Economic Outlook For Oshawa Derek Burleton VP & Deputy Chief Economist TD Economics May 2018
Global Economies Break Pattern Of Serial Disappointment 3.0 2.5 Average Annual Growth %, 16Q4-17Q4 Average growth Range for trend growth 2.0 1.5 1.0 0.5 0.0 Canada Eurozone U.S. Japan Source: National Statistical Agencies via Haver Analytics, TD Economics.
Global Outlook World economy close to full capacity Wages and inflation generally on the rise Not all economies facing the same threat of inflation: Price pressures in the U.S. most visible Not fully synchronous central bank response Fed furthest along in normalizing policy Greater caution shown by BoJ/ECB
Significant Risks To Growth And Inflation Geopolitical (Syria, Iran) Trade war Corporate debt Episodes of financial volatility/stress
Bond Yield Re-Pricing Swift, But Aligned To Fundamentals 0.8 Change From Oct. 1, 2017 0.6 0.4 U.S. 5 Year Treasury Note Canada 5 Year Benchmark Bond German 5 to 8 Years Securities 0.2 0.0-0.2-0.4 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Source: Federal Reserve Board, Bank of Canada, Deutsche Bundesbank, Bank of England, TD Economics 5
Financial Volatility Not A Cause For Concern At This Time 8 7 6 Financial Stress Index Lehman 5 4 3 2 Bear Stearns Euro Area Crisis 60% Probability of Recession 2018 Sell- Off 1 0 35% Probability of Recession 20% Probability of Recession -1-2 2001 2003 2005 2007 2009 2011 2013 2015 2017 Source: TD Economics 6
2.8 U.S. Repeated Fiscal Stimulus Causes Rare Large, Repeated Revisions Median Bloomberg Forecast for 2018 Real GDP Growth, % Budget = $300 bn 2.7 2.6 Tax bill signed into law = $1.5 trn 2.5 President asks for tax bill on his desk by Christmas 2.4 2.3 2.2 2.1 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 Source: Bloomberg survey as of April 2018, TD Economics 7
Canadian Economy Downshifts As 2017 Came To A Close 3.5 Quarterly Real GDP, Year/Year % Change 3.0 Forecast 2.5 Real GDP 2.0 1.5 1.0 0.5 0.0 2002-2016 2017 2018 2019 2020 Source: Statistics Canada, TD Economics 8
Ontario To Grow At Close To National Average 2.5 Real GDP, Year/Year % Change, 2018-19 Average National Average 2.0 1.5 1.0 0.5 0.0 Atlantic Manitoba Saskatchewan Ontario Canada Quebec British Columbia Source: Statistics Canada, forecast by TD Economics as at March 2018 Alberta 9
Ontario's Key Indicators Mixed 8 6-month average*, Y/Y % change Canada Ontario 6 4 2 0-2 -4 Manufacturing Shipments Employment Retail Trade Average Home Prices Source: TD Economics, *Latest 6 months of data available compared to same period one year ago 10
Ranking Of Average Employment Growth Across Industries Average Employment Growth, % Change (2018-19F) Wholesale Trade Transportation & Warehousing Scientific & Tech Services Manufacturing Educational Culture& Recreation FIRE Construction Healthcare Accomodation & Food Public Admin Primary and Utilities Retail Trade -2.0-1.0 0.0 1.0 2.0 3.0 4.0 5.0 Source: Statistics Canada, forecast by TD Economics as of April 2018 11
Ontario Government Faces A Considerable Debt Challenge 1.0 0.5 0.0-0.5-1.0-1.5-2.0-2.5 % of Nominal GDP % of Nominal GDP 45 40 35 30 25 20 15 10-3.0 Budget Balance (left scale) Net Debt (right scale) 5-3.5 01-02 03-04 05-06 07-08 09-10 11-12 13-14 15-16 17-18f 0 Source: 2017 Federal Fiscal Reference Tables and 2017/2018 Government Budgets & Fiscal Updates 12
Auto Sector Facing Much Uncertainty 22,000 Units (000's) Forecast Units (000's) 4,000 20,000 3,500 18,000 3,000 16,000 2,500 14,000 12,000 2,000 10,000 8,000 NA Auto Sales (lhs) Canadian Auto Production (rhs) 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018F 1,500 1,000 Source: WardsAuto.com; Forecast by TD Economics as of December 2016
Oshawa's Unemployment Rate Has Fallen Below It's Long-Term Average 12 Unemployment Rate, % 10 8 2001-2017 Average 6 4 2 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Statistics Canada, TD Economics 14
International Migration To Remain Supportive Of Population Growth In The GTA 140,000 Net International Migration, Greater Toronto Area, Persons 120,000 100,000 80,000 60,000 40,000 20,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Statistics Canada, TD Economics 15
Provincial Policy Also Weighing On GTA Housing Activity 35,000 30,000 Existing Home Sales, Greater Toronto Area, Units Fair Housing Plan Announced B20 Implemented 25,000 Forecast 20,000 15,000 2014 2015 2016 2017 2018 2019 2020 Source: CREA, forecast by TD Economics as of March 2018 16
Balanced Market In Durham Region 100 90 80 Existing Home Sales-to-listings ratio (12-mma) Seller's Territory GVA GTA Durham Region 70 60 50 Balanced Market 40 30 Buyer's Territory 20 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: CREA, TD Economics. Last data point March 2018
20 GTA Home Price Outlook Average Existing Home Prices, Greater Toronto Area, Year/Year % Change Forecast 15 10 5 0-5 -10 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: CREA, forecast by TD Economics as of March, 2018 18
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