Ontario economic snapshot for July 30, 2011
Troy Media – David Hobden
Employment in the information and communication technology (ICT) sector in Ontario remains in a shallow cyclical funk as of May 2011, trending more or less level about 14,000 workers (six per cent) below the pre-recession high in October 2008.
Recent job declines have been led by the telecommunication, computer/electronic product manufacturing, electronic/precision equipment repair/maintenance and data processing/hosting service industries. These declines have been offset by recent job growth in the computer system design and computer/communication equipment/ supply wholesale industries.
Meanwhile, jobs have trended more or less level in the software publishing and commercial machinery manufacturing industries.
Payroll employment in the ICT sector totalled 223,429 persons in May, seasonally adjusted, virtually unchanged from April. In the first five months of this year employment averaged 223,973 persons, up a slight 603 persons (0.3 per cent) from the same period last year.
The main headwind stalling job growth in the ICT sector is weak export growth. That is due to below average economic growth in the U.S., Europe and Japan as well as the high Canadian dollar. Growth in domestic demand is also dampened by lacklustre growth in discretionary consumer spending due to high levels of household debt, below average income growth, higher consumption taxes and higher prices for energy, food and some ICT services. These conditions are likely to prevail through next year and possibly 2013 as well.
Auto manufacturing stalling
Real gross domestic product (GDP) of Canada’s motor vehicle manufacturing sector inched down 0.6 per cent in May, following an 8.6 per cent contraction in April. The vast majority of Canada’s auto related manufacturing production is located in Ontario. Recent declines reflect weaker automobile sales in the U.S. and fallout from Japan’s supply chain disruptions. These are short-term, temporary factors however, and growth will accelerate again later this year.
Real GDP of motor vehicle and parts manufacturing industries totalled $16.4 billion in May (2002 dollars) at a seasonally adjusted annual rate (SAAR). That is down a slight 0.6 per cent from April but marks the third monthly decline in the latest four months. In the first five months of this year, industry real GDP averaged $17.4 billion SAAR, down $312 million (1.8 per cent) from the same period last year.
The prices received by motor vehicle and parts manufacturers at the factory have inched up over the past two months after steadily declining from a pre-recession high in early 2009. Motor vehicle manufacturers’ factory prices climbed 0.8 per cent in June from May but are down 5.0 per cent from June 2010. Meanwhile, parts manufacturers’ factory prices inched up 0.2 per cent month-over-month but are down 1.6 per cent year-over-year.
It is forecasted that Ontario’s auto sector real GDP will expand by three per cent this year and four per cent in 2012, following a post-recession recovery of 30 per cent growth last year. Growth will be led by vehicle assemblies, while parts output struggles against stiff international competition.
U.S. new vehicle sales are forecast to rise to 13 million units this year and 14 million units in 2012.
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