

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After a weak performance in 2017, construction employment bounced back in 2018. Year-to-date December construction employment is up by 1,400 positions from the same period in 2017 on the strength of non-residential construction.

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The average year-to-date unemployment rate increased to 5.9% in December 2018, up from 5.1% in December 2017. With negative job growth, the numbers of unemployed advanced sharply. Yearto-date, the number of unemployed is up from 7,583 in December 2017 to 8,883 in December 2018. Increases in the number of unemployed and the labour force (those working and actively seeking work) indicate that Regina is not experiencing significant out-migration of unemployed or the “discouraged worker” effect.

Discouraged workers are those who want and are available to work, but have dropped out of the labor force because they believe there aren’t any jobs for them.

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November 2018, total year-to-date housing starts are down by -761 units or -40.9% as the market struggles with over supply and stricter borrowing rules. Year-to-date declines were widespread and encountered across all classes of dwelling units: singles (-308 units or -48.4%), semi-detached (-114 units or -57.6%), row (-44 units or -18.9%), and apartment and other types (-295 units or -37.2%).

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November 2018 year-to-date building permits, a leading indicator of construction activity, are down -27.2% over the same period in 2017. The only sub sector that posted an increase was industrial (171.9%). During the same time period residential (-31.7%), Commercial (-33.2%), and institutional and governmental (-55.4%) posted declines.

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The average year-to-date Housing Price Index Benchmark Price is down from $290,175 in December 2017 to $275,750 in December 2018.

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With the pace of GDP growth at the national level suggesting that the economy is operating at close to full capacity, the Bank of Canada raised the overnight rate to 1.75% on October 24, up from 1.5%. This represents the highest rate since December 2008 and more rate increases are likely to follow in 2019 with additional GDP growth stemming from the new United States-MexicoCanada Agreement.

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2017 Regina Census Metropolitan Area population was up 2.4% over 2016 to 253,220 on the strength of international and intraprovincial migration. This can be expected to continue through 2018 with continued, although slowing, employment growth spurring further in-migration.

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The Conference Board of Canada forecasts Regina’s economy to post a 2.1% real GDP gain in 2019, following a 2.2% increase in 2018.

Economic Indicators October 2018

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Regina Census Metropolitan Area - Sources of Population Growth Executive Summary This special edition of Impact Regina examines the sources of population growth for the Greater Regina Area (GRA). Since 2007, the leading contributor of population growth has been immigration. Over the same time period, natural increase has advanced marginally while other sources of growth have remained relatively flat.

This report also examines the relationship between the declining housing market and the higher average household size among recent immigrants.

Rising immigration of younger and larger families has the potential to have major implications on local business and the overall economy. To accommodate the increasingly diverse population, products and services need to be accessible in easily understood languages and home builders must adapt by building fewer and larger homes.

Introduction The mathematics of population growth are relatively simple: Population growth = (natural increase=births-deaths) + (migratory increase=immigration-emigration).

However, changes in the drivers of population growth are much more complicated. For example, at the national level the contribution of natural increase to population growth has dropped as the Canadian population has aged and fertility rates have declined. Currently, natural increase accounts for less than one-third of Canada’s population growth and has ceased to be the major contributor. At the same time, migratory increase plays an increasing role in Canada’s population growth. Migratory increase currently accounts for about two-thirds of Canada’s population growth.

The Regina Experience In the case of the Regina Census Metropolitan Area (CMA), immigration has outstripped natural increase as the leading contributor of population growth since, and including, 2007. Since 2014, immigration is more than triple natural increase and immigration is only marginally offset by emigration.

Table 1: Regina CMA Components of Population Growth

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Births

2194

2257

2405

2646

2695

2770

2899

2902

3016

3058

3115

3160

3215

Deaths

1537

1530

1620

1671

1641

1618

1692

1651

1743

1738

1754

1780

1801

Natural Increase

657

727

785

975

1054

1152

1207

1251

1273

1320

1361

1380

1414

Immigrants

632

493

823

1032

1641

2367

2721

4102

3472

3905

3550

5235

4947

Emigrants

117

165

160

90

133

133

174

246

135

242

209

184

185

Returning Emigrants

102

81

186

123

175

155

156

195

116

183

165

172

172

72

73

48

36

45

40

60

53

42

56

48

42

42

-1879

-1444

-21

263

513

229

-69

410

-76

-669

-1308

-1279

-1585

560

756

1046

509

849

302

735

808

646

1139

1097

1009

1009

81

133

70

322

644

238

144

418

953

49

-456

318

298

328

200

-342

-339

-348

-378

-432

..

..

..

..

..

..

Net Temporary Emigration Net Interprovincial Migration Net Intra-Provincial Migration Net Non-Permanent Residents Residual Deviation economicdevelopmentregina.com

Removing the less important contributors to population growth and showing the results graphically below shows a more telling story.

Source: Cansim Table 051-0056 While immigration is increasing rapidly, the less important components are essentially flat or, in the case of natural increase, advancing only marginally. Since 2002, net interprovincial migration was negative with the exception of 2008, 2009, 2010, and 2012. Driving positive net interprovincial migration were peak or near peak resource prices, notably oil and potash, combined with a lack of economic opportunities in other parts of Canada.

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

202,481

205,240

209,590

213,482

217,710

224,595

230,802

236,431

240,583

247,192

253,220

Change

2,339

2,759

4,350

3,892

4,228

6,885

6,207

5,629

4,152

6,609

6,028

Net Immigration % of Change

28.3%

34.1%

34.7%

57.4%

60.2%

56.0%

53.8%

65.1%

80.5%

76.4%

79.0%

Population

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Immigration and the Housing Market November 2018, total year-to-date housing starts in the Regina CMA are down by -761 units or -40.9% as the market struggles with stricter borrowing rules and over supply. Year-to-date declines were widespread and encountered across all classes of dwelling units: singles (-308 units or -48.4%), semi-detached (-114 units or -57.6%), row (-44 units or -18.9%), and apartment and other types (-295 units or -37.2%).

Two rounds of federal mortgage stress rules were introduced in the fall of 2016 and in January 2018. These additional stress tests weakened demand locally by causing many buyers hoping to purchase a home to look in lower price ranges to qualify for a mortgage or postpone the purchase decision indefinitely.

In addition, the amount of unsold new housing inventory in the Regina CMA is at record levels adding further downward pressure on new starts.

Source: Statistics Canada. Table 34-10-0149-01 Canada Mortgage and Housing Corporation, absorptions and unabsorbed inventory, newly completed dwellings, by type of dwelling unit in census metropolitan areas.

economicdevelopmentregina.com

According to Statistics Canada’s “Recent Immigrants in Metropolitan Areas: Canada — A Comparative Profile Based on the 2001 Census”, the latest published source available, recent immigrant family/household size is 3.5 persons. This is well ahead of the Regina CMA average household size of 2.49 persons Using a simple housing predictive model population and net migration were in turn, translated into housing starts based on the following methodology: •

Net migration divided by the average Regina CMA household size of 2.49 will meet the net-in-migrant demand in the first scenario. The second scenario uses an average net-migrant household size of 3.5 persons.

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Historical examination of net-migration versus household starts suggests there is a certain amount of latent household formation that occurs annually regardless of the level of net-in-migration. This includes household break ups, offspring moving out, etc. and averages 0.28% of the regional population per year. This figure was multiplied by the regional population for each year and added to housing starts required to meet net-in-migration.

Comparative predictions of starts and actual starts since 2012 are shown below: 2012

2013

2014

2015

2016

2017

2018*

Actual Starts

3093

3122

2223

1597

1563

1923

1198

Predicted starts at 2.49 persons per household

2667

2215

2322

1931

2612

2390

2222

Predicted starts at 3.5 persons per household

2079

1763

1843

1568

2058

1905

1790

* Estimate

It is clear from the above that using an average household size of 3.5 persons yielded a much better predictor for starts beginning in 2015. 2015 was also the year when net interprovincial migration, already negative, went into a steep decline. It should be noted that neither predictive model yielded a reasonable estimate for 2018 starts largely because neither model takes into account unabsorbed new home inventory.

Implications for Business Business implications are clear. International in-migrants tend to be younger than the general population and have larger families. In addition, they tend to cluster in large cities. However, second and third generation migrants also seem to be shifting towards suburbs and semirural locations. From a more encompassing, economic point of view, migrants contribute to the prosperity of their host countries, helping fill employment gaps when necessary and rejuvenating ageing populations and workforces. This, along with ethnic minority consumers’ rising incomes, is positively impacting shopping behaviour within host countries. A successful economic development strategy should accommodate increased population diversity by providing products and services in appropriate, easily understood languages.

Finally, barring another resource boom coupled with slumping economic fortunes in other parts of the country, home builders must adapt to building fewer and larger homes to accommodate an expanding immigrant population with larger household sizes.

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Definitions Emigrant Canadian citizen or immigrant who has left Canada to establish a residence in another country, involving a change in usual place of residence.

Emigration may be either temporary or permanent.

Immigrant An immigrant refers to a person who is or has ever been a landed immigrant (permanent resident) and who has been granted the right to live in Canada permanently by immigration authorities.

Interprovincial Migration Interprovincial migration represents all movements from one province or territory to another involving a change in usual place of residence. A person who takes up residence in another province or territory is an out-migrant with reference to the province or territory of origin and an inmigrant with reference to the province or territory of destination.

Intra-Provincial Migration or Sub-Provincial Migration Intra-provincial migration or sub-provincial migration represents all movements from one region to another within the same province or territory involving a change in usual place of residence. A person who takes up residence in another region is an out-migrant with reference to the region of origin and an in-migrant with reference to the region of destination.

Natural Increase Variation of the population size over a given period as a result of the difference between the numbers of births and deaths.

Net Interprovincial Migration Net interprovincial migration represents the difference between in-migrants and out-migrants for a given province or territory.

Net Intra-Provincial Migration Net intra-provincial migration represents the difference between in-migrants and out-migrants in a given intra-provincial region. A region can be defined as a census division (CD), an economic region (ER) or a census metropolitan area (CMA).

Temporary Emigration Temporary emigration includes Canadian citizens and immigrants living temporarily abroad who have not maintained a usual place of residence in Canada.

Non-Permanent Resident A non-permanent resident is a person who is lawfully in Canada on a temporary basis under the authority of a valid document (work permit, study permit, Minister's permit or refugee) issued for that person along with members of his family living with them. This group also includes individuals who seek refugee status upon or after their arrival in Canada and remain in the country pending the outcome of processes relative to their claim.

Source: Statistics Canada 91-528-X

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About EDR

About Praxis

Economic Development Regina Inc. (EDR) is the economic development agency for the Greater Regina Area (GRA).

Praxis Consulting is Saskatchewan’s largest locally-based management consulting firm.

EDR is a not-for-profit economic development corporation, governed by a volunteer board of directors. EDR provides leadership to the community to support industry growth and diversification through retention and expansion of existing business and encouraging investment, development of industry and tourism.

Praxis works collaboratively with clients in the facilitation of growth and excellence. Leveraging an unmatched wealth of experience across multiple sectors, Praxis adds value to their clients through:

In collaboration with key stakeholders, we work to identify, develop and promote opportunities that advance economic prosperity and ensure the GRA offers a vibrant and diversified economy for investors, is a positive destination experience for visitors and offers a high quality of life for residents.

Strategy: Thought-leadership, rigorous planning, and pragmatic strategies.

economicdevelopmentregina.com

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Research: Information gathering and data analytics.

Results: Cascading strategy and culture within the organization.