Ontario economy grew at twice the Canadian average last year

For years while the price of oil was high, Ontario's growth lagged behind that of Alberta and Saskatchewan the main oil producing provinces. However, now its growth is surging while the oil producers are hard hit.

Canada's large banks predict that this year Ontario's growth will be near the top of all provinces. The jobless rate, 5.8 percent, is the lowest since 2001. The national average unemployment rate is 6.5 percent itself the lowest since 2008. In 2016, Ontario added 96, 800 full-time jobs and surprisingly part-time jobs actually decreased by 10,200 a plus for many workers. Manitoba has the lowest rates at 5.4 percent and British Columbia 5.5 percent. However there are still 437,000 Canadians looking for work according to Statistics Canada. In 2016 the province grew at twice the national average. The growth is not related to just one sector but includes manufacturing, real estate finance and technology. Tax revenue from corporations grew 16,.8 percent last year and 19.6 percent this year as corporate profits grew. The future looks promising as a survey of Ontario businesses by the Bank of Canada showed that sales are up and that companies are intending to invest in new equipment and hire on more staff.

The center of recent growth is in the Greater Toronto Area. The Conference Board of Canada predicts that this will be the leading metropolitan growth area in 2016 leading to a 2.6 increase in GDP for Ontario. Windsor, the Ottawa region, and the Kitchener-Cambridge-Guelph triangle are also prospering. The Conference Board claims: "Through 2019, Ontario households will reap the benefits of a robust business sector. With the labour market looking good, healthy consumer spending across all spending categories is expected over the near term." Robert Hogue, the senior economist at the Royal Bank of Canada(RBC) described the Ontario economy as vibrant and said: "The Ontario economy has been, I think, quite impressive at adapting, at adjusting, and at continuing to generate jobs." Ontario premier Kathleen Wynne will no doubt point to Ontario's growth if she announces a plan to hike the minimum wage to 15 dollars an hour.

In spite of the low unemployment level, the growth in the economy has not been matched by a parallel growth in wages. The average worker has not shared in the boom. Statistics Canada data show the average worker's wages grew just 1.1 percent last year. This is below inflation meaning that last year the average worker took a pay cut. This may have an effect on consumer confidence and sales in the future. As Nik Nanos, of Nanos research put it: "There's a collision between the psychology of consumer confidence and the reality of the economic numbers. When people don't feel that real wages are significantly increasing, when they're unsure about their level of job security, it creates a psychological chill on consumer confidence." However, borrowing iterest rates are low and that may encourage spending. The Bloomberg Nanos Canadian Confidence Index suggests that consumers in the province are feeling upbeat. The swing up began as the price of oil dropped. No doubt it reflects more money being available as less is spent on fuel.

There is some worry about growing protectionist rhetoric by Trump in the US and uncertainty caused by renegotiation of the North American Free Trade Act (NAFTA). Exports could also be hurt if the Canadian dollar, the loonie, were to increase significantly in value. However there are positive signs too from the US. Aided by tax refunds and rising incomes Americans increased spending in April at the fastest rate since 2016 in a sign the U.S. economy is growing faster. This could result in an increase in Canadian exports to the U.S. especially as the value of the Canadian dollar is quite low. Another worrying factor for Ontario is the boom in the housing market in Toronto that may turn out to be a bubble.

While some complain of Ontario hydro rates, the province has a low tax rate of just 11.5 percent. Only British Columbia has a lower rate. Ontario is fortunate as well in that its economy does not depend on one main commodity. It is less subject to severe stress as has happened in Alberta where oil is its main source of revenue. However, the entire manufacturing sector in Ontario was badly hit during the 2008-9 recession and the recovery has been relatively slow with some negative effects such as there being more part-time and contract work with less benefits for workers.

British Columbia led all provinces in the growth of its GDP last year growing by 3.7 percent. This was up from 3.1 percent in 2015. Ontario came second with a growth rate of 2.6 percent the same as in 2015. Manitoba was third with 2.4 percent an increase from 2.1 percent in 2015.

Minimum wage in Ontario to go to $8.75 per hour

Typical negative reaction from business which is understandable given that economic conditions are already not that great for many businesses. Yet the minimum wage raise is hardly as large as the legislator's wage increase of 25 per cent in 2006! Strange that when there is so much concern about an economic decline that no one notes that the increased wages will stimulate the economy because it is likely to be spent rather than saved.

Minimum Wage Rises To $8.75/Hr, While MPPs Get Salary Hike Of Their Own
Monday March 31, 2008
CityNews.ca Staff
Ontario workers in minimum wage jobs will see more money in their pockets starting Monday.

That's when their hourly rate jumps from $8 to $8.75, one of a series of planned hikes for the province's lowest paid employees. The next 75-cent increase happens a year from now, and the following on the same date in 2010, eventually bringing minimum wage to $10.25 per hour.

"We've done it in a way that is aggressive but gradual to allow businesses to adjust, so that we don't hurt the very people that we're trying to help," Labour Minister Brad Duguid said, adding that the increase means Ontario minimum wage earners are the highest paid in the country.

However business leaders suggest now's not a good time to be increasing minimum wage, given the dark economic outlook. Satinder Chera, Ontario director of the Canadian Federation of Independent Business, says increasing wages forces some business owners to reduce benefits or hire fewer people.

"No one begrudges giving those that are struggling to make ends meet a way forward," Chera said. "But we've always said to the government that there are other options."

Progressive Conservative Bob Bailey agrees, contending economic conditions should be considered before such a decision is made, saying, "Anybody that's in business and having a problem already - this could be just enough to make layoffs."

Labour groups on the other hand contend the current minimum wage, at $8.75, is still too low for most to make a living on and that many have to juggle several jobs to make ends meet.

Meanwhile, provincial politicians will also see more in their bank accounts come next paycheque. The base salary for an MPP is set to increase to a little higher than $116,000 annually, up from $113,000. That's an increase of just more than three per cent. That jump follows a 25 per cent hike in December of 2006 and comes out to 35 per cent higher earnings over the past two years.