Kitchener-Waterloo-Barrie

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 Kitchener-Waterloo-Barrie Economic Region is a large region containing about 10 percent of the province’s population, anchored in the southern half by the Kitchener-Cambridge-Waterloo Census Metropolitan Area (CMA) and the Guelph CMA. In the northern part, the Barrie CMA is the principal centre among the neighbouring census agglomerations of Orillia, Midland, and Collingwood.

The manufacturing and education industries stand out as the region’s most important export sectors, especially in its southern economies. Manufacturing plays a smaller but important export role in the northern economies, though education plays a lesser role than in the south.

Economic growth in the Kitchener-Waterloo-Barrie region so far in 2015 has been mixed and moderate overall. Employment and labour force growth has slowed, though housing market activity and residential construction have picked up. Investment in non-residential building construction is up, while non-residential building permits, a leading indicator of investment, has declined. Population growth has slowed slightly.

Employment was up about one percent in the region through October and the unemployment rate averaged 5.5 percent, down slightly from last year. The labour market was stronger than indicated by the headline number with full-time employment up nearly two percent and part-time employment down.

There is a considerable divergence in employment performance by CMA in the region. The Guelph CMA has seen a 10 percent jump so far in 2015, while employment dipped 1.1 percent in the Kitchener-Cambridge-Waterloo CMA and declined 2.5 percent in the Barrie CMA. Large swings in the Labour Force Survey (LFS) results for smaller geographic areas raise a cautionary flag that sample variability may account for the change, rather than underlying trends or forces.

Regional job growth in 2015 has been led by education, health, accommodation and food services, as well as construction. Gains in these industries have been largely offset by declines in information, culture, recreation, professional and technical services, business and building support, public administration, retail and wholesale trade services, as well as agriculture.

Manufacturing in the region has fared well in comparison to other regions and to the province as a whole. While manufacturing employment is lower in the past 10 years, the contraction is not as deep as in other regions. Further consolidation and restructuring will continue but likely at a lesser pace and gains are more likely now that external factors such as the lower Canadian dollar are providing competitive support.

Some manufacturing companies continue to invest in production capacity and add jobs, often with financial support from governments. Examples include Wolf Steel and Streit Manufacturing in Barrie, Huawei Technologies and DC Foods in Waterloo, Linamar Corporation and NSF Canada in Guelph, Heroux-Devtek in Cambridge, Toyota Boshoku Canada in Elmira and Howa Textile Industry in Alliston. However, General Mills announced the closure of its Midland food manufacturing plant in mid-2016, affecting approximately 100 employees. Also, Owens Corning will be cutting more than 100 jobs at its fibreglass plant in Guelph by 2016 when it shifts some production to Mexico.

The technology sector in the Kitchener-Cambridge-Waterloo CMA has faced some set-backs in 2015. BlackBerry reduced smartphone operations and announced two rounds of world-wide staff layoffs. Open Text Corporation announced a five percent cut in its global workforce to streamline operations. Some mitigation will come from Communitech Corporation, which plans to establish the Open Data Exchange, creating 370 direct and indirect jobs.

Over time, the region’s manufacturing sector will experience improved profits and market share as a result of the lower Canadian dollar and faster U.S. economic growth.

The region’s economic outlook through 2017 is for trend growth in employment and a slightly lower unemployment rate. Housing market activity will continue to increase with ongoing growth in sales, prices, and construction. Non-residential building construction will remain near current levels in the near term and turn higher in 2017. Population growth will remain near one percent annually.

Job growth in the region is forecast at 1.1 percent in 2016 and 1.3 percent in 2017, similar to the estimated 1.1 percent in 2015. Forecast job growth is led by the services sectors such as health, education, accommodation and food services. Construction employment is also seen rising. The unemployment rate will slide lower to 5.3 percent in 2016 and 5.1 percent in 2017, down from an estimated 5.4 percent in 2015. Labour market trends in the Kitchener-Cambridge-Waterloo CMA will track the region.

Housing market conditions have tightened considerably in recent months causing accelerating prices. Sales in the first 10 months of 2015 were up almost 10 percent year-over-year, while new listings were up less than one percent, pushing the sales-to-new listings ratio to its highest in 10 years. The average sale price accelerated at an eight percent annual rate in the third quarter, up from three percent in the first quarter of 2015. Indications point to further acceleration in the near term until listings pick up, or sales cool off.

Housing market activity is seen increasing in each of the next two years against the backdrop of low mortgage rates and some improvement in economic and income growth in 2016 and 2017. In the Kitchener-Cambridge-Waterloo CMA, MLS housing unit sales are forecast to rise 6.7 percent in 2016 and 5.2 percent in 2017 following estimated growth of 6.8 percent in 2015. The average MLS sale price is forecast to rise 5.0 percent in 2016 and 4.7 percent in 2017, following an estimated gain of less than three percent in 2015. Higher housing market activity is also forecast in the Guelph and Barrie CMAs.

Residential building permits are forecast to increase through 2017 and follow rising housing sales and prices. Permits surged in 2014 on a jump in multi-unit buildings in the Kitchener-Cambridge-Waterloo CMA and as a result permits are tracking slightly lower in 2015.

Investment in non-residential building construction in the region’s three CMAs was up almost 26 percent through the third quarter of 2015 compared to last year. The increase was mainly in institutional and government projects such as the $187 million expansion of Cambridge Memorial Hospital, as well as industrial buildings, while commercial building construction was down. Construction was up in the Kitchener-Cambridge-Waterloo and Barrie CMAs, but down in the Guelph CMA.

Non-residential building permits, an indicator of near term investment spending, are down almost 11 percent on the same basis. Permit decline is mainly in institutional and government buildings, while industrial permits are up and commercial permits are little changed. Non-residential building permits are down in all three CMAs of the region.

Examples of non-residential building construction are the City of Cambridge’s Creekside Corporate Campus multi-use industrial park, Canadian Forces Base Borden military housing and ammunition transit facility, and Collingwood’s new École élementaire catholique Notre-Dame-de-la-Huronie, which is scheduled to open in September 2016. A number of manufacturing companies in the region are also investing in expanded premises. The major engineering project in the region through 2017 is the Waterloo rapid transport system.

Non-residential building permits in the region are forecast to remain near current levels in 2016 following an estimated decrease of 8.2 percent in 2015. Private investment will trend higher, while public sector permits decline from 2014’s high. Non-residential building and engineering construction spending forecasts have upside potential due to the new federal government’s infrastructure initiative.

Population in the region is forecast to grow just under one percent per year through 2017, on par with estimated growth of 0.8 percent in 2015. Net in-migration, mostly from other parts of Ontario, will account for more than half of total growth. Lower net interprovincial out-migration is expected and higher net international migration. Forecast population growth rates will be similar in all three CMAs in the region.

Economic growth has been mixed and moderate overall.

Unemployment will slide to 5.1 percent in 2017.

Over time, the region’s manufacturing sector will benefit from a lower Canadian dollar and faster U.S. economic growth.

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Regional Economic Update Summary: Kitchener-Waterloo-Barrie
2013 2014 2015 2016 2017
Labour Force (000s) 741.2 747.8 753.0 760.0 768.0
% ch. 2.4 0.9 0.7 0.9 1.1
Total Employment (000s) 693.5 704.5 712.0 720.0 729.0
% ch. 2.8 1.6 1.1 1.1 1.3
Unemployment Rate 6.4 5.8 5.4 5.3 5.1
MLS® Res. Sales 22,551 23,060 24,000 25,300 26,400
% ch. 3.6 2.3 4.1 5.4 4.3
MLS® Res. Avg. Price 312,213 328,989 348,000 370,000 390,000
% ch. 2.4 5.4 5.8 6.3 5.4
Residential Permits (Units) 7,084 9,204 9,400 10,200 11,000
% ch. 12.0 29.9 2.1 8.5 7.8
Non-Residential Permits ($ millions.) 982 1,308 1,200 1,300 1,550
% ch. -0.5 33.1 -8.2 8.3 19.2
Private Non-Res Building Permits ($millions) 732 861 950 1,000 1,200
  % ch. 9.5 17.6 10.3 5.3 20.0
Public Non-Res Building Permits ($millions) 250 447 250 300 350
 % ch. -21.4 78.9 -44.1 20.0 16.7
Population (000s) 1,285.1 1,297.9 1,308.5 1,319.0 1,332.0
% ch. 1.1 1.0 0.8 0.8 1.0
Net Migration 8,971 8,340 6,300 7,000 8,500
Net International 3,255 2,771 1,000 1,500 2,000
Net Interprovincial -1,829 -1,976 -1,700 -1,500 -1,000
Net Intraprovincial 7,545 7,545 7,000 7,000 7,500

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: Kitchener-Waterloo-Barrie (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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