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Economic Growth to Continue for Most Ontario Cities in 2017, Albeit at a More Moderate Pace

Ottawa, August 3, 2017—Apart from London, Sudbury and Thunder Bay, Ontario’s mid-sized metropolitan areas can expect economic growth to moderate this year, according to The Conference Board of Canada’s Metropolitan Outlook. Still, Oshawa and Windsor are expected to boast the fastest growing economies among the 15 cities covered in this edition of the report, with growth of 2.5 per cent forecast for both cities this year. The remaining six Ontario cities in the report will post growth under 2 per cent.

“The weaker Canadian dollar and solid U.S. demand continue to provide a lift to many Southwestern and Eastern Ontario metropolitan economies, especially their export-oriented manufacturing industries. That said, growth is on track to moderate this year in most of these cities,” said Alan Arcand, Associate Director, Centre for Municipal Studies, The Conference Board of Canada. “For the two Northern Ontario cities in our report, improved nickel prices will help Sudbury’s economy bounce back from three straight annual declines, while Thunder Bay’s economy will remain mired in slow growth.”

Highlights

  • Oshawa and Windsor are expected to boast the fastest growing economies this year among the 15 medium sized cities in the report.
  • Most Ontario cities will see real GDP growth come in under 2 per cent this year.
  • Economic growth in Thunder Bay will inch up by just 0.2 per cent in 2017.

Oshawa

After rising by 3.2 per cent last year, real GDP growth in Oshawa is forecast to slow to a still solid 2.5 per cent in 2017. The local construction sector is expected to be among the region’s top performers as several non-residential projects fuel an output increase of 3.6 per cent this year. At the same time, services output is expected to post solid growth, with personal services, and health care and education leading way. Meanwhile, the manufacturing sector will continue on its modest growth path, forecast to expand by 1.1 per cent this year. General Motors is investing over $400 million to upgrade its Oshawa Assembly Plant and will add a second shift and create 500 jobs at its Oshawa Flex Plant next year. Local job growth surged a record 9.2 per cent last year, but this pace of growth is unsustainable so the labour market will reverse some of last year’s gains in 2017.

Windsor

Windsor will maintain its string of solid advances this year thanks to the continued revival of the key manufacturing sector. Driven by the auto industry and strong U.S. vehicle sales growth, the local manufacturing sector has expanded for seven consecutive years, posting average annual output growth of 6.8 per cent over 2014-16. The rebound in manufacturing has also helped lift the fortunes of the construction industry, and the transportation and warehousing sector. While the outlook for the local manufacturing sector remains bright, output is expected to increase at a more moderate pace of 3.7 per cent in 2017, with the rest of the economy following suit. Growth in Windsor’s real GDP is expected to remain healthy, coming in at 2.5 per cent this year.

London

London’s economy is also benefiting from strength in the local manufacturing sector, similarly driven by a weaker loonie and healthy U.S. demand, particularly for automobiles. The manufacturing sector is expected to continue to grow steadily over the next two years, with output increasing by 2.6 per cent in 2017 and 2.4 per cent in 2018. The manufacturing revival has also helped lift the spirits of consumers spurring major purchases, such as homes. This, in turn, has supported strong growth in London’s construction, and finance, insurance, and real estate sectors. In all, London’s economy is forecast to expand by 1.9 per cent this year.

Kingston

Following healthy growth of 2.4 per cent last year, Kingston is expected to post real GDP gains of 1.8 per cent this year. Thanks to rising housing starts and a variety of non-residential projects, the construction industry will be the economy’s top performer in 2017. Meanwhile, the services sector, led by public administration, is projected to grow steadily, albeit at a slower pace than the last two years. After growing by 1.1 per cent in 2016, employment is expected to rise at the same rate this year before slowing to 0.6 per cent in 2018.

St. Catharines-Niagara

St. Catharines-Niagara’s economy will continue to expand at a moderate pace, with real GDP growth forecast to come in at 1.6 per cent in 2017. After declining last year, the construction sector is expected to start recovering this year, as stronger non-residential investment activity more than offsets slightly weaker housing starts. At the same time, the local manufacturing sector is on track to see slightly stronger output growth this year, partly thanks to substantial investments by General Motors and General Electric. On the other hand, services sector output growth is projected to slow due to more moderate activity in wholesale and retail trade, and in public administration, combined with a fifth consecutive decline in non-commercial services (health care and education).

Kitchener-Cambridge-Waterloo

Economic growth in Kitchener-Cambridge-Waterloo is expected to decelerate to 1.6 per cent in 2017, following a 2.1 per cent increase in 2016. A modest expansion of 0.5 per cent is on tap for the local manufacturing sector this year, while services growth is expected to moderate. Meanwhile, construction output is on track to rebound with a 3.4 per cent gain this year, fuelled in part by work of the light rail transportation system. Kitchener will continue to attract newcomers, as the area provides relatively affordable housing for those working in the Greater Toronto area, Kitchener’s employment conditions remain decent, and job markets in Western Canada are less beckoning.

Greater Sudbury

Following contractions in four of the previous five years, Sudbury’s real GDP is forecast to rise 1.2 per cent in 2017. An anticipated modest rise in nickel prices will underpin the stronger economy. Local primary and utilities output, which includes mining activity, is poised to expand 4.0 per cent in 2017, following dips in four of the previous five years. The increased mining activity, combined with a major local road project, should support solid gains in Sudbury’s construction sector this year. Unfortunately, employment is poised to fall for the fourth straight year in 2017, before starting a modest recovery in 2018.

Thunder Bay

Thunder Bay’s economy continues to move forward sluggishly, with growth forecast to come in at 0.2 per cent in 2017. Local manufacturing is on track to decline by 3.5 per cent this year as prices for pulp and newsprint remain tepid. The services side of the economy will remain essentially flat with output forecast to rise by 0.2 per cent this year. On a more positive note, output in Thunder Bay’s construction industry is forecast to accelerate to 1.7 per cent in 2017, thanks largely to a ramp up in government infrastructure spending. After a solid 1.1 per cent advance in 2016, employment is projected to edge up by just 0.1 per cent this year and next.

The Metropolitan Outlook: Summer 2017 is The Conference Board of Canada’s analysis of 15 medium-sized Canadian census metropolitan areas (CMAs). Alan Arcand will present detailed findings from this report at a live webinar on August 31, 2017 at 11:00 AM EDT.


For more information contact

Corporate Communications
613-526-3280
corpcomm@conferenceboard.ca


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