Hamilton economy to see 2.9% growth in ’17
Expected to taper off to 2% next year
HAMILTON’S HOT housing market is driving “strong” growth in the local economy this year, but that boost is predicted to slow in 2018.
According to a new report from the Conference Board of Canada, the Hamilton-Burlington-Grimsby area’s real GDP performance — projected to reach 2.9 per cent in 2017 — is anticipated to taper off to 2 per cent next year.
“Overall, I’d say the (local) economy has done really well this year, but we do expect growth to ease next year,” said Alan Arcand, associate director of the Centre for Municipal Studies.
The city’s housing market experienced a strong surge, particularly in the first two quarters of 2017, driving gains in fields such as construction, finance, insurance and real estate, he noted.
Consumer spending also played a big role in growth in wholesale and retail trade, which Arcand said could also be linked to the hot housing market.
“Prices have been appreciating and the greater wealth that you accumulate maybe gives you more confidence to spend,” he added.
An expected cool-down in housing market activity could contribute to an expected decline in economic growth, Arcand said.
Hamilton is not the only city where growth is expected to slow next year, he added.
At the national level, growth is expected to increase by 2.6 per cent this year and drop to below 2 per cent in 2018, the board’s latest Metropolitan Outlook states.
“We’re expecting almost all the metro areas in our report to post slower growth in 2018 than this year,” he said, including Quebec City, Ottawa-Gatineau and Toronto.
Glen Norton, the city’s director of economic development, said he does not see local GDP performance dipping as much next year as the report predicts.
“My outlook might be simply more optimistic than theirs,” he said, based on conversations with local employers and Hamilton having surpassed $1 billion in building permits this year.
While local drivers of growth are broad, gains in sectors like construction, wholesale and retail trade, personal services and public administration are contributing to Hamilton’s growth, the Conference Board report notes.
The local job market is also “strong” which could drive consumer spending as well, Arcand noted.
The Hamilton-Burlington-Grimsby area is expected to see about 19,000 new jobs created this year, marking the fastest rate of employment growth in 14 years, the report says.
“It seems quite unsustainable and a little hot,” he said, noting next year’s forecast includes a drop of about 8,500 jobs.
According to a recent regional labour market report from the Bank of Montreal, Hamilton is the No. 2 performer in Canada when it comes to employment.
The report — called “Hammer Time” — included a caveat explaining the city’s showing is based on residents with jobs, which includes those who commute to the GTA for work.
It called Hamilton the thirdquarter’s “real eye-catcher” with employment jumping 12.5 per cent year over year and a 4.2 per cent unemployment rate.