Our 2016 Regional Economic Updates are your source for forward-looking intelligence on Ontario’s economy. Presented in partnership with the Credit Unions of Ontario, the findings of our updates are based on Central 1’s Ontario Regional Economic Outlook. Scroll down this page for cross-regional data summary tables or view individual regional economic updates using the sidebar menu.
The Hamilton-Niagara Peninsula (HNP) Economic Region spans the three census metropolitan areas (CMA) of Hamilton, St. Catharines-Niagara, and Brantford, and also covers Haldimand-Norfolk. The combined region represents about 11 percent of the provincial population, about 1.45 million people.
The HNP region grew more rapidly in 2015 than it did in 2014. Employment expanded at a faster pace and more residential activity materialized as did non-residential permits. Unlike 2014, most of this year’s employment growth was outside the Hamilton CMA. The St. Catharines-Niagara CMA led with a near five percent rise, followed by a substantial employment gain outside the three CMAs in the region. Employment growth in the Brantford CMA is running at a 1.5 percent pace this year with Hamilton CMA around one percent.
Labour market indicators of a regional and local economy are the best available but not without limitations. Statistics Canada’s household sample for the Labour Force Survey (LFS) is subject to sample variability, which can be large in smaller geographies or industry sectors and result in swings unrelated to underlying fundamentals or trends. The St. Catharines-Niagara 2015 results are treated with some caution for this reason.
Employment in the HNP region is rising around one percent annually and performance since 2013 has exceeded that trend, implying a cyclical gain. Part of this cyclical push is coming from the residential and construction sectors. Service-producing industry employment also contributed to the cyclical rise led by education and business, building, and support services.
Full-time employment is well above trend growth for the second year in a row posting near three percent gains annually. Most of the gains are centred in the Hamilton and St. Catharines-Niagara CMAs. With part-time employment down and full-time up, total hours worked is higher which suggests economic growth is higher than implied by headline total employment growth.
The unemployment rate at six percent is the lowest in years. Hamilton’s rate will approach an average of 5.6 percent in 2015 and in St. Catharines-Niagara it will fall below seven percent, the lowest since 2008. Brantford’s rate is below five percent.
A large reason behind the declining unemployment rates is a lower rate of participation in the labour force, especially since the 2008-09 recession. Had the labour force participation rate remained roughly the same as in 2008 and employment growth was unchanged, the region’s unemployment rate would be closer to nine percent, rather than six. This is not unique to this region as a similar pattern plays out in most regions in Canada.
Economic restructuring is an ongoing process, but the major consolidation and closures in the manufacturing sector during the last decade and since the last recession have subsided. Regional manufacturing employment has stabilized at above 90,000 persons, down from 135,000 persons in 2003. Manufacturing employment in Hamilton is up about eight percent this year with a similar gain recorded in the Brantford CMA. A 10 percent decline is evident in the St. Catharines-Niagara CMA this year, the largest since 2008, whereas previously employment was range-bound and stable. Further restructuring in the region’s manufacturing sector is still possible with older, foreign-owned operations most at risk.
Service-producing industries share of the economy and employment has risen to its highest point in 2015. The employment share of service industries in the regions is 77 percent, compared to 63 percent in 1987 and 70 percent in 1996. The highest share is in the St. Catharines-Niagara CMA, due to its significant tourist industry, while the Hamilton CMA is close behind on account of its trade, transportation, education, health, and business services sectors.
Housing and residential construction are important growth drivers in the regional economy and will reach multi-year highs in 2015. Low interest rates, an improving economy and rising consumer confidence have generated double-digit sales gains across the region. The average sale price is up about eight percent to $380,000. Sales and price performance this year is similar across the five real estate boards comprising the HNP region.
Residential construction is on track this year to hit its highest level since 2006 at a predicted 6,000 units, according to building permits issued. Permits issued in the Hamilton CMA will increase just over 20 percent to 3,200 units with the largest gain in the Brantford CMA at around 60 percent. Permits issued in the St. Catharines-Niagara CMA will jump about 25 percent.
Non-residential permits in the Hamilton CMA received a boost from government permits issued in Burlington for the Joseph Brant Hospital. Total non-residential permits will rise more than 15 percent in Hamilton and around eight percent in the HNP. However, private non-residential permit activity is tracking below last year.
Some notable developments underway or on the horizon are Fibracast’s plant in Stoney Creek that will manufacture water treatment membranes, creating about 100 jobs. Construction continues on the Niagara Region Wind Farm project. A new manufacturing plant to make pre-cast parts for wind-turbine towers for that project is underway, employing about 200 workers at its peak. While this is a short-term fulfillment order, the plant could supply other wind turbine projects. Hamilton International Airport will have a new cargo hangar, which will add about 400 direct and indirect jobs when it is fully built.
External growth conditions are favourable for improved economic growth in the HNP region. The low Canadian dollar, faster U.S. growth, and robust growth in the GTA will assist the region’s exports. Alberta’s recession and a weak oil and gas sector will continue to hamper exports into those areas. Moderate underlying growth trends will support domestic demand, which will grow off low interest rates and new fiscal stimulus.
Manufacturing, tourism, and transportation services stand to benefit from more favourable external conditions and domestic sectors such as construction, real estate, and retail trade will gain from low interest rates and an improvement in economic conditions.
Above-trend employment growth is predicted for the HNP region and the Hamilton CMA during the next two years. This improved growth profile is relative to the weak performance seen from the recession through 2013 and reflects the end of the major restructuring in the manufacturing sector. Some further plant closures or operational downsizings are possible, but not to the same extent as in the past decade and a half.
Job growth is forecast at 1.7 percent during 2016 in the HNP region, slightly lower than the 2.2 percent expected in 2015, but higher than every other year since the recession. In the Hamilton CMA, employment growth picks up to 1.5 percent annually through 2017 from 1.1 percent in 2015. Hamilton’s unemployment rate is forecast to decline to below five percent in 2017, while in the HNP region it will decline, but remain above five percent.
Robust housing market activity will extend into 2016 and 2017 with a slight slowing in the pace of annual gains likely. Housing sales will set new record highs along with housing prices. HNP region MLS® residential sales of 28,000 units are forecast during 2017, up from 25,000 units expected in 2015, which will be a record high. The forecast average sale price will hit $440,000 in 2017, up from $380,000 in 2015. New residential construction, measured by building permits, also climbs each year in the forecast, reaching 7,000 units in 2017, not a record but the second highest.
Those forecast regional housing trends are mirrored in and largely driven by the Hamilton CMA. Hamilton-Burlington MLS® residential sales in 2015 at 15,500 units will exceed the previous record and will continue to set new highs in 2016 and 2017 to reach 17,500 units. The average sale price will also set new highs each year hitting $500,000 in 2017. New construction will follow higher sales and prices.
Non-residential activity will also expand in the next two years led mostly by private sector investments. Total non-residential building permits in the HNP region are estimated at $1 billion in 2016, driven by a jump in commercial and industrial permits, while public permits come off their 2015 high. The Hamilton CMA is predicted to lead the region due to its declining vacancy rates and proximity to the GTA.
The region’s low population growth rates of the past few years will gradually rise due to more in-migration. Hamilton CMA’s growth rate is predicted to reach is fastest pace in many years at 1.4 percent in 2017.
The Hamilton CMA is an affordable alternative to higher housing and land prices in the GTA and with further improvements to the transportation network this trend will extend and accelerate. This facilitates and encourages the increasing economic integration with the GTA economy.
St. Catharines-Niagara led the region with a near five percent rise in employment.
Employment growth in the Brantford CMA is running at a 1.5 percent pace this year.
Job growth is forecast at 1.7 percent during 2016 in the HNP region, slightly lower than the 2.2 percent expected in 2015, but higher than every other year since the recession.
Regional Economic Update Summary: Hamilton Niagara Peninsula
|Labour Force (000s)||751.2||755.9||770.0||779.0||786.0|
|Total Employment (000s)||697.5||706.4||722.0||734.0||744.0|
|MLS® Res. Sales||21,048||22,274||25,000||26,500||28,000|
|MLS® Res. Avg. Price||333,673||352,833||380,000||410,000||440,000|
|Residential Permits (Units)||4,975||5,091||6,000||6,500||7,000|
|Non-Residential Permits ($ millions.)||1,264||889||960||1,000||1,200|
|Private Non-Res Building Permits ($millions)||916||622||560||700||800|
|Public Non-Res Building Permits ($millions)||348||267||400||300||400|
Source: Statistics Canada, CREA, Central 1 Credit Union forecasts.
Note: Housing sales and prices represent combined activity in real estate boards within the region.
Disclaimer: Regional Economic Update: Hamilton-Niagara Peninsula (the “Analysis”) may have forward-looking statements about the future economic growth of the Province of Ontario and its regions. These statements are subject to risk and uncertainty. Actual results may differ due to a variety of factors, including regulatory or legislative developments, competition, technological change, global capital market activity and general economic conditions in Canada, North America or internationally. This list is not exhaustive of the factors that may affect any of the Analysis’ forward-looking statements, and all factors should be considered carefully by readers and readers should not place undue reliance on the Analysis’ forward-looking statements.
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