Regional Economic Outlook

Transcription

1 2015 Regional Economic Outlook Muskoka-Kawarthas Presented by the Credit Unions of Ontario and the Ontario Chamber of Commerce 1 The region s unemployment rate is expected to fall steadily over the next two years, from 6.4 percent in 2014, to 6.3 percent in 2015, and 6.2 percent in The Muskoka-Kawarthas Economic Region (ER) is anchored by the census metropolitan area of Peterborough and the city of Kawartha Lakes. The ER also spans the Northumberland, Muskoka and Haliburton regions. While the geographic region is vast, Muskoka- Kawarthas represents less than three After a gangbuster year, employment in the Muskoka-Kawarthas ER is forecast to record modest growth over the projected period as nonresidential construction activity begins to taper off. While the investment flows of previous projects should continue to benefit the economy, the value of non-residential 2 The region is expected to add 4,400 jobs over the next two years. percent of Ontario s population. The region s industry concentration is geared towards the utilities and health sectors, as well as services such as accommodation and building permits in the Muskoka- Kawarthas ER is expected to decline this year by about 30 percent before recovering in At this point, with relatively few confirmed projects on 3 Housing prices rose by 6.2 percent in 2014, with the average selling price just under $320,000. food services, and trade. Industry concentrations reflect the older age structure of the region, as well as the importance of the tourism industry. Economic conditions in the Muskoka- Kawarthas ER exhibited surprising the books, the outlook for investment over the forecast horizon faces considerable uncertainty. Stronger U.S. demand and a weak Canadian dollar should buoy the region s manufacturing sector, strength last year as residential and while tourism-related industries, non-residential investment surged such as accommodations and food and total employment jumped services, are expected to benefit to 9.9 percent. As a result, the from increased visits from outside unemployment rate dropped by more the region as economic conditions than a full percentage point in 2014 to improve elsewhere in the province 6.4 percent. and in the U.S. Residential activity was boosted by a Some recent developments bode well 15.4 percent jump in building permits, for employment in Peterborough. a 5.6 percent increase in housing The new Nordia call centre in sales, and a 6.2 percent rise in the Peterborough opened in November average sale price. While market 2014 and management plans to hire conditions weakened in Kawartha about 400 people in the first 12 to Lakes and Peterborough, they 18 months of the facility s operation. were offset by robust sales growth Minacs, another call-centre operation and solid price gains in Muskoka- in the city, will also be hiring another Haliburton in people in the coming months. In addition, the GE Canada plant in 2015 Regional Economic Outlook: Muskoka-Kawarthas Economic Region 1

2 Peterborough has won a tentative contract from TransCanada Corp. to build electric motors for the Calgary-based company s Energy East pipeline project. The contract win for the plant follows the $65 million modernization of the facility over the past five years and is expected to create 250 jobs at its facility and across its local supply chain over a two-year period. Elsewhere, plans are progressing for a not-for-profit, small-batch, food-processing facility in Northumberland which will provide local farmers with fruit and vegetable value-adding opportunities. On balance, employment growth is forecast to ease considerably following last year s strong growth, with forecast gains of 1.0 percent in 2015 and 1.3 percent in Growth will be underpinned by a general improvement in economic conditions in the province and higher tourism levels. Unemployment is expected to decline slightly to 6.2 percent by 2016 compared to 6.4 percent last year. Population growth, which is primarily attributed to net positive flows of people from other parts of the province, is forecast to rise to 0.7 percent in With more retired people moving into the region, less interprovincial outflow, and improving employment growth, total net migration is seen rising above 3,000 persons in On the housing front, MLS sales in the Muskoka- Kawarthas ER are forecast to increase about three percent annually, with more upside than downside potential. Demographically-driven demand and low interest rates have generated a stable environment for the regional housing market, which should help home prices rise moderately over the forecast horizon. Read on to find out how the Muskoka-Kawarthas economic region stacks up against the rest of Ontario >>> 2015 Regional Economic Outlook: Muskoka-Kawarthas Economic Region 2

3 Regional Economic Outlook Muskoka-Kawarthas Labour Force (000s) % change Total Employment (000s) % change Unemployment Rate MLS Residential Sales 8,439 8,573 9,054 9,300 9,600 % change MLS Residential Average Price 292, , , , ,000 % change Residential Permits (units) 1,737 1,819 2,100 2,150 2,260 % change Non-Residential Permits ($ millions) % change Private Non-Residential Building Permits ($ millions) % change Public Non-Residential Building Permits ($ millions) % change Population (000s) % change Net Migration 2,962 2,572 2,400 2,500 3,400 Net International Net Interprovincial , Net Intraprovincial 3,347 3,347 3,300 2,400 3,250 Source: Statistics Canada, CREA, Central 1 Credit Union forecasts. Notes: Housing sales and prices represent combined activity in real estate boards within the region Regional Economic Outlook: Muskoka-Kawarthas Economic Region 3

4 Census METROPOLITAN AREA OUTLOOK Peterborough Total Employment (000s) % change Unemployment Rate MLS Residential Sales* 2,553 2,539 2,578 2,600 2,650 % change MLS Residential Average Price* 264, , , , ,000 % change Residential Permits (units) % change Non-Residential Permits ($ millions) % change Population (000s) % change Source: Statistics Canada, CREA, Central 1 Credit Union forecasts. *Approximated with data from the Peterborough Association of REALTORS Read on to find out how the Kawarthas- Muskoka economic region stacks up against the rest of Ontario >>> 2015 Regional Economic Outlook: Muskoka-Kawarthas Economic Region 4

5 2015 Regional Economic Outlook Summary of Ontario Summary Canadian dollar, and cost savings by External factors are setting the stage consumers and businesses, from lower for a better performing Ontario oil prices, notably in transportation, economy and its regional economies. will push up the province s real GDP 1 Improving external conditions support higher provincial growth. The expected improvement is broadly based across industries and regions, though some manufacturers will experience negative fallout from the decline in exports to oil-producing growth to 2.7 percent in each of the next two years. This compares to an estimated 1.9 percent in 2014 and 1.3 percent actual in provinces. Overall, Ontario is a net The global economic recovery 2 Regional economies boosted by varying degrees. beneficiary of low oil prices and, when combined with other drivers such as the lower Canadian dollar remains uneven and slow, with weakness in Europe, slowing growth in China, recession in Brazil and and faster U.S. economic growth, Russia, and sluggish commodity- 3 Narrowing regional growth disparities. economic prospects are improving. Regional economies in southwestern based economies offset by firmer growth in the U.S. and U.K. The collapse in oil prices has mixed and central Ontario are well- impacts which will contribute to lower positioned to benefit from the headline inflation in many countries expected improvement in and prompt some central banks to manufacturing, agriculture, and ease or postpone tightening. However, tourism. Business investment gains low energy prices will support global appear later in the forecast. Domestic economic growth by reallocating economic activity, for example in some energy-related savings to housing, will also firm up in most spending on non-energy goods and regions and will be aided by higher services. Oil-producing economies will population growth. Northern regions, bear the brunt of this price collapse which are heavily dependent on and will drag down overall economic mining, face less optimistic prospects. growth. On balance, however, global growth should receive a lift. Favourable external conditions for Canada s economic growth will Ontario s economy be negatively affected by the oil Ontario stands to benefit from price collapse, and depending external forces more than at any time on where oil prices settle and on in the past 10 years. The combination how long prices remain low, the of higher U.S. growth, the lower impact on real GDP growth could 2015 Regional Economic Outlook: Muskoka-Kawarthas Economic Region 5

6 be 0.5 percent in This will cause the Bank of Canada to hold off on a rate increase until the first quarter of 2016 and possibly later. With the U.S. Fed poised for its first rate increase around mid-2015, the narrowing interest rate differential, along with the widening growth differential, will put downward pressure on the Canadian dollar. reduced oil-related costs, the lower loonie, ongoing low interest rates, and improved provincial growth will benefit all regions, though initial conditions and industry-specifics will contribute to some growth differences. The improved growth backdrop will take time for its benefits to work through the economy with growth gaining momentum through Interprovincial migration flows will reflect the changing economic circumstances between the oil-producing regions of the country and the rest of Canada. Ontario s net interprovincial outflow to Alberta of about 15,000 persons annually will decline and turn into a net inflow, providing a small lift to the province s population growth rate. There are negative impacts from the oil price collapse that will ripple through Ontario s economy. Less capital expenditure by oil companies will mean less demand for machinery, equipment, fabricated metal products, professionaltechnical services, and financing from Ontario firms. Job layoffs in the oil patch will translate directly to lower income for commuting workers from Ontario. Lower government revenue from these sources is another negative. Gauging the net positives and negatives from lower oil prices depends on how low prices will fall and for how long. Current thinking is that it is a net positive for Ontario and other oil-importing provinces. The housing market will hold up and post further gains under improving economic and population growth, low interest rates, and pent-up demand in some of the province s regions. Markets in the manufacturing regions stand to gain the most given their modest recovery since the recession. Manufacturing-oriented economies outside of the Toronto and Kitchener-Waterloo-Barrie regions are beginning to see gains and are poised for faster growth. The composition of manufacturing activities in a region will make a difference as well, but a general improvement is likely in most types of manufacturing. Southwestern regions and the Hamilton-Niagara region are favourably positioned and also have the added advantage of robust agricultural and, in some cases, tourism sectors. Northern regions will continue to lag because of their large dependence on the mining sector, which faces weak prices and export prospects as long as slow growth persists in emerging markets such as China. However, the wood products sector faces better prospects from rising U.S. housing starts. One trend not expected to change soon is the dominance of a metropolitan area in a region relative to rural centres. In some regions, economic and population trends are considerably less positive in those rural areas than in the larger, more industry-diversified metro area, which is usually a region s service and distribution hub. Regional growth rotation Ontario s regional economies are quite diverse in their industry makeup though some dominant aspects exist in several of them. Higher U.S. growth, 2015 Regional Economic Outlook: Muskoka-Kawarthas Economic Region 6

7 LABOUR FORCE (000s) Regional Economic Outlook Hamilton-Niagara Peninsula % change Kingston-Pembroke % change Kitchener-Waterloo-Barrie % change London % change Muskoka-Kawarthas % change Northeast % change Northwest % change Ottawa % change Stratford-Bruce Peninsula % change Toronto 3, , , , ,665.0 % change Windsor-Sarnia % change Ontario 7, , , , ,633.0 % change Source: Statistics Canada, Central 1 Credit Union forecasts Regional Economic Outlook: Muskoka-Kawarthas Economic Region 7

8 Employment (000s) Regional Economic Outlook Hamilton-Niagara Peninsula % change Kingston-Pembroke % change Kitchener-Waterloo-Barrie % change London % change Muskoka-Kawarthas % change Northeast % change Northwest % change Ottawa % change Stratford-Bruce Peninsula % change Toronto 3, , , , ,392.0 % change Windsor-Sarnia % change Ontario 6, , , , ,137.7 % change Source: Statistics Canada, Central 1 Credit Union forecasts Regional Economic Outlook: Muskoka-Kawarthas Economic Region 8

9 Regional Economic Outlook Unemployment Rate (%) Hamilton-Niagara Peninsula Kingston-Pembroke Kitchener-Waterloo-Barrie London Muskoka-Kawarthas Northeast Northwest Ottawa Stratford-Bruce Peninsula Toronto Windsor-Sarnia Ontario Source: Statistics Canada, Central 1 Credit Union forecasts Regional Economic Outlook: Muskoka-Kawarthas Economic Region 9

10 Regional Economic Outlook NON-RESIDENTIAL BUILDING PERMITS ($ millions) Hamilton-Niagara Peninsula 1,491 1, % change Kingston-Pembroke % change Kitchener-Waterloo-Barrie , ,100 % change London % change Muskoka-Kawarthas % change Northeast % change Northwest % change Ottawa 1,284 1,179 1,200 1,100 1,220 % change Stratford-Bruce Peninsula % change Toronto 5,995 6,193 6,200 6,650 7,000 % change Windsor-Sarnia % change Ontario 12,166 11,666 12,022 11,720 12,560 % change Source: Statistics Canada, Central 1 Credit Union forecasts Regional Economic Outlook: Muskoka-Kawarthas Economic Region 10

11 Regional Economic Outlook RESIDENTIAL BUILDING PERMITS (units) Hamilton-Niagara Peninsula 5,416 4,975 5,000 5,300 5,700 % change Kingston-Pembroke 1,928 2,050 1,850 1,850 2,000 % change Kitchener-Waterloo-Barrie 6,325 7,084 7,900 7,500 7,900 % change London 3,121 2,971 2,875 3,000 3,300 % change Muskoka-Kawarthas 1,737 1,819 2,100 2,150 2,260 % change Northeast 1,484 1,305 1,100 1,000 1,000 % change Northwest % change Ottawa 8,211 6,643 8,950 7,800 8,000 % change Stratford-Bruce Peninsula 1,079 1,088 1,050 1,075 1,125 % change Toronto 38,841 40,256 35,000 36,500 38,500 % change Windsor-Sarnia 1,313 1,492 1,425 1,500 1,600 % change Ontario 69,884 70,133 67,640 68,075 71,810 % change Source: Statistics Canada, Central 1 Credit Union forecasts Regional Economic Outlook: Muskoka-Kawarthas Economic Region 11

12 Regional Economic Outlook MLS Residential Sales (units) Hamilton-Niagara Peninsula 20,572 21,048 22,274 23,000 24,000 % change Kingston-Pembroke 7,685 7,272 7,095 7,200 7,350 % change Kitchener-Waterloo-Barrie 19,977 20,706 21,101 22,000 23,000 % change London 9,787 9,783 10,405 10,800 11,200 % change Muskoka-Kawarthas 8,439 8,573 9,054 9,300 9,600 % change Northeast 6,515 6,167 5,842 5,750 5,700 % change Northwest 2,056 2,053 2,264 2,300 2,375 % change Ottawa 17,184 16,539 16,472 16,750 17,400 % change Stratford-Bruce Peninsula 3,806 3,700 4,017 4,200 4,350 % change Toronto 93,765 94,588 99, , ,800 % change Windsor-Sarnia 7,834 8,110 8,255 8,500 8,800 % change Ontario 197, , , , ,575 % change Source: CREA, Statistics Canada, Central 1 Credit Union forecasts Regional Economic Outlook: Muskoka-Kawarthas Economic Region 12

13 Regional Economic Outlook MLS RESIDENTIAL AVERAGE SALE PRICE ($) Hamilton-Niagara Peninsula 314, , , , ,000 % change Kingston-Pembroke 240, , , , ,000 % change Kitchener-Waterloo-Barrie 301, , , , ,000 % change London 237, , , , ,000 % change Muskoka-Kawarthas 292, , , , ,000 % change Northeast 209, , , , ,000 % change Northwest 182, , , , ,500 % change Ottawa 327, , , , ,000 % change Stratford-Bruce Peninsula 219, , , , ,000 % change Toronto 504, , , , ,500 % change Windsor-Sarnia 172, , , , ,000 % change Ontario 384, , , , ,858 % change Source: CREA, Statistics Canada, Central 1 Credit Union forecasts Regional Economic Outlook: Muskoka-Kawarthas Economic Region 13

14 POPULATION (000s) Regional Economic Outlook Hamilton-Niagara Peninsula 1, , , , ,465.5 % change Kingston-Pembroke % change Kitchener-Waterloo-Barrie 1, , , , ,325.0 % change London % change Muskoka-Kawarthas % change Northeast % change Northwest % change Ottawa 1, , , , ,342.0 % change Stratford-Bruce Peninsula % change Toronto 6, , , , ,535.0 % change Windsor-Sarnia % change Ontario 13, , , , ,933.1 % change Source: Statistics Canada, Central 1 Credit Union forecasts. Disclaimer: Regional Economic Outlook: Muskoka-Kawarthas (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, and all factors should be considered carefully by readers and readers should not place undue reliance on the Analysis forward-looking statements. The information contained in this Analysis ( Content ) does not constitute professional advice, and should not be relied upon as accurate, reliable, complete, timely or fit for any particular purpose without receiving appropriate and qualified professional advice. The Content is provided on an as is basis, without any representations, warranties, conditions or guarantees, whether express or implied, including any representations, warranties, conditions or guarantees as to the accuracy, reliability, completeness, currency, fitness for a particular purpose and non-infringement, all of which are hereby disclaimed by Central 1 Credit Union, the Ontario Chamber of Commerce, and all of the credit unions of Ontario and all the chambers of commerce and boards of trade in Ontario to the fullest extent permitted by law. Central 1 Credit Union, the Ontario Chamber of Commerce, and all of the credit unions of Ontario and all the chambers of commerce and boards of trade in Ontario and their respective directors, officers, employees and agents will not under any circumstances be liable for any loss or damage in connection with the use of the Content. Readers use of the Content is at their own risk Regional Economic Outlook: Muskoka-Kawarthas Economic Region 14