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   Prospects May Be Looking Up For Ontario's Economy

 

By Randall White

As 2016 gets underway, Frances Horodelski at Business News Network is pointing out equity markets in New York have just had their “worst start to a new year – ever.”

Meanwhile, financial wizard George Soros has told a forum in Colombo, Sri Lanka that he’s worried about the “major adjustment problem” the Chinese economy is struggling with. It is starting to disturb international financial markets just like the “crisis we had in 2008.”

A few days before George Soros spoke, we were already reading parallel domestic headlines like “Chief economists at Canada's big banks predict rocky year for economy.”

Falling oil and other commodity prices that have something to do with adjustment problems in China and elsewhere continue to weaken the Canadian resource economy. 

They’re also weakening a Canadian dollar that closed the first full week of January at less than 71 cents U.S. 

CIBC chief economist Avery Shenfeld has nicely summarized all this doom and gloom this way: “2016 will be a disappointing year for the global economy at large, and Canada won't be spared.”

At the same time, the Statistics Canada Labour Force survey for December 2015 appeared this past Friday as well. And it adds some unique wrinkles for Canada’s most populous province. 

The upfront headline here is “Canada added 22,800 jobs in December” — considerably more than expected.

But critics still complain that this is marred on two fronts. 

In the first place, net job growth was dominated by the more ambiguous class of “self-employed” workers as opposed to public and private sector employees.

Second, all of Newfoundland and Labrador, Prince Edward Island, Nova Scotia, Manitoba, Saskatchewan, Alberta, and British Columbia actually lost jobs in December. 

Employment increased somewhat in New Brunswick and Quebec. But the increase was very slight in New Brunswick, and dominated by part-time jobs in Quebec. 

Employment in Ontario, on the other hand, increased by close to 35,000 in December. And here part-time employment declined, while full-time employment grew.  

One month does not make a trend, and it is not easy to interpret the December employment results in Canada. 

But there is also recent evidence that the strong December employment growth in the Ontario regional economy may not be all that surprising. 

The latest TD Economics forecast for 2016 puts average Canada-wide growth in real gross domestic product at 1.7% — led by 2.4% in Ontario and 2.5% in BC. 

Bank of Canada governor Stephen Poloz has similarly urged that “solid U.S. economic expansion” and our increasingly low Canadian dollar are finally sparking much-anticipated fresh growth in the manufacturing sector that used to be a big Ontario advantage. And manufacturing employment did grow Canada-wide in December. 

Earlier last month the Ontario Chamber of Commerce released a forecast which suggested a rising American economy and falling Canadian dollar are at last starting to seriously stimulate provincial economic growth. 

According to Chamber president Allan O’Dette, “Ontario is looking at some improved economic conditions over the coming years.” He continues to believe that “federal and provincial infrastructure commitments should also stimulate growth across the province.”

 

To take just one of various similar sub-regional analyses, in the middle of December the Hamilton Spectator quoted a joint study by the Ontario Chamber of Commerce and Credit Unions of Ontario as predicting that "the Hamilton-Burlington-Grimsby area will 'experience above-trend employment growth' in the next two years as the troubled manufacturing sector ends its lengthy restructuring.”

Then, just before Christmas, the Conference Board of Canada issued a report urging that the proposed Ontario Retirement Pension Plan will result in long-term income increases.

It would be rash at best to imagine that the long history of serious regional economic restructuring that began in Ontario back in the later 20th century has ended forever, or even a long while. 

The Chamber of Commerce has recently been urging the importance of a re-tooled provincial policy framework for a beleaguered mining sector in Northern Ontario as well. 

And it is always possible that the global economic troubles currently worrying George Soros could finally overwhelm whatever more benign regional and local trends may otherwise be surfacing north of the North American Great Lakes.

Yet with any luck, 2016 could prove at least somewhat better for the Ontario economy than its harshest critics imagine. 

The Bank of Canada’s quarterly business outlook survey released Monday noted that prospects for Canadian exporters not tied to the resource economy, especially in manufacturing, are looking up. (And guess what province it is that so many of these exporters call home?) 

And finally, the low dollar is apparently also starting to bring some good news for tourism in such Canadian global destinations as Niagara Falls — and what the New York Times has just called the seventh-best place in the world to visit in 2016, in Ontario’s big-league capital city, and its surrounding regional environs.

 

 

 

 

 

 

About Randall White

Randall White is a former senior policy advisor with the Ontario Ministry of Finance, and a former economist with the Ontario Ministry of Municipal Affairs and Housing. He is the author of Ontario 1610-1985: A Political and Economic History and Ontario Since 1985. He writes frequently about Ontario politics.
Posted date : January 12, 2016

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