August 14, 2008
Economic Snapshot - August 15, 2008
Toronto’s prospects look good for now, but challenges lie ahead
Recently, Forbes Magazine and the Fraser Institute have focussed quite a bit of attention on Toronto’s long-term prospects.
According to US-based Forbes Magazine, the Greater Toronto Area (GTA) ranked tenth on its list of the “World’s Most Economically Powerful Cities.”
Forbes’ projections anticipate that the metro area will grow at an annual rate of 3% over the next 12 years, slightly faster than Madrid, Philadelphia and Mexico City.
Meanwhile, the Fraser Institute focuses its analysis on the Toronto Census Metropolitan Area, which has a population of 5.1 million people, according to the 2006 census.
Based on the institute’s analysis of census data, median incomes in the Toronto CMA fell significantly, relative to the national average, between the last two censuses in 2001 and 2006.
The number of management occupations is also a key indicator of a city’s health as a business centre. In the Toronto CMA, that number has dropped significantly over the past five years.
Clearly, without some major efforts to create a more investment-friendly climate, there is a growing risk that Toronto’s preeminent status as the financial capital of Canada will be eclipsed by more rapidly growing CMAs in western Canada.
Turning our attention to Toronto’s current economic health, although employment growth in the CMA slowed from 3% year over year in June, to 2.4% in July, the metro area is still creating jobs considerably faster than the country as a whole.
While the number of manufacturing jobs dropped 2.4% year over year, five other sectors saw significant employment growth: public administration (+32.3%), professional services (+7.9%), transportation and warehousing (+5.8%), health services (+5.7%) and education services (+4.4%).
In the short term, Toronto’s growth will continue to benefit from ongoing spending on recently started residential and commercial construction projects. However, the effects of the protracted slowdown in the U.S. and more widespread weakening in global economic growth will probably stall Toronto’s economy later in the second half of this year. Look for the beginning of a slow recovery by mid 2009.
John Clinkard has over 30 years experience as an Economist in international, national and regional research and analysis with leading financial institutions and media outlets in Canada.
Employment Growth: Toronto vs Canada
*“Year over year” is each month versus the same month of the previous year.
Data source: Statistics Canada/Chart: Reed Construction Data - CanaData.
