TORONTO, Sept. 12, 2011 /CNW/ - After showing promising signs earlier
this year, Ontario's economic growth has since been negatively impacted
by supply-chain disruptions in the auto sector and slower U.S. growth,
according to the RBC Economics Provincial Outlook report released
today. RBC forecasts Ontario's economy to grow by 2.3 per cent in 2011
and 2.4 per cent in 2012.
"Ontario's auto sector was severely disrupted by Japan's earthquake and
tsunami in March, causing a number of assembly plants to halt or
curtail operations for several weeks," said Craig Wright, senior
vice-president and chief economist, RBC. "As a result of this
catastrophe, car and truck output in the province plummeted by 14 per
cent in the second quarter relative to a year ago, which entirely
reversed the strong gains we saw in the first quarter."
The RBC report notes that although Ontario's automotive production has
declined over the spring, supply chain issues have largely been
resolved and will no longer hinder the industry in the months ahead.
Another factor that put a damper on provincial economic performance for
the first half of the year was the surge in energy prices over the fall
and winter. As consumers paid more for energy, they restrained their
spending at retail stores. The modest drop in gasoline prices since
spring will ease pressure on household budgets going forward.
"We anticipate Ontario consumers to loosen up their purse strings in the
coming months, but not enough to match last year's retail sales
growth," added Wright.
On a more positive note, Ontario's job market has been experiencing
steady gains. 85,000 new jobs have been created in the province in the
first eight months of 2011. The unemployment rate fell by 0.6
percentage points to 7.5 per cent in August. Although this labour
market improvement has not quite translated into retail spending
strength, it likely helped to maintain brisk activity in Ontario's
The RBC Economics Provincial Outlook assesses the provinces according to economic growth, employment growth,
unemployment rates, retail sales, housing starts and consumer price
indices. The full report and provincial details are available online as
of 8 a.m. ET today at http://www.rbc.com/newsroom/reports.html.
For further information:
Craig Wright, RBC Economics Research, (416) 974-7457
Robert Hogue, RBC Economics Research, (416) 974-6192
Elyse Lalonde, RBC Media Relations, (416) 974-8810