THIRD WAVE STALLS MOMENTUM
- Nova Scotia began 2021 with very strong gains across a number of sectors and remains positioned for very strong growth this year.
- A severe third pandemic wave and control measures may stall those gains.
Data released to date suggest that Nova Scotia began the year with particularly strong economic momentum. We noted last quarter that the province’s labour market witnessed an impressive rebound in the second half last year—supported by effective COVID-19 containment and its remote work-capable services industries’ resilience to lockdown measures. In the first quarter of 2021, gains in Nova Scotia employment, manufacturing shipments, car sales, and wages and salaries outpaced national-level advances.
Yet, the third wave of the pandemic hit Nova Scotia particularly hard, and has the potential to stall some of the province’s gains in the first half of this year. It was an unfortunate turn for a jurisdiction that had carried a relatively small COVID-19 caseload up to that point. The surge in cases began in late April and strict severe new lockdown measures were in effect through May, those developments impacted full-time employment and hours worked in the latter month. However, infection rates have since fallen and stabilized, and that has allowed the province proceed with reopening plans.
The relatively strong fiscal position outlined in Nova Scotia’s 2021 budget partly reflects resilience to the pandemic. Read our full summary here, where we note that: a) Nova Scotia has the earliest projected return to balance date of any Canadian province (FY25), and b) it aims to keep infrastructure outlays above $1 bn for the second straight fiscal year. The latter move should help support the recovery in 2021.
Federal shipbuilding contracts should support the manufacturing sector over the medium-term. Construction of arctic offshore patrol ships is expected to continue until the middle of this decade.
We continue to monitor international migration flows as the pandemic progresses; Nova Scotia has witnessed some gains on this front. Newcomer admissions are up incrementally versus year-earlier levels—the rally supported by a pickup in Provincial Nominees and likely related to measures to provide permanent resident status to individuals already in Canada. However, newcomer admissions remain below the target level across the country.
Exports have gotten off to a solid start to the year. Tire manufacturing and sales to the United States surged in April to overcome early 2021 weakness. We suspect that demand for these products south of the border will be strong as reopening proceeds and auto production picks up in the US, and pandemic-related uncertainty eases. Seafood manufacturing export values also jumped in April, but sales to China have been soft to begin 2021, which may be related to efforts in that country to support domestic producers.
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