Hamilton’s economy will feel the pinch

Conference Board of Canada estimates city’s GDP will grow by just half of what it did in 2022

Inflationary pressures and high interest rates are expected to take a bite out of Hamilton’s economic growth this year, according to a new forecast released by the Conference Board of Canada.

The report states the city’s gross domestic product (GDP) will grow by an estimated 1.4 per cent in 2023 — which is half of the approximately 2.8 per cent growth that was seen in 2022.

“It’s the theme for most cities across the country this year,” said Viktor Cicman, an economist at the Ottawa-based think tank. “However, we are expecting things to pick up later in the year.”

The economic slowdown comes after a year of rebounds for the city, which were fuelled by waning public health restrictions such as capacity limits, masking rules and vaccine policies.

Cicman said that created a flurry of new economic activity in the spring and summer, however as inflation and high interest rates hit households this year, that busyness is set to slow down.

And it will likely labour until at least the middle of the year, he noted.

Cicman said that, later this year, the economy is expected to see a rebound as inflation slows and wages grow above ballooning goods prices. The organization forecasts a 2.7 per cent jump in the city’s GDP next year, according to the report.

As economic activity slows this year, certain sectors will feel the greatest impact, while others will fare better. The city’s retail sector is forecasted to lose 600 jobs this year, marking a decline of 1.2 per cent as people rein in their spending habits, said Cicman.

Sales for that sector are also only expected to grow by less than half a per cent, before they recover in 2024, where they are predicted to jump by 3.3 per cent.

Meanwhile, Cicman said tourism and food service will see “good employment gains,” with an estimated 5,000 jobs expected to be added as those industries continue to recover from the pandemic.

“People are still filling up restaurants and going to concerts,” said Cicman. “There is a lot of pent up demand from the last three years.”

Overall, the number of jobs in the city is forecasted to grow half a per cent in 2023 — or by just 2,100 jobs. The unemployment rate is expected to jump to 5.7 per cent, according to the report.

However, the organization noted that manufacturing, health care and professional services will help “buoy the city.”

Norm Schleehahn, Hamilton’s director of economic development, said the city continues to field interest from folks looking to invest in the city, specifically in manufacturing and health care.

He pointed to the recent announcement of AtomVie Global

‘‘ People are still filling up restaurants and going to concerts. There is a lot of pent up demand from the last three years.

VIKTOR CICMAN CONFERENCE BOARD OF CANADA

Radiopharma Inc. leasing a large manufacturing facility near the John C. Munro Hamilton International Airport.

“We’re really getting established as a hub,” said Schleehahn, in an interview. “Development in the city remains very strong and we expect that to continue into the year.”

Among the other highlights from the report:

■ Employment with the healthcare and social assistance sectors are expected to grow by 5.6 per cent, creating 3,100 net new jobs.

■ Salaries and wages forecasted to grow by four per cent due to a tight labour market.

■ Manufacturing is expected to expand by 1.9 per cent this year and then 3.3 per cent in 2024.

■ Hamilton’s population estimated to grow by 1.4 per cent in 2023, up from 1.2 per cent in 2022.