In the nearly 20 years he has worked in economic development, Blake Landry says he has “never seen this level of economic activity in Niagara.”
“It’s very positive,” said Niagara Economic Development’s economic research and analysis manager. “There is a lot of renewed interest in tourism and tourism investment.”
But while a report released Monday by the Conference Board of Canada (CBoC) predicts Niagara will likely avoid a major economic recession, in part due to its “robust” tourism industry, Landry suspects prospects may be more favourable than the report indicates.
CBoC provided highlights of its report in an email Tuesday, which predict local economic growth will begin to slow in the months to come after growth in the past two years propelled Niagara to second place in Canada.
The report said Niagara’s growth will drop to 1.3 per cent by the end of this year, down from 5.5 per cent in 2022, but will rebound slightly to 1.5 per cent next year — placing the region “in the middle of the pack among major Canadian cities.”
Meanwhile, a record 22,850 net new jobs were created in Niagara after pandemic restrictions were lifted — decreasing region’s unemployment rate to roughly 4.7 per cent in the first quarter of this year.
Population growth primarily driven by international migration is also increasing demand for housing — contributing to “strong employment gains in the construction sector of 10.5 per cent, or 1,900 workers.”
Although unemployment is expected to again increase to 5.7 per cent by mid-2024, the CBoC report said the rate will rebound in 2025 and remain relatively low “partly because some employers are holding on to their employees.”
Landry said the report — for the most part — is “great news” for the region and is “closely aligned with my perspective on things.”
However, he said, it lacks insight regarding local industrial activity that has yet to be captured in the CBoC data.
Landry said the CBoC report is developed by studying economic indicators “and the indicators do look quite good … but they don’t have boots on the ground.”
“We do, so a lot of my work is a reflection of the activity that we’re seeing now but won’t be reflected in the data for quite some time — such as the level of investment that we’re seeing and the level of interest from industries,” he said.
Landry said the CoBC update also does not include export values that have been growing substantially in Niagara, reaching their “highest levels ever” at $8.18 billion in 2022. He said imports last year were valued at $3.1 billion, for a net gain of $5.08 billion.
“We’ve seen substantial growth over the last couple of years, so it’s just a reflection of our position in international markets and the strength of our manufacturing and industrial sectors,” he said.
“This is $5.08 billion coming into the Niagara economy and supporting many other sectors that are in the larger value chain. This is not addressed but has important positive implications for Niagara’s economy and outlook.”
Landry said he, too, is developing a Niagara economic outlook to be released in late September, one that will include much of the same information as the CBoC report but with additional insight. His report will be presented to Niagara Region council and be freely available, compared to CBoC’s $985 price tag to download its report.
“I’m actually in the process of buying that (CBoC) data to find out exactly where they’re seeing the heightened activity,” he said.
“I have to pay them $3,000 to get the raw data, and then I do some value-added analysis that is not in their report, and I also look at Statistics Canada data — international trade, labour force indicators. I look at investment and building construction, particularly in industrial, commercial and institutional — all those different things that they don’t actually include in their report.”
Landry said the CBoC report also omits “many substantial recent investments throughout Niagara that demonstrate … the level of investment interest in the industrial sector in Niagara.”
He said investments include Linamar and ReGen Resource Recovery in Welland, Atura Power in Niagara Falls, Abatement Technologies in Fort Erie, Big Country Raw in West Lincoln and many others throughout the region.
Allan Benner is a St. Catharines-based reporter with the Standard. Reach him via email: firstname.lastname@example.org
Highlights of Conference Board of Canada’s economic outlook for Niagara
A period of slower output growth predicted for Niagara after two years of robust gains, while the region will likely avoid a major downturn.
The regional economy expanded at an average annual rate of 5.5 per cent between 2021 and 2022, ranking second in output growth last year among major cities across Canada.
Growth expected to slow to 1.3 per cent in 2023, rising to 1.5 per cent for 2024, placing the region “in the middle of the pack among major Canadian cities.”
A record 22,850 net new jobs were created in Niagara last year, dropping the unemployment rate to 5.3 per cent in 2022 and an estimated 4.7 per cent in the first quarter of 2023.
Many companies may opt to retain their workers through the period of slower economic growth expected this year, since the cost of rehiring workers can exceed the short-term savings from cutting payrolls.
Employment increases are expected in accommodation and food services sector with an increase of 2,500 workers, manufacturing and wholesale trade will see employment increasing by 2,400 jobs, and the construction sector will increase by 1,900 workers; while transportation, warehousing and professional, scientific and technical services will also see job gains in 2024.
Niagara’s GDP is expected to grow by 1.3 per cent this year and 1.5 per cent next year.
Retail sales growth is expected to plummet this year 2023 although the slowdown will rebound in 2024 and maintain a healthy average from 2025 to 2027.
Inflation is not expected to reach the Bank of Canada’s two per cent target until the end of 2024. By then, consumer spending will be picking up, as wage growth will persistently remain above inflation.
After reaching a peak in 2022, total population growth will slow during the next five years but remain healthy, averaging just about one per cent annually, put pressure on housing demand.