The Hamilton-Burlington economy will be the fastest growing in 2012 among Ontario cities tracked in a new Conference Board of Canada report.
The region is expected to churn out steady growth of 2.5 per cent this year, thanks to increases in the manufacturing and construction sectors, and will match that on average over the next four years, according to the Ottawa-based research centre.
And that 2.5 per cent figure is the actual gross domestic product growth recorded in the local economy in 2011.
Hamilton ranks fifth in projected 2012 economic growth among 13 cities tracked in the Metropolitan Outlook report. The top four cities are Edmonton, Calgary, Regina and Vancouver. Toronto comes in at sixth with 2.3 per cent growth and Ottawa-Gatineau, the only other Ontario city tracked, comes in last at 1 per cent.
The manufacturing and construction sectors will lead
the way in growth for the Hamilton-Burlington census metropolitan area, which also includes Grimsby.
Manufacturing is forecasted to grow 4.5 per cent this year, following increases of 8.6 per cent in 2010 and 3.7 per cent in 2011. The board predicts 3.4 per cent growth through 2013-2014.
“The industry is continuing to reshape and recover after declining for much of the 2000s, having been hurt by two recessions and a rising Canadian dollar during that time,” reads the report released Tuesday.
“The region’s steel industry was particularly hard hit, given its importance to the auto and parts sector, which saw demand tumble during the last recession.”
But the steel sector has seen renewed demand, says the report, and other manufacturing sectors are growing. The board noted the new Canada Bread plant, plans for a $395-million Maple Leaf processing plant and the expansion of Columbian Chemicals carbon black plant.
Total construction growth is expected to come in at 3.8 per cent this year and then slow to 1.8 per cent in 2013.
After falling 31 per cent in 2011, the board predicts total housing starts will surge by 39 per cent this year thanks to steady economic and population growth and continued affordability. The board expects to see starts rise an average of 7.7 per cent from 2014 to 2016.
The board pointed out a number of residential and non-residential developments under way, including the Witton Lofts, Urban West, Staybridges Suites, the McMaster Automotive Research Centre, the City Square condos, along with proposed projects, including Acclamation Lofts and Options for Homes Hamilton, which will continue to lift Hamilton construction numbers.
The region’s service sector is predicted to grow by just 1.9 per cent in 2012, hampered by small increases in transportation and warehousing, personal services and shrinking output in the public sector in a time of fiscal restraint.
Finance, insurance, real estate and business services are all expected to grow, along with wholesale and retail trade through 2012. Consumer spending is also expected to be strong, in sharp contrast to drastic declines in 2008 and 2009.
“The confidence is there now with a few years of steady growth,” said Conference Board economist Jane McIntyre.
“In 2009, Hamilton’s unemployment rate was 8.3 per cent but last year it was 6.3 per cent. After a period of volatility, there is stability in Hamilton now. It helps businesses and consumers gain confidence in the economy again.”
DeGroote School of Business professor Marvin Ryder said while the board’s report is a “positive statement” for the city, he cautions against reading too much into the numbers.
He’s tracked the Conference Board’s record on forecasting growth since 2004 and says the actual numbers have come in both higher and lower than predicted.
For instance, in 2009, the board predicted a decline in the Hamilton economy of 1.9 per cent but the real drop turned out to be 4.5 per cent.
“You could argue that it was hard to see just how deep and bad the recession would be, but that’s the point. A forecast is just a forecast. You can’t take it to the bank.”
He said global factors, including the performance of the European and American economies, will play more of a role in the Hamilton market over the next few years than anything done locally.
Ryder also doesn’t think economic forecasts affect the pessimism or optimism of potential investors, although positive reports can help those at the city charged with attracting developers.
“Does it affect location decisions by itself? No,” Ryder said of the report. “But it might encourage someone to take a look at Hamilton who might not have before.”
Article courtesy The Hamilton Spectator.