Canada's small and mid-sized cities hit hard by slumping manufacturing sector



    www.conferenceboard.ca

    OTTAWA, June 25 /CNW Telbec/ - Abbotsford is expected to lead Canada's
small and mid-sized census metropolitan areas (CMAs) in economic growth this
year, but given the overall slowdown in Canada's economy, most CMAs can expect
slower growth this year, according to the Conference Board's Metropolitan
Outlook - Summer 2008.
    This is the first time the Conference Board has ranked 14 small and
medium-sized CMAs together in the same outlook. In previous outlooks, these
CMAs were included with larger Canadian cities.
    "The ongoing downturn in the manufacturing sector is dragging down
economic growth in Canada's small and mid-sized CMAs," said Alan Arcand,
Principal Economist. "All CMAs except for Thunder Bay and Saguenay are
expected to post slower growth this year. And even these CMAs are forecast to
eke out only marginal gains this year."
    Coming off a modest 2.7 per cent increase last year, Abbotsford's real
gross domestic product (GDP) is expected to grow by only 2.5 per cent in 2008.
The CMA's economy will be held back by weak output in wood product
manufacturing, although non-residential construction activity is expected to
remain strong.
    Aside from Abbotsford, only Trois-Rivières and Saint John, N.B., are
expected to see economic growth above the two per cent mark this year. The
declining manufacturing sector, particularly the paper industry, continues to
be of concern for Trois-Rivières, but provincial government infrastructure
projects will bolster its economy. Growth in Saint John will ease to
2.3 per cent on weaker construction and wholesale and retail trade.
    The drop in manufacturing output, due to the high Canadian dollar and the
sluggish U.S. economy, will limit growth in Oshawa and Sherbrooke too. Oshawa
posted real GDP growth of 2.1 per cent in 2007. But production cuts and
layoffs at General Motors truck assembly plant partly explain why real GDP
growth is forecast to slow to 1.9 per cent in 2008.
    Auto parts and plastic products manufacturing weakness in Sherbrooke will
be offset by vigorous construction activity and solid growth in the services
industry. Sherbrooke's GDP growth is expected to come in at 1.8 per cent in
2008.
    Sudbury's economy continues to post relatively healthy growth, thanks
mainly to elevated nickel prices. GDP growth is forecast to reach 1.7 per cent
in 2008 and average 2 per cent per year over the next two years.
    Kingston's economy as a whole has been growing at a stable pace over the
last four years as strong services sector growth has offset manufacturing
weakness. This year, further manufacturing and construction sector losses,
combined with slowing services sector activity, will limit GDP growth to
1.7 per cent.
    Solid domestic demand, including healthy consumer spending, kept London's
economy afloat in 2007. This year, the slump in auto parts manufacturing,
combined with weaker service sector activity, will drag down growth to
1.3 per cent.
    Kitchener faces sharply cooler economic growth this year as output in the
motor vehicle manufacturing sector falls for third straight year. In fact, the
CMA's economy is expected to expand by only 1.2 per cent in 2008.
    Healthy demand for aluminum along with work on major construction
projects will provide a lift to Saguenay's economy. The CMA is expected to
post GDP growth of 1.2 per cent this year, up from 1 per cent in 2007.
    Another year of weak auto parts and fabricated metals manufacturing
output will limit economic growth in St. Catharines-Niagara to just
0.8 per cent. The strong Canadian dollar and high gasoline prices will also
act as a drag on the area's tourism sector.
    Thanks to the booming offshore oil industry, St. John's, N.L., led all
CMAs in economic growth last year with a real GDP increase of 8.8 per cent.
But offshore oil production is expected to be lower this year and, as a
result, St. John's is forecast to eke out economic growth of only
0.7 per cent.
    Thunder Bay will edge up one spot this year. Economic growth is expected
to be limited to 0.5 per cent, while employment growth will remain flat.
However, on a positive note, paper mills have been bought up by local
investors and given new product mandates, while Bombardier's local rail-car
plant has received several big contracts.
    Windsor's real GDP is expected to decline for the third consecutive year
in 2008, following additional plant closures and layoffs. The struggling
tourism and auto industries will be largely responsible for a 0.3 per cent
contraction in Windsor's real GDP this year.
    The Metropolitan Outlook, published quarterly, provides economic
forecasts for 27 Canadian CMAs, their provinces, and Canada. Once a year, the
Conference Board's Centre for Municipal Studies will publish forecasts for
small and medium-sized CMAs in Canada.




For further information:

For further information: Brent Dowdall, Media Relations, (613) 526-3090
ext. 448, corpcomm@conferenceboard.ca


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