Toronto to be one of Canada's growth leaders this year and next
Healthy economic outlooks for Hamilton and Ottawa-Gatineau
OTTAWA, Oct. 17, 2017 /CNW/ - Toronto is expected to boast the fastest-growing metropolitan economy outside of Alberta this year, and is forecast to be a growth leader again in 2018, according to The Conference Board of Canada's Metropolitan Outlook: Autumn 2017. Meanwhile, Hamilton and Ottawa-Gatineau's economies are on track to post solid gains this year.
"Toronto's economy was firing on all cylinders during the first half of 2017, but growth has moderated since then and this trend will continue through 2018, as government housing market cooling policies have their desired effect. Likewise, Hamilton's economy is enjoying strong growth this year, but slower growth looms," said Alan Arcand, Associate Director, Centre for Municipal Studies, The Conference Board of Canada. "Meanwhile in Ottawa-Gatineau, many key pillars of the region's economy are posting solid advances this year: the public sector is growing and hiring, the construction industry remains busy, and tourism is having a banner year."
Highlights
- Toronto's economy is forecast to grow 3.7 per cent in 2017 and 2.5 per cent in 2018.
- Real GDP growth in Hamilton is forecast to reach 2.9 per cent this year and slow to 2.0 per cent in 2018.
- Ottawa–Gatineau's real GDP is forecast to grow 2.5 per cent in 2017 and 2.2 per cent in 2018, the strongest back-to-back increases since 2007–08.
- Calgary and Edmonton are forecast to be the fastest growing census metropolitan areas (CMAs) in Canada this year, with real GDP is forecast to grow by 4.6 per cent and 3.9 per cent respectively.
Toronto
Toronto's real GDP is forecast to grow 3.7 per cent this year, the fourth year in a row of above 3 per cent growth. Next year, economic growth will slow to a still decent 2.5 per cent, good enough to top all other metro areas in this report except Vancouver.
The local construction sector has been a key growth driver. In fact, output is on track to expand at a 3.9 per cent clip this year, as robust non-residential construction activity will more than offset cooling new home construction. Indeed, after a blistering start to the year, housing market activity started to cool soon after the Ontario government introduced its Fair Housing Plan in April, with the aim of cooling red-hot housing markets in the Greater Golden Horseshoe region. The measures appeared to have had their desired effect and, as such, housing starts are projected to fall an additional 4.4 per cent in 2018 on the heels of a 1.7 dip in 2017. Accordingly, overall construction output growth is forecast to ease to 2.0 per cent next year.
Finance, insurance, and real estate will also feel the pinch of the housing market slowdown, as output growth is projected to decelerate from 4.8 per cent in 2017 to a still solid 3.1 per cent in 2018. A similar growth pattern is anticipated for consumer spending and thus for wholesale and retail trade output—robust growth in 2017 will give way to more moderate gains next year.
Meanwhile, the export-oriented manufacturing sector is experiencing slower growth this year, as U.S. vehicle sales appeared to have peaked. Output growth in Toronto's manufacturing sector is set to reach just 0.9 per cent in 2017, before improving modestly to 1.4 per cent next year.
The healthy economic activity will be mirrored in the city's labour market as a total of 85,200 new jobs are forecast to be created in 2017–18. As a result, the unemployment rate is expected to fall from 7.0 per cent in 2016 to 6.7 per cent in 2018.
Hamilton
Hamilton's economy is projected to grow by 2.9 per cent in 2017, before easing to 2.0 per cent in 2018. This year's strength has been driven by strong gains in several sectors, including construction, wholesale and retail trade, personal services, and public administration. Robust non-residential investment activity will more than offset a sharp decline in residential investment, allowing construction output to grow at a rapid pace of 4.8 per cent this year. At the same time, growth is also on track to accelerate in wholesale and retail trade and in personal services, as healthy employment and income gains have lifted consumer spending. Unfortunately, we think growth in all these sectors will slow next year. On a positive note, manufacturing activity is expected to bounce back next year following a small dip in output in 2017. As well, housing starts are forecast to increase.
The local job market is hot. Employment is expected to climb at its fastest rate in 14 years this year, leading to the creation of over 19,000 net new jobs in 2017. But such growth is unsustainable. As such, we expect Hamilton's labour market to give back some these gains in 2018, with employment projected to dip 2.1 per cent, equivalent to the loss of 8,500 jobs.
Ottawa-Gatineau
With many key pillars of Ottawa–Gatineau's economy enjoying solid advances this year, real GDP is on track to increase by 2.5 per cent, the fastest rate of growth in seven years. Although economic growth is projected to moderate in 2018, it will remain healthy at 2.2 per cent. A big increase in federal government spending has been accompanied by a significant upswing in local public service hiring. Indeed, public administration output is projected to climb by an average of 2.9 per cent per year from 2016 to 2018. The construction industry has been another important driver of growth this year, thanks to strong showings from the residential and governmental sectors. Meanwhile, the tourism industry has been enjoying a banner year, as visitors have flocked to the Capital to participate in events to celebrate Canada's 150th birthday. Finally, the local high-tech sector has been another key economic contributor as it continues to grow and diversify into other areas besides telecommunications.
The strong economic conditions have translated into a good year for Ottawa–Gatineau's labour market; some 11,000 net new jobs are expected to be added to payrolls in 2017. The positive momentum should continue next year as the economy generates an additional 7,100 net new jobs.
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