Ontario Economic Forecast 2011-2014 - Central 1 Credit Union
Economic Analysis of Ontario Volume 2 • Issue 1 • April 2011 | ISSN: 0834-3980
Ontario Economic Forecast 2011-2014 Highlights •
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•
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Economic Growth, Ontario
Economic growth will slow to 2.7% in 2011 following the first full-year recovery rebound to an estimated 3.0% in 2010.
Percentage change in gross domestic product
12 Current $
The economy grows more slowly in 2012 with the removal of government stimulus and fiscal consolidation along with slower growth in exports. Business investment spending stands out as the most robust sector of the economy growing at an average 6% annual rate during the forecast period. The unemployment rate slowly retreats from its highs, remaining above 8% this year and falling to below 7% in 2014.
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Inflation spikes higher in 2011 due to higher energy and food prices but settles down in the following three years to just above 2% annually.
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The province’s export-oriented industries struggle under a currency at par and belownormal U.S. import demand.
Forecast overview The economic recovery approaches its third year this July and will undergo a mid-cycle slowdown in 2012 followed by a moderate re-acceleration through to
2002 $
8 4 0 -4 -8 1998
2002
2006
2010
2014
Source: Central 1 Credit Union. Note: 2010 estimated, forecast 2011-14
2014. The end of fiscal stimulus and deficit reduction plans remove a source of growth not completely offset by private domestic spending and exports in 2011 and 2012. Overall, Ontario’s economy will post a moderate growth performance in the next four years. A fallback into recession would likely only come about by another bout of negative external events. Growth in real Gross Domestic Product (GDP) slows to 2.7% in 2011 from 3.0% in 2010 while current dollar GDP grows at 5.1% from an estimated 6.2% in 2010. On a short-term basis, quarterly growth picked up in the last quarter of 2010 and that momentum carried into 2011. The recent disaster in Japan could
Forecast Summary: Ontario 2008 Real GDP, % chg.
2009
2010
2011
2012
2013
2014
-0.9
-3.6
3.0
2.7
2.3
2.6
2.9
Nominal GDP, % chg.
0.1
-1.1
6.2
5.1
4.9
5.2
5.4
Employment, % chg.
1.4
-2.8
1.7
1.7
1.7
1.8
2.3
Unemployment Rate, %
6.5
9.4
8.7
8.2
7.8
7.3
6.5
Population, % chg.
1.1
1.0
1.1
1.1
1.1
1.1
1.1
75.1
50.4
60.4
62.8
66.9
71.8
79.6
Housing Starts, units, 000s Retail Sales, % chg.
3.9
-2.5
5.2
4.7
6.3
5.5
5.9
Personal Income, % chg.
2.7
-0.2
4.2
3.6
4.1
4.3
4.7
-10.9
-13.6
17.5
13.5
10.9
12.4
10.0
2.3
0.4
2.3
2.8
2.1
2.2
2.3
Corporate Pre-tax profits, % chg. Consumer Price Index, % chg.
Forecast commences 2011. Source: Statistics Canada, Central 1 CU 1
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have some negative near term consequences for the province’s auto sector due to supply disruptions. The trade sector remains the Achilles heel of the provincial economy with its widening deficit. Weak growth in manufacturing exports due to a slow recovery in U.S. demand and stiff international competition under a high currency results in a difficult operating environment for most exporters. Natural resource exports will benefit from robust metals prices and considerable new investment spending. Imports are seen outpacing exports through most of the forecast.
Unemployment Rate, Ontario Per cent of labour force
10 9 8 7 6 5 4 3
Domestic demand carries the economy with a shift to more business investment spending and less government spending, while consumer spending holds at a moderate growth rate. The residential sector expands at a below-normal pace weighed down by low income and job gains and gradually rising interest rates. Population growth continues at the same low rate seen in recent years, however, household pentup demand steadily accumulates, becoming a larger growth source at higher employment and income levels. Total income generated in the economy increases an average 5.1% annually with labour income forecast to grow 4.4%, while corporation profits before tax expand 11.7% annually through to 2014. The declining but high unemployment rate keeps wage increases to just below the inflation rate for most of the forecast. Ontario is a net oil importer and the recent run-up in oil prices serves as a brake on growth for consumers and businesses. A portion of the oil price increase is due to a risk premium and will diminish when hostilities and unrest fade in North Africa and the Middle East. This aside, the medium-term outlook is for fossil fuel prices to trend higher.
Labour market The unemployment rate declines every year, falling to 6.5% in 2014 in this forecast. During 2011 employment growth at 1.7% outpaces labour force growth and pulls down the unemployment rate to an average 8.2%. The average number of hours worked per week edges higher and reflects a shift to more full-time employment. Total hours worked in 2012 surpasses the pre-recession high of 2008.
Economic Analysis of Ontario
1998
2002
Source: Statistics Canada, C1CU.
2006
2010
2014
Forecast 2011-14.
Labour supply growth could increase by more than is assumed in this forecast with a faster increase in the participation rate. The upturn in the participation rate following a recession can be considerable as evidenced by the two to three percentage point increase coming out of the 1981-82 and 1990-92 recessions. However, demographics are different this decade and less conducive to such large increases. Should the small gains forecast in the participation rate be overtaken, the unemployment rate would be higher, though driven by faster employment growth reflecting a stronger economy than forecast. Average hourly and weekly wage increases typically fall off during and after a recession but after a period of economic recovery, wages begin to re-accelerate. The moderate employment demand outlook combined with some increase in labour supply results in wage gains approaching 2% in 2011 and 2012, rising above 2% thereafter.
Population growth Immigration keeps the province’s overall population growth rate at or just above 1% annually. Net interprovincial migration remains negative through to 2014, though the net outflow diminishes in 2014 when the province’s labour market is in a stronger position relative to the rest of Canada, notably the western provinces.
Housing market The housing market is in a mid-cycle position facing higher mortgage rates, tighter federal mortgage insurance rules, moderate job and income growth,
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and some pent-up demand from the recession. Under these circumstances unit sales will generally flat line on a trend basis but exhibit considerable swings during the next two years. By 2013 following additional job, income, and population growth, sales will head higher on a cyclical basis when more pent-up demand materializes. Housing prices follow sales and moderate price gains are foreseen until sales rise significantly. Housing sales in the short term are most affected by the federal mortgage insurance changes that took effect March 18. A temporary sales peak is likely in March when low-equity purchasers took advantage of the old mortgage insurance rules and are less active in April. Below-normal winter weather conditions pulled down February sales, which will likely be made up in the following month or two. The next hurdle for the market is higher mortgage rates likely commencing in May before the Bank of Canada looks to raise its key rate in July. Given the uncertainties in the global economy, there is a chance the Bank may hold off until the fall and lenders may not raise mortgage rates until late summer. This rate reprieve would mitigate the sales softening expected in the near term. Housing starts, the main source of economic growth from housing, are forecast to post a small gain in 2011 followed by a similar-sized gain in 2012. By 2013, housing starts are expected to top 70,000 units and approach 80,000 units in 2014. There is a chance housing starts could fall below the 2010 level 60,433 units this year, and if they do, the drop would likely be less than 10%. It is a close call.
Inflation Consumer price inflation at 2.8% in 2011 rises to its highest rate since 2001 and up from 2.3% in 2010 due to higher energy and food prices. The underlying rate of inflation or the core rate remains under 2% since there is considerable spare production capacity in the economy. Cost-push inflation from higher wages and tighter profit margins is not a factor this year or next. Economy-wide inflation, as measured by the GDP implicit price index, eases to 2.3% this year from an estimated 3.2% gain in 2010. The overall price index expands about 2.5% annually during the forecast with pressure from non-durable goods, residential construction, and non-residential construction prices.
Economic Analysis of Ontario
Corporation Profits Before Tax, Ontario Per cent change
30 20 10 0 -10 -20 1998
2002
2006
2010
2014
Source: Statistics Canada, C1CU. Note: 2010 estimated, forecast 2011-14.
Prices for durable goods, machinery and equipment, and imports will cool overall inflation.
Incomes Total income generated in the provincial economy increases 5.1% in the 2011 forecast, following an estimated 6.2% gain in 2010 reflecting a recovery rebound from the 1.1% drop in 2009. Economy-wide income gains in the forecast to 2014 are near 5% annually but with some sector differences. Personal income growth expands each year in tandem with labour income. Moderately higher employment and wage rates cause labour income to steadily rise to 4.9% in 2014 from 4.0% in 2011. One area which grows at a much slower pace is government transfer payments to persons, another sign that the economy is well into recovery. These transfer payments are forecast to increase around 3% annually, compared to an estimated 6.4% increase in 2010 and the 8.6% rise in 2009 estimated by Statistics Canada. Personal disposable income (personal income after taxes and other government charges) is forecast to rise 3.4% in 2011 following an estimated 4.7% gain in 2010. Disposable income growth gradually picks up to 4.4% in 2014. After inflation, personal disposable income gains are about 1.5 to 2% per year. The resurgence in corporate profits continues but at a somewhat diminished pace. Profits before tax climb 13.5% this year after an estimated 17.5% rebound last year. Profits increase at a slower pace year with a 10% gain predicted for 2014. Corporate profits as a share of total income rises each year and begins to approach the highs seen in the late 1990s and early 2000s. Profitability is a necessary factor contributing to more business investment spending.
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Expenditures Total spending in the economy rises 5.1% in current dollars and 2.7% in 2002 dollars during 2011. Estimated growth in 2010 is 6.2% and 3.0%, respectively. Domestic spending is the main growth driver, led by investment spending with moderate support from consumers. Government investment spending drops noticeably in 2012 with the ending of its fiscal stimulus and government spending on goods and services grows at a low rate to deal with deficits at the federal and provincial levels. The trade sector continues to post large deficits throughout the forecast.
Trade Balance, Ontario Chained (2002) dollars - billions
60 40 20 0 -20 -40 1998
2002
2006
2010
2014
Source: Statistics Canada, C1CU. Note: 2010 estimated, forecast 2011-14.
Consumer spending advances at a moderate pace following a rebound in 2010. In current dollars, spending on non-durable goods will show the most growth this year but after adjustment for inflation, spending on durable goods is more robust. Looking further ahead, overall spending gradually gains momentum into 2014, but is expected to remain moderate and below growth rates seen in the past recoveries except for the early 1990s. There is some upside potential in these growth forecasts particularly in the later years since pent-up demand has a track record of surprises. Residential investment spending is downgraded from the last forecast due to a less robust housing market and fewer housing starts. Renovation spending steadily increases after dipping in 2010 when the federal renovation tax credit expired. Total investment spending growth drops to about 5% in current dollars and 2% after inflation during 2011 from an estimated 14% and 11% in 2010. Last year’s large percentage gains reflect the recovery rebound from the 2009 recession and percentage gains are usually smaller thereafter in the cycle. Construction price pressures are seen rising in the next three years under higher materials and labour costs. Business investment is the main source of domestic growth with corporate profitability setting the stage for more spending facilitated by the high Canadian dollar. Investment spending growth slides lower in 2011 but picks up again in 2012 when non-residential spending grows faster than spending on machinery and equipment. The 2010 export rebound from the recession is estimated at 11% in 2002 dollars, which will give way to a smaller 4% gain this year, but with the important difference that export prices are higher unlike the two previous years. Current dollar export growth
Economic Analysis of Ontario
exceeds real export growth which does not occur under falling exports prices. Overall, export prices are not expected to rise at a robust pace, except in metals and to a lesser extent in forestry products, but these modest forecast gains are welcome after several years of subpar performance. There is some downside risk to prices for the province’s autos, auto parts, machinery, and electronic equipment exports since it is a competitive international landscape. Exports grow between 4 to 5% annually in current dollars and under 3% in 2002 dollars through to 2014. While the U.S. economic recovery is positive for exports, the high Canadian dollar and a weak upturn in U.S. new vehicle sales holds down growth. Services exports, which mainly serve Canadian markets, outperform goods exports over the entire forecast. Ontario’s trade deficit is forecast to widen each year with moderate growth in exports insufficient to offset import growth. The change from a trade surplus to deficit is a major reason for the downshift to moderate growth rates from the robust growth rates of the late 1990s and most of the 1980s. With a high currency and the dominant U.S. export market, a large trade deficit will persist since it takes considerable time to diversify exports into new markets and products.
Industries Export-oriented industries account for most of the cyclical change in the economy and this year will contribute less to growth than in 2010 when exports rebounded sharply from the recession. Domestic industries anchor the overall economy but are limited to growth of less than 3% until 2014. In a fundamen-
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tal way, exports largely determine the economy’s overall growth pace and lead the domestic economy and industries. The modest export growth foreseen contributes to a similar performance in domestic industries and this time is exacerbated somewhat by the reduction in government spending growth and the ending of the recovery fiscal stimulus measures. Total industry GDP growth in 2002 prices is forecast at 2.7% in 2011, down slightly from the 3.0% estimated for 2010. Industry production will surpass pre-recession output by mid-2011, which by one definition means a full recovery. Output growth slows to 2.3% in 2012 with some slowing in the U.S. economy, domestic fiscal drag, and limited housing growth. Prospects improve in 2013 and 2014 when the U.S. economy is seen growing at a faster pace and the effects of fiscal restraint wind down. A key assumption for 2014 is the decline in the U.S.-Canada exchange rate which shows up in more robust exports with a rising domestic sector not far behind. The fastest-growing industries are mining, construction, transportation and warehousing, information and professional business services, retail and wholesale trade, and finance and insurance. The slowest growing industries are government services, machinery manufacturing, motor vehicle parts manufacturing, and education services. All remaining main industry groups are forecast to grow at a pace comparable to the overall economy. Auto sector output will be led by vehicle assemblies while parts output increasingly struggles against stiff international competition. U.S. new vehicle sales are forecast to rise to 13 million units in 2011 and to 14 million units in 2012. An important short term consideration is the fallout from Japan and its supply chain disruptions. Forestry and related manufacturing posted some notable gains coming out of the recession but look to grow more slowly. U.S. housing starts will rise a little in 2011 and climb to above one million units in 2013. The demand for pulp and paper products also increases with the U.S. economic recovery; however, the market for newsprint in the U.S. is not growing due to technological changes, though it is growing outside of North America. Metals prices are up and the outlook is favourable. For example, the COMEX futures market is currently pricing gold above $1,400 USD. These prices are
Economic Analysis of Ontario
Export and Domestic Industries Growth, Ontario Percentage change in gross domestic product
12 8 4 0 -4 -8
Export
Domestic
-12 1985
1990
1995
2000
2005
2010
Source: Central 1 Credit Union.
conducive to an expansion in production, exploration and development. One example of the province’s increasingly active mining sector is Detour Gold’s open-pit mine targeted production date of early 2013 with annual production of 650,000 ounces over 16 years. The $1.2-billion construction project will create more than 1,000 direct jobs and an estimated 500 people will be employed during operations. Several other mine prospects are in the pipeline and some will likely materialize during the forecast. Several new mine developments are on the horizon. In the Ring of Fire, one of the largest chromite deposits in the world offers considerable potential for the mining industry. However, in addition to favourable pricing, northern mining opportunities, while geologically plentiful, have to deal with a high-cost structure relative to other mining jurisdictions. The price cycle in commodities and precious metals is on the upswing and is forecast to remain in this sweet spot for another couple of years or more. History is against an unending up-cycle and at a minimum a supply-side price correction should be expected. A far worse ending to the price cycle would come from a drop in demand or another global recession. The transportation and warehousing industry bounced back from the recession with an estimated near 4.7% growth in 2010 reflecting the turnaround in the domestic economy and higher trade flows with the U.S. This sector’s GDP forecast growth generally outpaces the overall provincial economy. The finance, insurance, and real estate sector, excluding owner-occupied housing, grows at a slightly faster rate than the overall economy. This sector generates considerable interprovincial exports and a trade surplus in these services from Toronto’s role
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as the financial centre of Canada with a considerable presence on the international stage. The large business and technology services sector expands 4.3% this year, after a rare decline in 2009. Output will slow to 2.6% in 2011 and gradually gain momentum into 2014. Retail and wholesale trade sector output tracks the overall economy after rebounding 5.3% in 2010. Current dollar retail sales growth is forecast at 4.7% in 2011 averaging 6% per year thereafter. Wholesale trade activity adds an export element to this sector and helps the trade sector outperform the overall economy by a small margin. Health industry output will grow at roughly a 3% annual pace while there is a declining growth trend in the education sector during the forecast. An aging population along with new treatments and procedures expands the health industry while education faces a weaker demand profile due to population demographics. One mitigating factor for education is the increasing demand from international students.
External economic setting Another round of fiscal stimulus and quantitative easing in the U.S. combined with a healthier financial sector will pull up U.S 2011 economic growth to the best annual performance since 2000. Financial conditions continue to ease. While remaining tight by historical standards, they will contribute to private loan growth. A weak spot in the U.S. economy is its housing sector with little improvement expected in 2011 but more signs of its recovery should emerge in subsequent years. The lack of growth in personal spending and housing activity is the main source of the economy’s overall sub-par performance. Recent events on the global scene cast some doubt on the economic recovery. Rising oil prices and possible supply disruptions due to events in North Africa and the Middle East are probably the most concerning. Net oil-importing economies face a drag on growth when higher oil prices affect those economies. The tragic disaster in Japan and potentially catastrophic nuclear situation causes a brief recession in that economy and negatively affects economic activity in many of its trading partners. The European banking and fiscal crisis is ongoing with some progress but also with some setbacks leaving its economy stuck in below-trend growth for some time yet.
Economic Analysis of Ontario
The global economy likely will avoid a recession but may possibly fall into a growth slowdown should oil prices keep climbing or military actions break out in other oil-producing countries. The base scenario is global growth in the 4 to 4.5% range led by the emerging economies with the U.S. economy contributing more to growth during the forecast period. Commodity prices rise on both demand and supply factors with supply tending to catch up and slowing price increases later in the forecast. Canada’s economy is seen growing at a moderate pace and below that of U.S. Contending with a currency above par to the U.S. dollar is holding down Canada’s trade sector and overall economic growth. The Canadian dollar will remain above par in 2011 and well into 2012 but will begin to slide lower when the U.S. Fed raises rates for the first time since the financial crisis. The Bank of Canada will resume its drive to normal rate levels in July with three or four one-quarter percentage point moves followed by another pause around yearend. Beyond 2011, the trend in rates is up not only in Canada but also in the U.S. since less spare capacity in both economies begins to generate higher wage increases and other cost pressures prompting central bankers to act in advance of unwanted inflation. Helmut Pastrick Chief Economist, Centralb1 Credit Union [email protected] www.central1.com 604.737.5026
Appendix Tables GDP, Income-based . . . . . . . . . . . . . . . . . . . . . . . . . 7 Gross Domestic Expenditure ($millions) . . . . . . . . 8 Gross Domestic Expenditure ($2002 millions) . . . 9 Residential investment . . . . . . . . . . . . . . . . . . . . .10 Non-residential construction investment . . . . . .10 GDP by Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Employment by Industry . . . . . . . . . . . . . . . . . . . 12 Labour market indicators . . . . . . . . . . . . . . . . . . . 12 Population components . . . . . . . . . . . . . . . . . . . . 13 External economic forecasts . . . . . . . . . . . . . . . . 13
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Gross Domestic Product, Income-based ($ Millions): Ontario 2008 Labour income % change Corporate profits before tax % change Interest & investment % change Unincorporated business % change Inventory valuation adjustment Indirect Taxes Less Subsidies % Change Capital Consumption Allowance % Change GDP at market prices % change Personal income % change Direct taxes % Change Social insurance
2009
2010
2011
2012
2013
2014
327,194
323,910
337,623
351,277
365,956
382,200
401,080
2.8
-1.0
4.2
4.0
4.2
4.4
4.9
59,240
51,174
60,151
68,245
75,685
85,072
93,591
-10.9
-13.6
17.5
13.5
10.9
12.4
10.0
25,071
21,444
22,353
23,130
24,005
25,148
26,377
10.5
-14.5
4.2
3.5
3.8
4.8
4.9
35,429
37,603
40,793
42,583
44,432
46,463
48,814
-0.4
6.1
8.5
4.4
4.3
4.6
5.1
-2,846
1,367
1,005
1,311
1,401
981
-1,162
69,265
68,902
73,809
76,178
79,768
83,913
88,991
-1.4
-0.5
7.1
3.2
4.7
5.2
6.1
71,086
73,255
77,019
80,178
83,627
87,396
91,722
3.6
3.1
5.1
4.1
4.3
4.5
5.0
584,460
578,181
614,254
645,404
676,878
712,176
750,414
0.1
-1.1
6.2
5.1
4.9
5.2
5.4
478,696
477,641
497,693
515,772
536,700
559,939
586,222
2.7
-0.2
4.2
3.6
4.1
4.3
4.7
78,631
72,192
73,380
76,850
80,833
85,268
90,260
0.0
-8.2
1.6
4.7
5.2
5.5
5.9
27,527
28,558
29,767
30,971
32,265
33,697
35,362
% Change
-1.1
3.7
4.2
4.0
4.2
4.4
4.9
Other taxes
3,685
3,686
3,841
3,980
4,142
4,321
4,524
Economic Analysis of Ontario
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Gross Domestic Product, Expenditures ($ Millions): Ontario Consumer % change Government current % change Government investment % change Residential construction % change Business plant & equipment % change Machinery and equipment % change Non-residential construction % change Final domestic demand % change Exports % change Imports % change Net exports Inventory change GDP, expenditures % change
Economic Analysis of Ontario
2008
2009
2010
347,996
349,381
366,061
2011 384,406
2012
2013
2014
401,962
420,700
442,496
4.1
0.4
4.8
5.0
4.6
4.7
5.2
119,384
126,729
133,719
138,870
142,792
146,577
150,706
7.4
6.2
5.5
3.9
2.8
2.7
2.8
16,946
19,635
22,685
22,422
20,636
20,482
19,778
4.1
15.9
15.5
-1.2
-8.0
-0.7
-3.4
39,442
36,894
41,941
44,224
47,642
52,267
59,468
-0.7
-6.5
13.7
5.4
7.7
9.7
13.8
55,108
46,583
48,827
51,026
56,791
61,694
66,166
2.0
-15.5
4.8
4.5
11.3
8.6
7.2
36,878
31,514
32,512
33,212
36,739
39,073
41,095
0.9
-14.5
3.2
2.2
10.6
6.4
5.2
18,230
15,069
16,315
17,815
20,051
22,622
25,071
4.2
-17.3
8.3
9.2
12.6
12.8
10.8
578,876
579,222
613,233
640,948
669,819
701,718
738,613
4.2
0.1
5.9
4.5
4.5
4.8
5.3
325,997
282,167
308,500
325,364
342,000
356,973
372,629
-2.8
-13.4
9.3
5.5
5.1
4.4
4.4
325,274
282,301
307,521
322,713
335,334
346,519
359,715
3.8
-13.2
8.9
4.9
3.9
3.3
3.8
723
-134
979
2,652
6,666
10,453
12,913
4,881
-381
1,543
4,304
2,391
1,003
-112
584,460
578,181
614,254
645,404
676,878
712,176
750,414
0.1
-1.1
6.2
5.1
4.9
5.2
5.4
8
Centralb1 Credit Union
Gross Domestic Product, Expenditures ($2002 Millions): Ontario 2008
2009
2010
2011
2012
2013
2014
Consumer
320,513
320,898
331,039
339,734
349,249
359,050
370,554
% change
2.7
0.1
3.2
2.6
2.8
2.8
3.2
99,678
102,990
106,454
107,967
108,881
109,623
110,486
Government current % change Government investment % change Residential construction % change Business plant & equipment % change Machinery and equipment % change Non-residential construction % change Final domestic demand % change Exports % change Imports % change Net exports Inventory change GDP, expenditures % change
Economic Analysis of Ontario
3.9
3.3
3.4
1.4
0.8
0.7
0.8
14,627
16,774
19,338
19,010
17,359
17,185
16,433
-1.6
14.7
15.3
-1.7
-8.7
-1.0
-4.4
30,388
27,912
30,920
31,662
33,101
35,065
38,141
-3.1
-8.1
10.8
2.4
4.5
5.9
8.8
58,834
47,738
51,754
54,409
60,229
64,472
67,843
-0.4
-18.9
8.4
5.1
10.7
7.0
5.2
44,999
36,445
39,725
41,421
45,912
48,780
51,049
0.3
-19.0
9.0
4.3
10.8
6.2
4.7
13,835
11,293
12,029
12,988
14,316
15,692
16,794
-2.5
-18.4
6.5
8.0
10.2
9.6
7.0
523,090
516,917
540,161
553,710
569,256
585,995
604,677
2.1
-1.2
4.5
2.5
2.8
2.9
3.2
326,775
283,492
315,510
327,979
336,152
344,810
352,573
-6.2
-13.2
11.3
4.0
2.5
2.6
2.3
329,706
294,253
339,344
354,553
366,860
378,050
385,296
-2.1
-10.8
15.3
4.5
3.5
3.1
1.9
-2,931
-10,761
-23,834
-26,574
-30,708
-33,241
-32,723
3,817
-1,508
3,593
2,980
807
-223
-1,242
528,635
509,421
524,508
538,885
551,484
565,888
582,446
-0.9
-3.6
3.0
2.7
2.3
2.6
2.9
9
Centralb1 Credit Union
Residential Investment: Ontario 2008
2009
2010
2011
2012
2013
2014
$ Millions Total residential investment % change New dwellings % change Renovations % change
39,442
36,894
41,941
44,224
47,642
52,267
59,468
-0.7
-6.5
13.7
5.4
7.7
9.7
13.8
17,408
14,305
17,669
18,855
20,689
22,994
26,670
-4.5
-25.5
27.6
5.1
9.3
10.9
17.0
18,548
19,686
21,158
22,160
23,616
25,790
29,108
-0.5
6.1
7.5
4.7
6.6
9.2
12.9
3,227
2,695
2,895
2,981
3,099
3,233
3,424
% change
-1.9
-16.5
7.4
3.0
3.9
4.3
5.9
Other residential construction
259
208
219
228
238
250
266
% change
25.7
-20.0
5.3
4.2
4.6
5.0
6.2
30,388
27,912
30,920
31,662
33,101
35,065
38,141
-3.1
-8.1
10.8
2.4
4.5
5.9
8.8
13,412
10,822
13,026
13,499
14,375
15,426
17,105
-3.4
-19.3
20.4
3.6
6.5
7.3
10.9
14,290
14,894
15,598
15,865
16,408
17,302
18,669
-2.9
4.2
4.7
1.7
3.4
5.4
7.9
2,486
2,039
2,134
2,135
2,153
2,169
2,196
% change
-4.3
-18.0
4.7
0.0
0.9
0.7
1.2
Other residential construction
200
157
161
163
166
168
171
% change
22.6
-21.4
2.7
1.2
1.5
1.4
1.6
75,076
50,370
60,632
62,839
66,917
71,807
79,619
10.2
-32.9
20.4
3.6
6.5
7.3
10.9
Total acquisition costs
$ 2002 Millions Total residential investment % change New dwellings % change Renovations % change Total acquisition aosts
Housing starts, units % change
Non-residential Construction Investment ($2002 millions): Ontario 2008 Engineering construction % change Building construction % change Commercial
2009
2010
2011
2012
2013
2014
11,411
10,768
13,236
13,501
13,260
13,930
14,160
-1.7
-5.6
22.9
2.0
-1.8
5.1
1.6
9,663
10,202
12,157
12,965
13,725
14,564
15,088
-11.6
5.6
19.2
6.6
5.9
6.1
3.6
4,040
3,987
4,569
4,924
5,609
6,081
6,535
% change
-11.4
-1.3
14.6
7.8
13.9
8.4
7.5
Industrial
1,618
1,419
1,831
2,143
2,530
2,822
3,000
% change
-23.7
-12.3
29.1
17.0
18.1
11.6
6.3
4,006
4,796
5,757
5,899
5,586
5,660
5,553
-5.7
19.7
20.0
2.5
-5.3
1.3
-1.9
21,075
20,969
25,393
26,467
26,985
28,494
29,247
-6.5
-0.5
21.1
4.2
2.0
5.6
2.6
Institutional-government % change Total non-residential construction
% change
Economic Analysis of Ontario
10
Centralb1 Credit Union
Gross Domestic Product by Industry ($2002 Millions): Ontario Total % change Agriculture % change Forestry, fishing & hunting % change Mining % change Manufacturing % change Motor vehicles % change Motor vehicle parts % change Machinery & computer % change Primary metals % change Fabricated metals % change Other manufacturing % change Utilities % change Construction % change Transportation & warehousing % change Retail & wholesale trade % change FIREL* % change Owner-occupied housing % change Other FIREL % change Information, professional, managerial % change Other services % change Accommodation & food services % change Education services % change Health & social services % change Government services % change
2008
2009
2010
2012
2013
2014
486,161
468,961
482,850
496,085
2011
507,683
520,943
536,186
-0.7
-3.5
3
2.7
2.3
2.6
2.9
4,889
4,778
4,649
4,923
5,074
5,118
5,210
5.1
-2.3
-2.7
5.9
3.1
0.9
1.8 438
574
410
371
394
404
414
-10.9
-28.6
-9.5
6.3
2.5
2.5
5.6
2,676
2,126
1,862
2,104
2,221
2,279
2,292
8.2
-20.5
-12.4
13
5.5
2.6
0.6
80,452
68,385
74,022
75,349
76,721
78,318
80,467
-10.3
-15
8.2
1.8
1.8
2.1
2.7
10,258
7,140
10,021
10,405
10,594
10,767
11,096
-24.5
-30.4
40.4
3.8
1.8
1.6
3.1
6,531
4,902
6,009
6,049
6,080
6,107
6,237
-23
-24.9
22.6
0.7
0.5
0.4
2.1
5,772
4,751
5,463
5,412
5,454
5,479
5,482
-7.9
-17.7
15
-0.9
0.8
0.5
0.1
5,002
3,100
3,131
3,179
3,229
3,301
3,389
-0.6
-38.0
1.0
1.5
1.6
2.2
2.7
6,279
5,217
5,421
5,686
5,814
5,977
6,184
-12.3
-16.9
3.9
4.9
2.2
2.8
3.5
46,611
43,276
43,977
44,618
45,550
46,687
48,078
-5.1
-7.2
1.6
1.5
2.1
2.5
3.0
10,113
9,252
9,104
9,276
9,475
9,673
9,909
-0.1
-8.5
-1.6
1.9
2.1
2.1
2.4
25,167
23,483
25,172
25,973
26,809
28,256
29,851
-0.6
-6.7
7.2
3.2
3.2
5.4
5.6
19,480
18,635
19,512
20,315
20,900
21,534
22,174
0.9
-4.3
4.7
4.1
2.9
3.0
3.0
59,120
57,426
60,463
61,925
63,780
65,900
68,173
1.0
-2.9
5.3
2.4
3.0
3.3
3.5
110,296
111,573
114,426
117,570
120,415
123,636
127,447
0.6
1.2
2.6
2.7
2.4
2.7
3.1
40,306
41,413
42,413
43,360
44,333
45,375
46,502
3.1
2.7
2.4
2.2
2.2
2.4
2.5
69,990
70,160
72,013
74,210
76,082
78,261
80,945
-0.7
0.2
2.6
3.1
2.5
2.9
3.4
62,678
61,400
60,801
63,391
65,011
66,979
69,081
0.7
-2.0
-1.0
4.3
2.6
3.0
3.1
17,030
16,924
17,148
17,678
18,155
18,651
19,243
1.5
-0.6
1.3
3.1
2.7
2.7
3.2
9,695
9,327
9,601
9,834
10,088
10,359
10,706
2.0
-3.8
2.9
2.4
2.6
2.7
3.3
24,108
24,328
25,146
25,721
26,285
26,742
27,235
2.6
0.9
3.4
2.3
2.2
1.7
1.8
30,714
31,307
32,095
32,919
33,683
34,454
35,308
2.4
1.9
2.5
2.6
2.3
2.3
2.5
26,838
27,227
28,015
28,238
28,178
28,130
28,142
3.2
1.5
2.9
0.8
-0.2
-0.2
0.0
* FIREL - Finance, insurance, real estate and leasing
Economic Analysis of Ontario
11
Centralb1 Credit Union
Employment by Industry (000s): Ontario 2008
2009
2010
2011
2012
2013
6,687.3
6,502.0
6,610.0
6,719.5
6,836.3
6,957.4
7,115.4
1.4
-2.8
1.7
1.7
1.7
1.8
2.3
Agriculture
84.5
84.0
84.6
85.7
88.0
89.2
91.0
% change
-11.2
-0.6
0.7
1.3
2.6
1.5
2.0
Other primary
38.8
35.8
40.7
41.5
42.4
43.2
43.6
% change
10.9
-7.7
13.7
1.9
2.2
2.0
0.8
896.1
790.5
781.1
797.2
800.0
799.5
805.9
-5.1
-11.8
-1.2
2.1
0.4
-0.1
0.8
64.5
56.7
58.8
59.9
60.7
61.8
63.3
Total % change
Manufacturing % change Utilities % change Construction % change Transportation & warehousing % change Trade % change FIREL %change Information, professional, managerial % change Accommodation & food services % change Education services % change Health & social services % change Other services % change Government services % change
2014
12.6
-12.1
3.7
1.8
1.4
1.8
2.4
437.7
408.6
428.8
434.9
449.8
466.1
486.9
7.4
-6.6
4.9
1.4
3.4
3.6
4.5
324.5
311.6
304.3
328.8
335.7
342.5
350.0
8.0
-4.0
-2.3
8.1
2.1
2.0
2.2
1,024.0
1,005.5
1,011.1
1,017.5
1,043.3
1,070.1
1,103.4
0.4
-1.8
0.6
0.6
2.5
2.6
3.1
472.7
502.5
497.6
509.8
520.7
531.0
545.7
0.0
6.3
-1.0
2.5
2.1
2.0
2.8
963.2
937.5
965.3
980.0
995.1
1,017.4
1,043.2
2.9
-2.7
3.0
1.5
1.5
2.2
2.5
401.6
389.1
388.3
384.0
386.7
389.6
396.0
-0.7
-3.1
-0.2
-1.1
0.7
0.8
1.6
480.4
461.0
489.1
488.7
498.9
507.0
515.9
3.1
-4.0
6.1
-0.1
2.1
1.6
1.7
693.4
704.6
718.3
743.7
760.2
776.8
795.3
3.6
1.6
1.9
3.5
2.2
2.2
2.4
419.0
455.6
469.4
470.3
478.8
488.2
501.0
-1.0
8.7
3.0
0.2
1.8
2.0
2.6
366.0
358.9
372.5
377.5
376.0
374.7
374.1
10.0
-1.9
3.8
1.4
-0.4
-0.4
-0.2
Labour Market Indicators: Ontario 2008 Source population, 000s % change Labour force participation rate % Labour force, 000s % change Employment, 000s % change Unemployment, 000s
10,502.3
2009 10,646.0
2010 10,790.6
2011 10,935.6
2012 11,071.5
2013 11,203.4
2014 11,334.3
1.4
1.4
1.4
1.3
1.2
1.2
1.2
68.1
67.4
67.1
66.9
67.0
67.0
67.2
7,154.5
7,175.1
7,236.6
7,320.6
7,413.4
7,504.8
7,612.1
1.6
0.3
0.9
1.2
1.3
1.2
1.4
6,687.3
6,502.0
6,610.0
6,719.5
6,836.3
6,957.4
7,115.4
1.4
-2.8
1.7
1.7
1.7
1.8
2.3
467.2
673.1
626.6
601.1
577.1
547.5
496.7
Unemployment rate, %
6.5
9.4
8.7
8.2
7.8
7.3
6.5
Average weekly hours
33.1
32.4
32.6
32.7
32.9
33.0
33.1
% change
-1.2
-2.1
0.6
0.5
0.4
0.3
0.4
Avg. hr. wage rate, % change
2.8
3.8
1.3
1.9
2.0
2.4
2.2
Unit labour costs, % change
-1.6
-2.4
6.2
3.5
2.4
1.1
0.8
Economic Analysis of Ontario
12
Centralb1 Credit Union
Population and Factors of Growth (000s): Ontario Population % change
2008
2009
2010
2011
2012
2013
2014
12932.3
13064.9
13210.7
13356.8
13500.4
13645.3
13793.8
1.1
1.0
1.1
1.1
1.1
1.1
1.1
Births
139.0
140.4
141.8
144.1
145.7
147.3
148.9
Deaths
88.9
91.8
94.9
97.8
100.6
103.4
106.0
Natural increase
50.2
48.6
46.9
46.4
45.0
43.9
42.9
Net migration
89.2
84.0
98.8
99.8
98.5
101.0
105.6
104.0
99.6
106.1
108.8
104.8
107.9
115.9
-14.8
-15.6
-7.3
-9.0
-6.2
-6.9
-10.2
Net international Net interprovincial
Key External Economic Forecasts 2008 U.S. Real GDP, % chg.
2009
0.0
2010
2011
2012
2013
-2.6
2.8
3.6
2.9
3.4
2014 3.2
Canada Real GDP, % chg.
1.1
-2.1
3.0
2.8
2.6
3.0
2.7
European Union Real GDP, % chg.
0.3
-4.0
1.6
1.5
1.6
1.9
1.9
China Real GDP, % chg.
9.6
8.7
10.1
9.3
8.7
8.5
8.3
Japan Real GDP, % chg.
-1.2
-6.3
3.9
0.5
3.0
2.5
2.3
Canada 3-month T-Bill, %
2.4
0.4
0.6
1.3
2.5
3.5
4.2
Canada 10-year GoC Bond, %
4.04
3.89
3.23
3.59
4.4
5.25
5.75
U.S.-Canada Exchange Rate, cents/dollar
93.8
87.6
97.1
101.5
100.0
100.0
98.0
99.59
61.63
79.50
100.00
95.00
100.00
105.00
Crude Oil, US$ per barrel
The data used in these tables are drawn from a number of sources: Statistics Canada, U.S. Bureau of Economic Analysis, International Monetary Fund, Consensus Forecasts; Central 1 Credit Union for all Ontario Forecasts.
Terms Published by the Economics Department of Centralb1 Credit Union, 1441 Creekside Drive, Vancouver, B.C. V6J 4S7 © Centralb1 Credit Union, 2011. This work may not be reproduced in whole or part, by photocopy or other means, without permission of Centralb1 Credit Union. Economic Analysis of Ontario (the “Analysis”) may have forward-looking statements about the future economic growth of the Province of Ontario and its regions. These statements are subject to risk and uncertainty. Actual results may differ due to a variety of factors, including regulatory or legislative developments, competition, technological change, global capital market activity and general economic conditions in Canada, North America or internationally. This list is not exhaustive of the factors that may affect any of the Analysis’ forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on the Analysis’ forward-lookingbstatements. The Analysis and Centralb1 Credit Union disclaims any and all warranties, whether express or implied, including (without limitation) any implied warranties of merchantability or fitness for a particular purpose. The Analysis and Centralb1 Credit Union will not accept any responsibility for the reader’s use of the data and / or opinions presented in the Analysis, or any loss arising therefrom. Chief Economist: Helmut Pastrick
Economic Analysis of Ontario
Economist: David Hobden
Economist: Bryan Yu
Production: Judy Wozencroft
13
Ontario Economic Forecast 2011-2014 Highlights •
•
•
•
Economic Growth, Ontario
Economic growth will slow to 2.7% in 2011 following the first full-year recovery rebound to an estimated 3.0% in 2010.
Percentage change in gross domestic product
12 Current $
The economy grows more slowly in 2012 with the removal of government stimulus and fiscal consolidation along with slower growth in exports. Business investment spending stands out as the most robust sector of the economy growing at an average 6% annual rate during the forecast period. The unemployment rate slowly retreats from its highs, remaining above 8% this year and falling to below 7% in 2014.
•
Inflation spikes higher in 2011 due to higher energy and food prices but settles down in the following three years to just above 2% annually.
•
The province’s export-oriented industries struggle under a currency at par and belownormal U.S. import demand.
Forecast overview The economic recovery approaches its third year this July and will undergo a mid-cycle slowdown in 2012 followed by a moderate re-acceleration through to
2002 $
8 4 0 -4 -8 1998
2002
2006
2010
2014
Source: Central 1 Credit Union. Note: 2010 estimated, forecast 2011-14
2014. The end of fiscal stimulus and deficit reduction plans remove a source of growth not completely offset by private domestic spending and exports in 2011 and 2012. Overall, Ontario’s economy will post a moderate growth performance in the next four years. A fallback into recession would likely only come about by another bout of negative external events. Growth in real Gross Domestic Product (GDP) slows to 2.7% in 2011 from 3.0% in 2010 while current dollar GDP grows at 5.1% from an estimated 6.2% in 2010. On a short-term basis, quarterly growth picked up in the last quarter of 2010 and that momentum carried into 2011. The recent disaster in Japan could
Forecast Summary: Ontario 2008 Real GDP, % chg.
2009
2010
2011
2012
2013
2014
-0.9
-3.6
3.0
2.7
2.3
2.6
2.9
Nominal GDP, % chg.
0.1
-1.1
6.2
5.1
4.9
5.2
5.4
Employment, % chg.
1.4
-2.8
1.7
1.7
1.7
1.8
2.3
Unemployment Rate, %
6.5
9.4
8.7
8.2
7.8
7.3
6.5
Population, % chg.
1.1
1.0
1.1
1.1
1.1
1.1
1.1
75.1
50.4
60.4
62.8
66.9
71.8
79.6
Housing Starts, units, 000s Retail Sales, % chg.
3.9
-2.5
5.2
4.7
6.3
5.5
5.9
Personal Income, % chg.
2.7
-0.2
4.2
3.6
4.1
4.3
4.7
-10.9
-13.6
17.5
13.5
10.9
12.4
10.0
2.3
0.4
2.3
2.8
2.1
2.2
2.3
Corporate Pre-tax profits, % chg. Consumer Price Index, % chg.
Forecast commences 2011. Source: Statistics Canada, Central 1 CU 1
Centralb1 Credit Union
have some negative near term consequences for the province’s auto sector due to supply disruptions. The trade sector remains the Achilles heel of the provincial economy with its widening deficit. Weak growth in manufacturing exports due to a slow recovery in U.S. demand and stiff international competition under a high currency results in a difficult operating environment for most exporters. Natural resource exports will benefit from robust metals prices and considerable new investment spending. Imports are seen outpacing exports through most of the forecast.
Unemployment Rate, Ontario Per cent of labour force
10 9 8 7 6 5 4 3
Domestic demand carries the economy with a shift to more business investment spending and less government spending, while consumer spending holds at a moderate growth rate. The residential sector expands at a below-normal pace weighed down by low income and job gains and gradually rising interest rates. Population growth continues at the same low rate seen in recent years, however, household pentup demand steadily accumulates, becoming a larger growth source at higher employment and income levels. Total income generated in the economy increases an average 5.1% annually with labour income forecast to grow 4.4%, while corporation profits before tax expand 11.7% annually through to 2014. The declining but high unemployment rate keeps wage increases to just below the inflation rate for most of the forecast. Ontario is a net oil importer and the recent run-up in oil prices serves as a brake on growth for consumers and businesses. A portion of the oil price increase is due to a risk premium and will diminish when hostilities and unrest fade in North Africa and the Middle East. This aside, the medium-term outlook is for fossil fuel prices to trend higher.
Labour market The unemployment rate declines every year, falling to 6.5% in 2014 in this forecast. During 2011 employment growth at 1.7% outpaces labour force growth and pulls down the unemployment rate to an average 8.2%. The average number of hours worked per week edges higher and reflects a shift to more full-time employment. Total hours worked in 2012 surpasses the pre-recession high of 2008.
Economic Analysis of Ontario
1998
2002
Source: Statistics Canada, C1CU.
2006
2010
2014
Forecast 2011-14.
Labour supply growth could increase by more than is assumed in this forecast with a faster increase in the participation rate. The upturn in the participation rate following a recession can be considerable as evidenced by the two to three percentage point increase coming out of the 1981-82 and 1990-92 recessions. However, demographics are different this decade and less conducive to such large increases. Should the small gains forecast in the participation rate be overtaken, the unemployment rate would be higher, though driven by faster employment growth reflecting a stronger economy than forecast. Average hourly and weekly wage increases typically fall off during and after a recession but after a period of economic recovery, wages begin to re-accelerate. The moderate employment demand outlook combined with some increase in labour supply results in wage gains approaching 2% in 2011 and 2012, rising above 2% thereafter.
Population growth Immigration keeps the province’s overall population growth rate at or just above 1% annually. Net interprovincial migration remains negative through to 2014, though the net outflow diminishes in 2014 when the province’s labour market is in a stronger position relative to the rest of Canada, notably the western provinces.
Housing market The housing market is in a mid-cycle position facing higher mortgage rates, tighter federal mortgage insurance rules, moderate job and income growth,
2
Centralb1 Credit Union
and some pent-up demand from the recession. Under these circumstances unit sales will generally flat line on a trend basis but exhibit considerable swings during the next two years. By 2013 following additional job, income, and population growth, sales will head higher on a cyclical basis when more pent-up demand materializes. Housing prices follow sales and moderate price gains are foreseen until sales rise significantly. Housing sales in the short term are most affected by the federal mortgage insurance changes that took effect March 18. A temporary sales peak is likely in March when low-equity purchasers took advantage of the old mortgage insurance rules and are less active in April. Below-normal winter weather conditions pulled down February sales, which will likely be made up in the following month or two. The next hurdle for the market is higher mortgage rates likely commencing in May before the Bank of Canada looks to raise its key rate in July. Given the uncertainties in the global economy, there is a chance the Bank may hold off until the fall and lenders may not raise mortgage rates until late summer. This rate reprieve would mitigate the sales softening expected in the near term. Housing starts, the main source of economic growth from housing, are forecast to post a small gain in 2011 followed by a similar-sized gain in 2012. By 2013, housing starts are expected to top 70,000 units and approach 80,000 units in 2014. There is a chance housing starts could fall below the 2010 level 60,433 units this year, and if they do, the drop would likely be less than 10%. It is a close call.
Inflation Consumer price inflation at 2.8% in 2011 rises to its highest rate since 2001 and up from 2.3% in 2010 due to higher energy and food prices. The underlying rate of inflation or the core rate remains under 2% since there is considerable spare production capacity in the economy. Cost-push inflation from higher wages and tighter profit margins is not a factor this year or next. Economy-wide inflation, as measured by the GDP implicit price index, eases to 2.3% this year from an estimated 3.2% gain in 2010. The overall price index expands about 2.5% annually during the forecast with pressure from non-durable goods, residential construction, and non-residential construction prices.
Economic Analysis of Ontario
Corporation Profits Before Tax, Ontario Per cent change
30 20 10 0 -10 -20 1998
2002
2006
2010
2014
Source: Statistics Canada, C1CU. Note: 2010 estimated, forecast 2011-14.
Prices for durable goods, machinery and equipment, and imports will cool overall inflation.
Incomes Total income generated in the provincial economy increases 5.1% in the 2011 forecast, following an estimated 6.2% gain in 2010 reflecting a recovery rebound from the 1.1% drop in 2009. Economy-wide income gains in the forecast to 2014 are near 5% annually but with some sector differences. Personal income growth expands each year in tandem with labour income. Moderately higher employment and wage rates cause labour income to steadily rise to 4.9% in 2014 from 4.0% in 2011. One area which grows at a much slower pace is government transfer payments to persons, another sign that the economy is well into recovery. These transfer payments are forecast to increase around 3% annually, compared to an estimated 6.4% increase in 2010 and the 8.6% rise in 2009 estimated by Statistics Canada. Personal disposable income (personal income after taxes and other government charges) is forecast to rise 3.4% in 2011 following an estimated 4.7% gain in 2010. Disposable income growth gradually picks up to 4.4% in 2014. After inflation, personal disposable income gains are about 1.5 to 2% per year. The resurgence in corporate profits continues but at a somewhat diminished pace. Profits before tax climb 13.5% this year after an estimated 17.5% rebound last year. Profits increase at a slower pace year with a 10% gain predicted for 2014. Corporate profits as a share of total income rises each year and begins to approach the highs seen in the late 1990s and early 2000s. Profitability is a necessary factor contributing to more business investment spending.
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Expenditures Total spending in the economy rises 5.1% in current dollars and 2.7% in 2002 dollars during 2011. Estimated growth in 2010 is 6.2% and 3.0%, respectively. Domestic spending is the main growth driver, led by investment spending with moderate support from consumers. Government investment spending drops noticeably in 2012 with the ending of its fiscal stimulus and government spending on goods and services grows at a low rate to deal with deficits at the federal and provincial levels. The trade sector continues to post large deficits throughout the forecast.
Trade Balance, Ontario Chained (2002) dollars - billions
60 40 20 0 -20 -40 1998
2002
2006
2010
2014
Source: Statistics Canada, C1CU. Note: 2010 estimated, forecast 2011-14.
Consumer spending advances at a moderate pace following a rebound in 2010. In current dollars, spending on non-durable goods will show the most growth this year but after adjustment for inflation, spending on durable goods is more robust. Looking further ahead, overall spending gradually gains momentum into 2014, but is expected to remain moderate and below growth rates seen in the past recoveries except for the early 1990s. There is some upside potential in these growth forecasts particularly in the later years since pent-up demand has a track record of surprises. Residential investment spending is downgraded from the last forecast due to a less robust housing market and fewer housing starts. Renovation spending steadily increases after dipping in 2010 when the federal renovation tax credit expired. Total investment spending growth drops to about 5% in current dollars and 2% after inflation during 2011 from an estimated 14% and 11% in 2010. Last year’s large percentage gains reflect the recovery rebound from the 2009 recession and percentage gains are usually smaller thereafter in the cycle. Construction price pressures are seen rising in the next three years under higher materials and labour costs. Business investment is the main source of domestic growth with corporate profitability setting the stage for more spending facilitated by the high Canadian dollar. Investment spending growth slides lower in 2011 but picks up again in 2012 when non-residential spending grows faster than spending on machinery and equipment. The 2010 export rebound from the recession is estimated at 11% in 2002 dollars, which will give way to a smaller 4% gain this year, but with the important difference that export prices are higher unlike the two previous years. Current dollar export growth
Economic Analysis of Ontario
exceeds real export growth which does not occur under falling exports prices. Overall, export prices are not expected to rise at a robust pace, except in metals and to a lesser extent in forestry products, but these modest forecast gains are welcome after several years of subpar performance. There is some downside risk to prices for the province’s autos, auto parts, machinery, and electronic equipment exports since it is a competitive international landscape. Exports grow between 4 to 5% annually in current dollars and under 3% in 2002 dollars through to 2014. While the U.S. economic recovery is positive for exports, the high Canadian dollar and a weak upturn in U.S. new vehicle sales holds down growth. Services exports, which mainly serve Canadian markets, outperform goods exports over the entire forecast. Ontario’s trade deficit is forecast to widen each year with moderate growth in exports insufficient to offset import growth. The change from a trade surplus to deficit is a major reason for the downshift to moderate growth rates from the robust growth rates of the late 1990s and most of the 1980s. With a high currency and the dominant U.S. export market, a large trade deficit will persist since it takes considerable time to diversify exports into new markets and products.
Industries Export-oriented industries account for most of the cyclical change in the economy and this year will contribute less to growth than in 2010 when exports rebounded sharply from the recession. Domestic industries anchor the overall economy but are limited to growth of less than 3% until 2014. In a fundamen-
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Centralb1 Credit Union
tal way, exports largely determine the economy’s overall growth pace and lead the domestic economy and industries. The modest export growth foreseen contributes to a similar performance in domestic industries and this time is exacerbated somewhat by the reduction in government spending growth and the ending of the recovery fiscal stimulus measures. Total industry GDP growth in 2002 prices is forecast at 2.7% in 2011, down slightly from the 3.0% estimated for 2010. Industry production will surpass pre-recession output by mid-2011, which by one definition means a full recovery. Output growth slows to 2.3% in 2012 with some slowing in the U.S. economy, domestic fiscal drag, and limited housing growth. Prospects improve in 2013 and 2014 when the U.S. economy is seen growing at a faster pace and the effects of fiscal restraint wind down. A key assumption for 2014 is the decline in the U.S.-Canada exchange rate which shows up in more robust exports with a rising domestic sector not far behind. The fastest-growing industries are mining, construction, transportation and warehousing, information and professional business services, retail and wholesale trade, and finance and insurance. The slowest growing industries are government services, machinery manufacturing, motor vehicle parts manufacturing, and education services. All remaining main industry groups are forecast to grow at a pace comparable to the overall economy. Auto sector output will be led by vehicle assemblies while parts output increasingly struggles against stiff international competition. U.S. new vehicle sales are forecast to rise to 13 million units in 2011 and to 14 million units in 2012. An important short term consideration is the fallout from Japan and its supply chain disruptions. Forestry and related manufacturing posted some notable gains coming out of the recession but look to grow more slowly. U.S. housing starts will rise a little in 2011 and climb to above one million units in 2013. The demand for pulp and paper products also increases with the U.S. economic recovery; however, the market for newsprint in the U.S. is not growing due to technological changes, though it is growing outside of North America. Metals prices are up and the outlook is favourable. For example, the COMEX futures market is currently pricing gold above $1,400 USD. These prices are
Economic Analysis of Ontario
Export and Domestic Industries Growth, Ontario Percentage change in gross domestic product
12 8 4 0 -4 -8
Export
Domestic
-12 1985
1990
1995
2000
2005
2010
Source: Central 1 Credit Union.
conducive to an expansion in production, exploration and development. One example of the province’s increasingly active mining sector is Detour Gold’s open-pit mine targeted production date of early 2013 with annual production of 650,000 ounces over 16 years. The $1.2-billion construction project will create more than 1,000 direct jobs and an estimated 500 people will be employed during operations. Several other mine prospects are in the pipeline and some will likely materialize during the forecast. Several new mine developments are on the horizon. In the Ring of Fire, one of the largest chromite deposits in the world offers considerable potential for the mining industry. However, in addition to favourable pricing, northern mining opportunities, while geologically plentiful, have to deal with a high-cost structure relative to other mining jurisdictions. The price cycle in commodities and precious metals is on the upswing and is forecast to remain in this sweet spot for another couple of years or more. History is against an unending up-cycle and at a minimum a supply-side price correction should be expected. A far worse ending to the price cycle would come from a drop in demand or another global recession. The transportation and warehousing industry bounced back from the recession with an estimated near 4.7% growth in 2010 reflecting the turnaround in the domestic economy and higher trade flows with the U.S. This sector’s GDP forecast growth generally outpaces the overall provincial economy. The finance, insurance, and real estate sector, excluding owner-occupied housing, grows at a slightly faster rate than the overall economy. This sector generates considerable interprovincial exports and a trade surplus in these services from Toronto’s role
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as the financial centre of Canada with a considerable presence on the international stage. The large business and technology services sector expands 4.3% this year, after a rare decline in 2009. Output will slow to 2.6% in 2011 and gradually gain momentum into 2014. Retail and wholesale trade sector output tracks the overall economy after rebounding 5.3% in 2010. Current dollar retail sales growth is forecast at 4.7% in 2011 averaging 6% per year thereafter. Wholesale trade activity adds an export element to this sector and helps the trade sector outperform the overall economy by a small margin. Health industry output will grow at roughly a 3% annual pace while there is a declining growth trend in the education sector during the forecast. An aging population along with new treatments and procedures expands the health industry while education faces a weaker demand profile due to population demographics. One mitigating factor for education is the increasing demand from international students.
External economic setting Another round of fiscal stimulus and quantitative easing in the U.S. combined with a healthier financial sector will pull up U.S 2011 economic growth to the best annual performance since 2000. Financial conditions continue to ease. While remaining tight by historical standards, they will contribute to private loan growth. A weak spot in the U.S. economy is its housing sector with little improvement expected in 2011 but more signs of its recovery should emerge in subsequent years. The lack of growth in personal spending and housing activity is the main source of the economy’s overall sub-par performance. Recent events on the global scene cast some doubt on the economic recovery. Rising oil prices and possible supply disruptions due to events in North Africa and the Middle East are probably the most concerning. Net oil-importing economies face a drag on growth when higher oil prices affect those economies. The tragic disaster in Japan and potentially catastrophic nuclear situation causes a brief recession in that economy and negatively affects economic activity in many of its trading partners. The European banking and fiscal crisis is ongoing with some progress but also with some setbacks leaving its economy stuck in below-trend growth for some time yet.
Economic Analysis of Ontario
The global economy likely will avoid a recession but may possibly fall into a growth slowdown should oil prices keep climbing or military actions break out in other oil-producing countries. The base scenario is global growth in the 4 to 4.5% range led by the emerging economies with the U.S. economy contributing more to growth during the forecast period. Commodity prices rise on both demand and supply factors with supply tending to catch up and slowing price increases later in the forecast. Canada’s economy is seen growing at a moderate pace and below that of U.S. Contending with a currency above par to the U.S. dollar is holding down Canada’s trade sector and overall economic growth. The Canadian dollar will remain above par in 2011 and well into 2012 but will begin to slide lower when the U.S. Fed raises rates for the first time since the financial crisis. The Bank of Canada will resume its drive to normal rate levels in July with three or four one-quarter percentage point moves followed by another pause around yearend. Beyond 2011, the trend in rates is up not only in Canada but also in the U.S. since less spare capacity in both economies begins to generate higher wage increases and other cost pressures prompting central bankers to act in advance of unwanted inflation. Helmut Pastrick Chief Economist, Centralb1 Credit Union [email protected] www.central1.com 604.737.5026
Appendix Tables GDP, Income-based . . . . . . . . . . . . . . . . . . . . . . . . . 7 Gross Domestic Expenditure ($millions) . . . . . . . . 8 Gross Domestic Expenditure ($2002 millions) . . . 9 Residential investment . . . . . . . . . . . . . . . . . . . . .10 Non-residential construction investment . . . . . .10 GDP by Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Employment by Industry . . . . . . . . . . . . . . . . . . . 12 Labour market indicators . . . . . . . . . . . . . . . . . . . 12 Population components . . . . . . . . . . . . . . . . . . . . 13 External economic forecasts . . . . . . . . . . . . . . . . 13
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Centralb1 Credit Union
Gross Domestic Product, Income-based ($ Millions): Ontario 2008 Labour income % change Corporate profits before tax % change Interest & investment % change Unincorporated business % change Inventory valuation adjustment Indirect Taxes Less Subsidies % Change Capital Consumption Allowance % Change GDP at market prices % change Personal income % change Direct taxes % Change Social insurance
2009
2010
2011
2012
2013
2014
327,194
323,910
337,623
351,277
365,956
382,200
401,080
2.8
-1.0
4.2
4.0
4.2
4.4
4.9
59,240
51,174
60,151
68,245
75,685
85,072
93,591
-10.9
-13.6
17.5
13.5
10.9
12.4
10.0
25,071
21,444
22,353
23,130
24,005
25,148
26,377
10.5
-14.5
4.2
3.5
3.8
4.8
4.9
35,429
37,603
40,793
42,583
44,432
46,463
48,814
-0.4
6.1
8.5
4.4
4.3
4.6
5.1
-2,846
1,367
1,005
1,311
1,401
981
-1,162
69,265
68,902
73,809
76,178
79,768
83,913
88,991
-1.4
-0.5
7.1
3.2
4.7
5.2
6.1
71,086
73,255
77,019
80,178
83,627
87,396
91,722
3.6
3.1
5.1
4.1
4.3
4.5
5.0
584,460
578,181
614,254
645,404
676,878
712,176
750,414
0.1
-1.1
6.2
5.1
4.9
5.2
5.4
478,696
477,641
497,693
515,772
536,700
559,939
586,222
2.7
-0.2
4.2
3.6
4.1
4.3
4.7
78,631
72,192
73,380
76,850
80,833
85,268
90,260
0.0
-8.2
1.6
4.7
5.2
5.5
5.9
27,527
28,558
29,767
30,971
32,265
33,697
35,362
% Change
-1.1
3.7
4.2
4.0
4.2
4.4
4.9
Other taxes
3,685
3,686
3,841
3,980
4,142
4,321
4,524
Economic Analysis of Ontario
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Centralb1 Credit Union
Gross Domestic Product, Expenditures ($ Millions): Ontario Consumer % change Government current % change Government investment % change Residential construction % change Business plant & equipment % change Machinery and equipment % change Non-residential construction % change Final domestic demand % change Exports % change Imports % change Net exports Inventory change GDP, expenditures % change
Economic Analysis of Ontario
2008
2009
2010
347,996
349,381
366,061
2011 384,406
2012
2013
2014
401,962
420,700
442,496
4.1
0.4
4.8
5.0
4.6
4.7
5.2
119,384
126,729
133,719
138,870
142,792
146,577
150,706
7.4
6.2
5.5
3.9
2.8
2.7
2.8
16,946
19,635
22,685
22,422
20,636
20,482
19,778
4.1
15.9
15.5
-1.2
-8.0
-0.7
-3.4
39,442
36,894
41,941
44,224
47,642
52,267
59,468
-0.7
-6.5
13.7
5.4
7.7
9.7
13.8
55,108
46,583
48,827
51,026
56,791
61,694
66,166
2.0
-15.5
4.8
4.5
11.3
8.6
7.2
36,878
31,514
32,512
33,212
36,739
39,073
41,095
0.9
-14.5
3.2
2.2
10.6
6.4
5.2
18,230
15,069
16,315
17,815
20,051
22,622
25,071
4.2
-17.3
8.3
9.2
12.6
12.8
10.8
578,876
579,222
613,233
640,948
669,819
701,718
738,613
4.2
0.1
5.9
4.5
4.5
4.8
5.3
325,997
282,167
308,500
325,364
342,000
356,973
372,629
-2.8
-13.4
9.3
5.5
5.1
4.4
4.4
325,274
282,301
307,521
322,713
335,334
346,519
359,715
3.8
-13.2
8.9
4.9
3.9
3.3
3.8
723
-134
979
2,652
6,666
10,453
12,913
4,881
-381
1,543
4,304
2,391
1,003
-112
584,460
578,181
614,254
645,404
676,878
712,176
750,414
0.1
-1.1
6.2
5.1
4.9
5.2
5.4
8
Centralb1 Credit Union
Gross Domestic Product, Expenditures ($2002 Millions): Ontario 2008
2009
2010
2011
2012
2013
2014
Consumer
320,513
320,898
331,039
339,734
349,249
359,050
370,554
% change
2.7
0.1
3.2
2.6
2.8
2.8
3.2
99,678
102,990
106,454
107,967
108,881
109,623
110,486
Government current % change Government investment % change Residential construction % change Business plant & equipment % change Machinery and equipment % change Non-residential construction % change Final domestic demand % change Exports % change Imports % change Net exports Inventory change GDP, expenditures % change
Economic Analysis of Ontario
3.9
3.3
3.4
1.4
0.8
0.7
0.8
14,627
16,774
19,338
19,010
17,359
17,185
16,433
-1.6
14.7
15.3
-1.7
-8.7
-1.0
-4.4
30,388
27,912
30,920
31,662
33,101
35,065
38,141
-3.1
-8.1
10.8
2.4
4.5
5.9
8.8
58,834
47,738
51,754
54,409
60,229
64,472
67,843
-0.4
-18.9
8.4
5.1
10.7
7.0
5.2
44,999
36,445
39,725
41,421
45,912
48,780
51,049
0.3
-19.0
9.0
4.3
10.8
6.2
4.7
13,835
11,293
12,029
12,988
14,316
15,692
16,794
-2.5
-18.4
6.5
8.0
10.2
9.6
7.0
523,090
516,917
540,161
553,710
569,256
585,995
604,677
2.1
-1.2
4.5
2.5
2.8
2.9
3.2
326,775
283,492
315,510
327,979
336,152
344,810
352,573
-6.2
-13.2
11.3
4.0
2.5
2.6
2.3
329,706
294,253
339,344
354,553
366,860
378,050
385,296
-2.1
-10.8
15.3
4.5
3.5
3.1
1.9
-2,931
-10,761
-23,834
-26,574
-30,708
-33,241
-32,723
3,817
-1,508
3,593
2,980
807
-223
-1,242
528,635
509,421
524,508
538,885
551,484
565,888
582,446
-0.9
-3.6
3.0
2.7
2.3
2.6
2.9
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Centralb1 Credit Union
Residential Investment: Ontario 2008
2009
2010
2011
2012
2013
2014
$ Millions Total residential investment % change New dwellings % change Renovations % change
39,442
36,894
41,941
44,224
47,642
52,267
59,468
-0.7
-6.5
13.7
5.4
7.7
9.7
13.8
17,408
14,305
17,669
18,855
20,689
22,994
26,670
-4.5
-25.5
27.6
5.1
9.3
10.9
17.0
18,548
19,686
21,158
22,160
23,616
25,790
29,108
-0.5
6.1
7.5
4.7
6.6
9.2
12.9
3,227
2,695
2,895
2,981
3,099
3,233
3,424
% change
-1.9
-16.5
7.4
3.0
3.9
4.3
5.9
Other residential construction
259
208
219
228
238
250
266
% change
25.7
-20.0
5.3
4.2
4.6
5.0
6.2
30,388
27,912
30,920
31,662
33,101
35,065
38,141
-3.1
-8.1
10.8
2.4
4.5
5.9
8.8
13,412
10,822
13,026
13,499
14,375
15,426
17,105
-3.4
-19.3
20.4
3.6
6.5
7.3
10.9
14,290
14,894
15,598
15,865
16,408
17,302
18,669
-2.9
4.2
4.7
1.7
3.4
5.4
7.9
2,486
2,039
2,134
2,135
2,153
2,169
2,196
% change
-4.3
-18.0
4.7
0.0
0.9
0.7
1.2
Other residential construction
200
157
161
163
166
168
171
% change
22.6
-21.4
2.7
1.2
1.5
1.4
1.6
75,076
50,370
60,632
62,839
66,917
71,807
79,619
10.2
-32.9
20.4
3.6
6.5
7.3
10.9
Total acquisition costs
$ 2002 Millions Total residential investment % change New dwellings % change Renovations % change Total acquisition aosts
Housing starts, units % change
Non-residential Construction Investment ($2002 millions): Ontario 2008 Engineering construction % change Building construction % change Commercial
2009
2010
2011
2012
2013
2014
11,411
10,768
13,236
13,501
13,260
13,930
14,160
-1.7
-5.6
22.9
2.0
-1.8
5.1
1.6
9,663
10,202
12,157
12,965
13,725
14,564
15,088
-11.6
5.6
19.2
6.6
5.9
6.1
3.6
4,040
3,987
4,569
4,924
5,609
6,081
6,535
% change
-11.4
-1.3
14.6
7.8
13.9
8.4
7.5
Industrial
1,618
1,419
1,831
2,143
2,530
2,822
3,000
% change
-23.7
-12.3
29.1
17.0
18.1
11.6
6.3
4,006
4,796
5,757
5,899
5,586
5,660
5,553
-5.7
19.7
20.0
2.5
-5.3
1.3
-1.9
21,075
20,969
25,393
26,467
26,985
28,494
29,247
-6.5
-0.5
21.1
4.2
2.0
5.6
2.6
Institutional-government % change Total non-residential construction
% change
Economic Analysis of Ontario
10
Centralb1 Credit Union
Gross Domestic Product by Industry ($2002 Millions): Ontario Total % change Agriculture % change Forestry, fishing & hunting % change Mining % change Manufacturing % change Motor vehicles % change Motor vehicle parts % change Machinery & computer % change Primary metals % change Fabricated metals % change Other manufacturing % change Utilities % change Construction % change Transportation & warehousing % change Retail & wholesale trade % change FIREL* % change Owner-occupied housing % change Other FIREL % change Information, professional, managerial % change Other services % change Accommodation & food services % change Education services % change Health & social services % change Government services % change
2008
2009
2010
2012
2013
2014
486,161
468,961
482,850
496,085
2011
507,683
520,943
536,186
-0.7
-3.5
3
2.7
2.3
2.6
2.9
4,889
4,778
4,649
4,923
5,074
5,118
5,210
5.1
-2.3
-2.7
5.9
3.1
0.9
1.8 438
574
410
371
394
404
414
-10.9
-28.6
-9.5
6.3
2.5
2.5
5.6
2,676
2,126
1,862
2,104
2,221
2,279
2,292
8.2
-20.5
-12.4
13
5.5
2.6
0.6
80,452
68,385
74,022
75,349
76,721
78,318
80,467
-10.3
-15
8.2
1.8
1.8
2.1
2.7
10,258
7,140
10,021
10,405
10,594
10,767
11,096
-24.5
-30.4
40.4
3.8
1.8
1.6
3.1
6,531
4,902
6,009
6,049
6,080
6,107
6,237
-23
-24.9
22.6
0.7
0.5
0.4
2.1
5,772
4,751
5,463
5,412
5,454
5,479
5,482
-7.9
-17.7
15
-0.9
0.8
0.5
0.1
5,002
3,100
3,131
3,179
3,229
3,301
3,389
-0.6
-38.0
1.0
1.5
1.6
2.2
2.7
6,279
5,217
5,421
5,686
5,814
5,977
6,184
-12.3
-16.9
3.9
4.9
2.2
2.8
3.5
46,611
43,276
43,977
44,618
45,550
46,687
48,078
-5.1
-7.2
1.6
1.5
2.1
2.5
3.0
10,113
9,252
9,104
9,276
9,475
9,673
9,909
-0.1
-8.5
-1.6
1.9
2.1
2.1
2.4
25,167
23,483
25,172
25,973
26,809
28,256
29,851
-0.6
-6.7
7.2
3.2
3.2
5.4
5.6
19,480
18,635
19,512
20,315
20,900
21,534
22,174
0.9
-4.3
4.7
4.1
2.9
3.0
3.0
59,120
57,426
60,463
61,925
63,780
65,900
68,173
1.0
-2.9
5.3
2.4
3.0
3.3
3.5
110,296
111,573
114,426
117,570
120,415
123,636
127,447
0.6
1.2
2.6
2.7
2.4
2.7
3.1
40,306
41,413
42,413
43,360
44,333
45,375
46,502
3.1
2.7
2.4
2.2
2.2
2.4
2.5
69,990
70,160
72,013
74,210
76,082
78,261
80,945
-0.7
0.2
2.6
3.1
2.5
2.9
3.4
62,678
61,400
60,801
63,391
65,011
66,979
69,081
0.7
-2.0
-1.0
4.3
2.6
3.0
3.1
17,030
16,924
17,148
17,678
18,155
18,651
19,243
1.5
-0.6
1.3
3.1
2.7
2.7
3.2
9,695
9,327
9,601
9,834
10,088
10,359
10,706
2.0
-3.8
2.9
2.4
2.6
2.7
3.3
24,108
24,328
25,146
25,721
26,285
26,742
27,235
2.6
0.9
3.4
2.3
2.2
1.7
1.8
30,714
31,307
32,095
32,919
33,683
34,454
35,308
2.4
1.9
2.5
2.6
2.3
2.3
2.5
26,838
27,227
28,015
28,238
28,178
28,130
28,142
3.2
1.5
2.9
0.8
-0.2
-0.2
0.0
* FIREL - Finance, insurance, real estate and leasing
Economic Analysis of Ontario
11
Centralb1 Credit Union
Employment by Industry (000s): Ontario 2008
2009
2010
2011
2012
2013
6,687.3
6,502.0
6,610.0
6,719.5
6,836.3
6,957.4
7,115.4
1.4
-2.8
1.7
1.7
1.7
1.8
2.3
Agriculture
84.5
84.0
84.6
85.7
88.0
89.2
91.0
% change
-11.2
-0.6
0.7
1.3
2.6
1.5
2.0
Other primary
38.8
35.8
40.7
41.5
42.4
43.2
43.6
% change
10.9
-7.7
13.7
1.9
2.2
2.0
0.8
896.1
790.5
781.1
797.2
800.0
799.5
805.9
-5.1
-11.8
-1.2
2.1
0.4
-0.1
0.8
64.5
56.7
58.8
59.9
60.7
61.8
63.3
Total % change
Manufacturing % change Utilities % change Construction % change Transportation & warehousing % change Trade % change FIREL %change Information, professional, managerial % change Accommodation & food services % change Education services % change Health & social services % change Other services % change Government services % change
2014
12.6
-12.1
3.7
1.8
1.4
1.8
2.4
437.7
408.6
428.8
434.9
449.8
466.1
486.9
7.4
-6.6
4.9
1.4
3.4
3.6
4.5
324.5
311.6
304.3
328.8
335.7
342.5
350.0
8.0
-4.0
-2.3
8.1
2.1
2.0
2.2
1,024.0
1,005.5
1,011.1
1,017.5
1,043.3
1,070.1
1,103.4
0.4
-1.8
0.6
0.6
2.5
2.6
3.1
472.7
502.5
497.6
509.8
520.7
531.0
545.7
0.0
6.3
-1.0
2.5
2.1
2.0
2.8
963.2
937.5
965.3
980.0
995.1
1,017.4
1,043.2
2.9
-2.7
3.0
1.5
1.5
2.2
2.5
401.6
389.1
388.3
384.0
386.7
389.6
396.0
-0.7
-3.1
-0.2
-1.1
0.7
0.8
1.6
480.4
461.0
489.1
488.7
498.9
507.0
515.9
3.1
-4.0
6.1
-0.1
2.1
1.6
1.7
693.4
704.6
718.3
743.7
760.2
776.8
795.3
3.6
1.6
1.9
3.5
2.2
2.2
2.4
419.0
455.6
469.4
470.3
478.8
488.2
501.0
-1.0
8.7
3.0
0.2
1.8
2.0
2.6
366.0
358.9
372.5
377.5
376.0
374.7
374.1
10.0
-1.9
3.8
1.4
-0.4
-0.4
-0.2
Labour Market Indicators: Ontario 2008 Source population, 000s % change Labour force participation rate % Labour force, 000s % change Employment, 000s % change Unemployment, 000s
10,502.3
2009 10,646.0
2010 10,790.6
2011 10,935.6
2012 11,071.5
2013 11,203.4
2014 11,334.3
1.4
1.4
1.4
1.3
1.2
1.2
1.2
68.1
67.4
67.1
66.9
67.0
67.0
67.2
7,154.5
7,175.1
7,236.6
7,320.6
7,413.4
7,504.8
7,612.1
1.6
0.3
0.9
1.2
1.3
1.2
1.4
6,687.3
6,502.0
6,610.0
6,719.5
6,836.3
6,957.4
7,115.4
1.4
-2.8
1.7
1.7
1.7
1.8
2.3
467.2
673.1
626.6
601.1
577.1
547.5
496.7
Unemployment rate, %
6.5
9.4
8.7
8.2
7.8
7.3
6.5
Average weekly hours
33.1
32.4
32.6
32.7
32.9
33.0
33.1
% change
-1.2
-2.1
0.6
0.5
0.4
0.3
0.4
Avg. hr. wage rate, % change
2.8
3.8
1.3
1.9
2.0
2.4
2.2
Unit labour costs, % change
-1.6
-2.4
6.2
3.5
2.4
1.1
0.8
Economic Analysis of Ontario
12
Centralb1 Credit Union
Population and Factors of Growth (000s): Ontario Population % change
2008
2009
2010
2011
2012
2013
2014
12932.3
13064.9
13210.7
13356.8
13500.4
13645.3
13793.8
1.1
1.0
1.1
1.1
1.1
1.1
1.1
Births
139.0
140.4
141.8
144.1
145.7
147.3
148.9
Deaths
88.9
91.8
94.9
97.8
100.6
103.4
106.0
Natural increase
50.2
48.6
46.9
46.4
45.0
43.9
42.9
Net migration
89.2
84.0
98.8
99.8
98.5
101.0
105.6
104.0
99.6
106.1
108.8
104.8
107.9
115.9
-14.8
-15.6
-7.3
-9.0
-6.2
-6.9
-10.2
Net international Net interprovincial
Key External Economic Forecasts 2008 U.S. Real GDP, % chg.
2009
0.0
2010
2011
2012
2013
-2.6
2.8
3.6
2.9
3.4
2014 3.2
Canada Real GDP, % chg.
1.1
-2.1
3.0
2.8
2.6
3.0
2.7
European Union Real GDP, % chg.
0.3
-4.0
1.6
1.5
1.6
1.9
1.9
China Real GDP, % chg.
9.6
8.7
10.1
9.3
8.7
8.5
8.3
Japan Real GDP, % chg.
-1.2
-6.3
3.9
0.5
3.0
2.5
2.3
Canada 3-month T-Bill, %
2.4
0.4
0.6
1.3
2.5
3.5
4.2
Canada 10-year GoC Bond, %
4.04
3.89
3.23
3.59
4.4
5.25
5.75
U.S.-Canada Exchange Rate, cents/dollar
93.8
87.6
97.1
101.5
100.0
100.0
98.0
99.59
61.63
79.50
100.00
95.00
100.00
105.00
Crude Oil, US$ per barrel
The data used in these tables are drawn from a number of sources: Statistics Canada, U.S. Bureau of Economic Analysis, International Monetary Fund, Consensus Forecasts; Central 1 Credit Union for all Ontario Forecasts.
Terms Published by the Economics Department of Centralb1 Credit Union, 1441 Creekside Drive, Vancouver, B.C. V6J 4S7 © Centralb1 Credit Union, 2011. This work may not be reproduced in whole or part, by photocopy or other means, without permission of Centralb1 Credit Union. Economic Analysis of Ontario (the “Analysis”) may have forward-looking statements about the future economic growth of the Province of Ontario and its regions. These statements are subject to risk and uncertainty. Actual results may differ due to a variety of factors, including regulatory or legislative developments, competition, technological change, global capital market activity and general economic conditions in Canada, North America or internationally. This list is not exhaustive of the factors that may affect any of the Analysis’ forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on the Analysis’ forward-lookingbstatements. The Analysis and Centralb1 Credit Union disclaims any and all warranties, whether express or implied, including (without limitation) any implied warranties of merchantability or fitness for a particular purpose. The Analysis and Centralb1 Credit Union will not accept any responsibility for the reader’s use of the data and / or opinions presented in the Analysis, or any loss arising therefrom. Chief Economist: Helmut Pastrick
Economic Analysis of Ontario
Economist: David Hobden
Economist: Bryan Yu
Production: Judy Wozencroft
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