Northern Economist 2.0

Thursday, 23 November 2017

Homicide Rate Up Again in Thunder Bay

Statistics Canada released its 2016 homicide statistics yesterday and for Canada as a whole, the total number of homicides actually declined slightly with the national homicide rate falling by 1 percent to 1.68 per 100,000 of population.  Of course, when Canada's urban areas are examined, there is quite a bit of fluctuation around this national average.  For Canada's CMAs, the homicide rate in 2016 ranged from a high of 6.64 per 100,000 of population in Thunder Bay to a low of 0 in three cities: Trois Rivieres, Kingston and Greater Sudbury (See Figure 1)




If you look at the percentage increase in the homicide rate, the rankings change somewhat.  The largest percent increases in the homicide rate were in Ottawa, Gatineau and Thunder Bay.  Fifteen CMAs saw an increases in their homicide rate, two saw no change (Brantford actually had zero murders in 2015 and 2016) while the remaining 17 CMAs saw declines in their homicide rates. (See Figure 2).


Thunder Bay is up again after a decline in the homicide rate in 2015.  If you need a refresher on long-term trends in Thunder Bay's homicide rate, here it is down below.  Thunder Bay's homicide rate trended downwards from 1981 to about 2008 and then began to trend up.  For a local media take on this story, see here.






 

Wednesday, 22 November 2017

Bigger Deficits in 2016


Statistics Canada has released its 2016 Consolidated Government Finance Statistics and the combined deficit of all three levels combined – federal, provincial-territorial and local – was $18.1 billion in 2016 which was up from $12.9 in 2015.  According to Statistics Canada, the increase in the combined deficit was attributable to expenses rising faster than revenue.  Government spending in Canada in 2016 was up by 2.6% while revenues were up by 1.0 percent.  The accompany chart from Statistics Canada summarizes the picture nicely.

 
The federal government saw an especially pronounced deterioration.  The net operating balance deficit for the federal government was $10.0 billion in 2016, compared with a $2.1 billion surplus the previous year. Total federal expenses grew 4.2%, due to an increase in social benefits (old age and family allowances) and grants to provinces and territories expenses, while revenue actually was down 0.1%. A big component of that revenue drop incidentally was from income tax revenue – despite the increase in personal income rates on higher earners that kicked in.  For a longer term take on federal finances, you might want to check another post of mine here.

As for the provinces, net operating balances in deficit were reported in 9 of 13 jurisdictions with Alberta (-$9.9 billion), Manitoba and Ontario (each -$1.7 billion) having the largest deficits in 2016.  While still in deficit, Ontario's net operating balance improved the most, due to higher revenues from corporate income taxes and taxes on goods and services – but then Ontario’s economy in 2016 did see an improvement.  As for the largest surpluses – meet the new poster children for fiscal responsibility in Canada in 2016:  British Columbia (+$4.9 billion) and Quebec (+$4.4 billion).

Friday, 17 November 2017

Why Are Northern Ontarians So Happy?


I recently came across a Statistics Canada Report from 2015 on life satisfaction across Census Metropolitan areas and economic regions that presented ranked scores based on the responses to the Canadian Community Health Survey and General Social Survey. The responses are over the period 2009 to 2013 and the key question was:

“Using a scale of 0 to 10, where 0 means “very dissatisfied” and 10 means “Very satisfied”, how do you feel about your life as a whole right now?”

There were nearly 340,000 respondents to the survey and the results for the CMAs had samples of at least 1,800 to 2,000 respondents.  Average life satisfaction from 2009 to 2013 across Canada’s 33 CMAs (as shown in Chart 1 below taken from the report) ranged from a low of about 7.8 in Vancouver, Toronto and Windsor to a high of 8.2 in St. John’s, Trois-Rivieres and Saguenay.  More interesting is that both Sudbury and Thunder Bay are in the top ten in terms of life satisfaction.  Moreover, the proportion of individuals reporting a 9 or 10 – the highest rankings – is highest in Sudbury and Thunder Bay and lowest in Toronto and Vancouver (As shown in Chart 2).  Even when the results are adjusted for individual-level socio-economic characteristics such as income, life satisfaction remains higher in smaller communities like Thunder Bay or Sudbury. 


 

I guess it bears repeating that economic success and achievement and life in the big city may not be all it is cracked up to be.  Given the surge in rents and housing prices in places like Toronto as of late, and the increased congestion and traffic, one would expect these life satisfaction rankings results would persist if a survey was done today.  Even with slower economic growth in northern Ontario, it remains that for many people there is an advantage to living in communities where there is a more intimate and human scale of life. 

At the same time, given the higher rate of aging populations in smaller communities and the u-shaped relationship between life satisfaction and age the report notes, it may simply be demographics - an older population seems to be a happier one.  While young people are striving and competing and making their way in the world, older people have pretty much come to accept where they are at and are comfortable in their own skins. Having a larger proportion of older people in a community may be the key to tranquility and happiness on a community level.

Nevertheless, northern Ontario can use all the good news it can get.  Residents of northern Ontario have apparently decided to embrace Albert Einstein’s observation that: “A calm and modest life brings more happiness than the pursuit of success.”

Thursday, 9 November 2017

Thunder Bay Construction Intentions Drop, Sudbury Up

Statistics Canada's latest building permit numbers show an increase nationally in September with a monthly increase of 3.8 percent.  Yearly (September 2016 to September 2017), the total value of permits in Canada was up 12.43 percent.  As noted by Statistics Canada: "Canadian municipalities issued $7.9 billion worth of building permits in September, up 3.8% from the previous month. A 1.7% decrease in the residential sector was more than offset by a 13.9% increase in the non-residential sector. A high-value institutional building permit issued in Alberta was behind much of the increase."  Ontario posted a decrease mainly due to lower construction intentions for apartments which probably does not bode well for the future of renters in the province.

With respect to the specifics across cities, the accompanying figure presents the percent change from September 2016 to September 2017 ranked from highest to lowest for Canadian CMAs.   For all CMAs, the increase was 14.5 percent.  At the top we have Halifax, St. John's and Brantford at 196.9, 154.5 and 145.2 percent growth respectively.  At the bottom - well, Thunder Bay is last at -62.9 percent, just behind Hamilton at -43.7 percent and Kingston at -40 percent.  Sudbury actually manages to shine at an increase of 123.3 percent - just behind Brantford putting it in fourth place.  Of the 14 CMAs showing a decrease, seven were in Ontario - including Toronto which saw a year over year decrease of 13 percent.




Friday, 3 November 2017

Left Behind



The good news continues for the Canadian economy as the latest job numbers from Statistics Canada show a net increase in employment of 35,000 jobs in October. Indeed, one has to wonder why the Bank of Canada does not go out and raise interest rates a bit more given that should the economy slowdown it would give them some scope to lower rates to counteract the slowdown.  At the moment we have large deficits at the federal level and low interest rates - really, how much more direct stimulus does the Canadian economy need at this point?  What do we do if the economy goes into recession?

For Ontario, however, the picture is more mixed as employment there was virtually unchanged.  Indeed, over half of the net employment growth in Canada came from Quebec and most of the remainder from Alberta.  Ontario’s employment story got another interesting assessment from a Fraser Institute Report showing that almost all the recent employment growth in Ontario has been concentrated in the Toronto and Ottawa areas.  Many of the CMAs outside of these two regions experienced employment declines.  The figure below taken from the Fraser Institute report shows that quite a few Ontario CMAs - including all of those from northern Ontario saw employment drops.




Needless to say, when it comes to employment Ontario very much seems to have become a two-track economy with the North, East and Southwest portions of the economy not doing as well as the Toronto-Ottawa core.  A notable exception is Windsor which has managed to create employment since 2008 despite the manufacturing downturn.  Some of the cities that have been doing well - Guelph, Oshawa and Kitchener-Waterloo-Cambridge are all part of that area within direct and short range of the GTA.  

Yet, the October numbers suggest Ontario as a whole has slowed down in terms of job creation even in the Toronto-Ottawa core.  This does not bode well for the effects of the minimum wage increase coming in January.  If an employment slump continues, it also introduces a new dynamic into the provincial election coming in June.  If the feeling of being left behind gains momentum even in previously economically  buoyant areas such as the GTA then the prospects for political change will rise.



Tuesday, 24 October 2017

Economic News Around the North, October 24th Edition

It is quite the blustery day here in Thunder Bay today so what better way to hunker down and enjoy the day than taking a look at the major economic news items over the last little while.

Ontario's GDP boosted billions per year by Lakehead University Thunder Bay, Orillia campuses. CBC Thunder Bay, October 24th, 2017.

Well, it turns out that according to a study authored by faculty at Lakehead's business school that Lakehead University's economic impact on Ontario is 1.4 billion dollars.  To my way of thinking, the faculty are the core of the university - indeed all the expenditures a university makes are to allow faculty to generate research, teaching outcomes and human capital value added for graduates so given that there are about 300 full-time faculty at Lakehead, I would estimate my personal economic impact on Ontario's economy at 4.7 million dollars (1.4 billion dollars divided by 300).  Based on my current salary, I am obviously grossly undervalued.  That is a pretty good return to any investment.  Come to think of it, hiring more full time university faculty is obviously a cheap and effective way to boost Ontario GDP.  Let the hiring boom begin.

Business ties with India explored. Chronicle Journal, October 24, 2017.

Well, a few weeks ago it was a delegation from China.  This week a delegation from India is passing through Thunder Bay.  Given the precarious state of our NAFTA negotiations, I would imagine it is a good idea to try and build as many ties as possible with the Asia Pacific region.

Northern business owners in 'defensive mode' about proposed tax changes. CBC Sudbury, October 24th, 2017.

This is the northern Ontario take on the tax changes being shepherded by Bill Morneau.  However, as we know there are going to be revisions.  Moreover, there may be other goodies coming down the pipeline in the wake of today's fiscal and economic update in Ottawa.

And in other Sudbury economic and business news....

2 former chairs quit Sudbury Chamber of Commerce over casino, arena position. CBC Sudbury, October 19th, 2017.

No comment there.  Sounds like a pretty strong difference of opinions.

While Thunder Bay is focusing on India and China for its economic enhancement efforts, it would appear that Timmins Economic Development Corporation has targeted Bolivia.

Exchange will see Bolivian delegates visit Timmins. TimminsPress.com. October 4th, 2017.

If you are interested in the Elliot Lake model of economic development, there is this...

Sault's becoming a popular retirement destination, credit analyst says. SOOTODAY.com, October 6th, 2017.

On the other hand, what if Amazon builds its new headquarters in the Sault?  The Sault is sending in a proposal. Check here.  Quite frankly, I have not come across other northern Ontario cities doing the same.

As well, there is television production activity underway in the Sault.

Producer returns with big projects for Northern Ontario. SaultOnline. October 15th, 2017.

And all the way in North Bay, there is this item referring to a recent Fraser Institute Report by Ross McKitrick and Elmira Aliakbari:

Ontario's green energy policies killed jobs.Nugget.ca, October 19th, 2017.

Even North Bay is apparently getting into the film business...

Film industry applauds local cinematography program. BAYTODAY.com, October 14th,017.

Have a great week!

Wednesday, 18 October 2017

Will It Be a Wynne Win Situation in June?


The consensus seems to be that Ontario’s current Liberal government and Premier Kathleen Wynne are headed for defeat come the June 2018 election.  Recent polls have seen the government trailing third behind the Conservatives and the New Democrats.  An IPSOs poll in mid-September also suggested that most Ontario voters –- 76 percent -- want a change in government.

Two cabinet ministers (Treasury Board President Liz Sandals and Deputy Premier Deb Matthews) recently announced that they will not be seeking re-election which some may interpret as a signal that there is not a lot of confidence in the government’s future past June.  This is on top of Economic Development Minister Brad Duguid who announced last month he won’t run for re-election and Environment Minister Glen Murray in the summer.

As well, the Premier’s personal approval rating is low.  There is the baggage of nearly 15 years of Liberal government rule including the demise of the manufacturing sector, high electricity prices, the high debt and deficit, and the gas plants scandal to which can be added the current trial underway in Sudbury.  And the electricity sector seems to be a problem that never seems to diminish in scope given the recent Auditor General’s report that the Wynne government’s plan to reduce electricity prices will eventually be higher cost in the long run.

Yet, one should not count Kathleen Wynne and the Liberals out yet.  Recent polls have suggested there has been a bit of a rebound in Liberal support with a September 30th Forum poll suggesting the Liberals and PCs are tied for support in the vote rich Toronto area. Given the recent rebound in Ontario’s economy, the electorate may be less keen to turf the governing party in favor of gambling the PCs might do a better job with the economy.   As well, there have been a range of initiatives –the minimum wage hike, changes to real estate rules, the basic income pilot that are likely to sway NDP supporters.  And most Ontarians will not understand that a lower electricity bill today will eventually mean much higher bills tomorrow under the current Liberal plan. As for the departing cabinet ministers, another interpretation is that after 15 years one can expect to see the departure of veterans and renewal of candidates.

It all comes down to the campaign.  The Liberals in Canada, whether at the provincial level or the federal level tend to campaign from the left and then govern from the right.  They are usually quite successful in running campaigns with policies that take enough votes from the NDP to gain office.  They are somewhat less successful in governing like PCs when it comes to economic matters given that seems to be a congenital Liberal predisposition to grand social, economic and industrial interventionist strategies.  However, demonstrating this to the public requires a strong, inspiring and methodical policy campaign by the PCs and to date PC leader Patrick Brown despite any lead in the polls has yet to capture the imagination of Ontario voters.

In the end, one can imagine that Liberal support bottomed early enough this summer to allow the Liberals to position themselves as “the underdog” and come back from behind.  Indeed, one wonders if this was not the strategy all along to allow the opposition parties to capture the lead in the polls and peak early.  Of course, such a strategy can still backfire despite the recent policy stage being set by the Liberals if events deal them economic or political shocks.  And there is always the strong possibility that the opposition leaders might finally get their act together and campaign more effectively. 

It is going to be an entertaining next few months in the lead up to the election.

Sunday, 8 October 2017

Porter Airlines Says it's Sorry But Is it Enough?


Well, we had quite the flight delay with Porter Airlines yesterday.  Our flight to Billy Bishop from Thunder Bay was supposed to depart at 11:10 am and when all was said and done it did not leave until nearly 6:00 pm meaning that from start to finish our trip to Hamilton in the end took twelve hours.  We have traveled to Europe in less.  Indeed, you can drive to Hamilton from Thunder Bay in about 14 hours straight if you put your mind to it.  Still, compared to others on the packed flight with small children or who were traveling on tighter schedules to attend weddings or were unable to go back to their house and spend some time for the extended wait – we were fortunate.  And Porter has demonstrated its concern and sympathy and very quickly emailed us with a 100-dollar voucher each (it came in at 4:52am this morning) to be used on future bookings with Porter.  Based on the length of the delay and the amount of the compensation, it seems that Porter already complies with the new proposed Ontario minimum wage at least when it comes to the value of passenger time.

In the end the delay was for a “mechanical issue” and as one of the flight attendants who took the elevator with us at the end of the flight remarked it is better to be safe than sorry.  I agree.  Still, this is not the first mechanical delay with Porter on a flight to or from Thunder Bay that I or other members of my family have encountered.  Indeed, over the last year there have now been about four such issues involving us with the most recent delay the longest.  In each case, the weather was excellent and the plane on the tarmac and then suddenly…the dreaded delay due to a mechanical issue.  However, if you are in Thunder Bay it is even more ominous because Porter Airlines must fly in the mechanic from Toronto on its next available flight.

Why Porter airlines and the other two airlines in Thunder Bay (Air Canada and Westjet) who also fly nothing but Q400s there could not get together to chip in and maintain one mechanic on a standby contract to service their planes is beyond me.  Perhaps the recent announcement from Porter that they are making Thunder Bay a crew base will also mean they are going to keep a mechanic and parts on hand.  I hope that is the case because I like flying Porter and the convenient access to downtown Toronto.

At the same time, I think Porter has had an awful lot of “mechanical issues” and having so many really is ultimately their fault. I think they have an aging stock of aircraft given that the planned beefing up with the C-Series fell through and they now need to renew their aircraft stock in a very competitive airline world.  It's tough I know.  Still, here is the thing.  You can’t keep telling people they have a delay due to mechanical issues.  It has happened often enough to me and my family now that inevitably I am starting to wonder if an airline with so many mechanical issues is the one I should keep selecting for my travel.  I am already booked on a few more flights with Porter for the next couple of months but after that maybe I should shop around more.  After all, better to be safe than sorry.

Thursday, 5 October 2017

The State of the North

The State of the North conference hosted by the Northern Policy Institute was held in Timmins from September 27-28 with much of the discussion focusing on reversing the north's economic decline.   Charles Cirtwill, President of the Northern Policy Institute sent out the slides of his presentation with an invitation to share and today's post reproduces a few of those slides.  Figures 1-2 present some GDP estimates by sector for the Northwest and the Northeast of Ontario while Figures 3-5 present non-residential building permits for assorted northern Ontario districts.

Tuesday, 3 October 2017

Economic News Around the North: October 3rd Edition

Here are some of the items of economic interest with respect to northern Ontario that have caught my interest over the last little while.  There truly is never a dull moment when it comes to the economy of northern Ontario.

White River Benefits from new Harte Gold mine. CBCNews Thunder Bay, October 3rd, 2017.

While being a small resource based community means dire times when the main industry shuts down, the converse is that when a new industry starts up, there can be a boom.  White River is getting good economic news.

Porter Airlines sets up a Thunder Bay crew base. TBNewswatch. September 19th,  2017.

This is definitely good news and raises the prospect that Porter may be looking at expanding its service west and south.  I would expect to see more flights through Thunder Bay to Winnipeg and perhaps through Chicago Midway to connect with the current Chicago-Toronto run.

Liquid natural gas coming to communities on Lake Superior's north shore. CBCNews Thunder Bay, September 25th, 2017.

And here are two interesting and related items:

Delegates discuss keys to reversing decline. TimminsPress.com, September 28th, 2017.

The State of the North - A New Vision is Emerging. TBNewswatch, September 28th, 2017.

I suppose you can start to smell the prospects of elections coming soon.  A provincial election is expected by spring while municipalities will be going to the polls next October.  Needless to say, the shopping lists are being put together in the form of strategies and plans designed to reverse the northern Ontario economic decline and to get candidates elected.  Such regional studies and strategies have a long history in the north - think back to the 1970s (Design for Development) or the 1980s (Royal Commission on the Northern Environment) or the 2000s (Regional Adjustment Strategy, The Northern Growth Plan, the Rosehart Report).   Given the lack of success to date in reversing northern decline, one must admire everyone's faith in grand economic studies and development strategies but then I suppose there is no serious expectation they will reverse anything.  Their purpose is simply to put together the wish list for new government spending initiatives designed to continue northern Ontario's palliative economic care.  This is not really a new vision at all but rather business as usual.

And in terms of some of the more entertaining economic development strategies being touted:

City signs friendship agreement with Nanning, China. TbNewswatch, Septembner 22nd, 2017.

City makes friends with Nanning, China. The Chronicle Journal, September 23rd, 2017.

Apparently one of the visions discussed was shiploads of vegetables and beef and other agricultural produce from Thunder Bay's port to Nanning.  According to one Thunder Bay City Councillor: "There is that kind of potential for our agricultural sector."  I assume this meant western Canada's agricultural sector (but then why ship to China through Thunder Bay rather than Vancouver or Prince Rupert) given that Thunder Bay's agricultural sector would be hard pressed to feed 100,000 people locally never mind 7.5 million in Nanning.

Still, its nice to be friends with other cities even if the expectations are a little off kilter.

In other news:

Could more autonomy hurt the North? One expert says yes. Northern Ontario Business. October 2nd, 2017.

Cambrian student population reaches highest total in 10 years. Northern Ontario Business. October 2nd, 2017.

Give First Nations priority access to marijuana industry. Nugget.ca. October 2nd, 2017.

Developing a Smart City important for the economy. Saultstar.com. September 29th, 2017.

And in terms of negative economic impact when a major broader public sector employer shuts down....

Laurentian University strike enters second week, administration says new offer on table. CBCNews Sudbury. October 2nd, 2017.


Sunday, 1 October 2017

Canada's Economy is Going to Cool Off But How Much is Not "Predetermined"


Focus Economics has just released its October 2017 Consensus Forecast for Major Economies and the numbers for Canada bear some consideration in the wake of our recent surge in real GDP growth.  Annualized GDP growth in the second Quarter of 2017 for Canada according to Focus Economics was 3.7 percent – the highest in all the G7-which averaged 2.2 percent.  The world economy grew at 3.2 percent; the United States came in at only 2.2 percent while Germany managed only 0.8 percent.  So, Canada seems to be on a roll.

However, looking ahead at the 3rd and 4th quarters and into 2018, the GDP growth rates start to come down.  Canada’s 3rd quarter of 2017 is forecast at 2.7 percent while the 4th quarter comes in at 2.5.  As for 2018, the 1st quarter is forecast at 2.5 percent, the 2nd at 2.1 and the remaining quarters at only 2 percent each.  Canada is still expected to outperform the G-7, which by the 4th quarter of 2018 is expected to see only 1.8 percent average growth.  However, the gap between Canada and the G-7 narrows considerably.

Part of what is going to cool off the Canadian and G-7 economies is the anticipated rise in interest rates.  The rate for three month T-bills in Canada was at 0.54% in 1st quarter of 2017 but is expected to rise to 1.72 percent by the 4th quarter of 2018.  The average for the G-7 has it going from 0.54% to 1.14% suggesting that rates in Canada are currently expected to rise faster than other G-7 countries.  Over the same period, 10-year bond yields are expected to rise from 1.63% to 2.56% in Canada and from an average of 1.48% to 1.91% in the G-7. 

Of course, these interest rates are all still quite low by historical standards but think of them another way.  From the 1st quarter of 2017 to the 4th quarter of 2018, Canadian T-bill rates are expected to undergo an increase from 0.54% to 1.72% - a percent point increase of 1.18 points but a percentage increase of over 200 percent.  In other words, there is a doubling of debt service costs.  Moreover, this increase is greater than the average for the G-7. 

The coming slowdown in Canadian economic growth is going to be driven by two interest rate effects.  First, the rise in interest rates will affect borrowing and investment by Canadian consumers and businesses.  Second, Canadian interest rates rising faster than the United States and other G-7 countries means that all other things given, the Canadian dollar can also be expected to appreciate relative to other major currencies also affecting our exports. 

In the end, much depends on how quickly Canadian interest rates continue to rise.  Stephen Poloz, the Governor of the Bank of Canada in last week’s address in St. John’s remarked that there was “No predetermined path for interest rates from here” suggesting that future rate increase are by no means preordained.    Of course, this introduces a certain amount of variability into forecasts as well as some uncertainty into the expectations of consumers and businesses.  In the end, what this also means is that the amount of cooling off the Canadian economy may face over the next 18 months is also not predetermined. 

Wednesday, 20 September 2017

The Not So Giving North?

Well, here is some interesting data on median donations by Ontario CMA in 2015 available from Statistics Canada (Table 111-0001).  It is of course useful as an index of local generosity to charitable causes.  Please note it is not a complete index as it only takes into account the value of donations and charitable activity also can involve a great deal of donated volunteer time - which this measure does not capture.  Nevertheless, Figure 1 is somewhat disappointing when one looks at the performance of northern Ontario.

The median donation ranges from a high of $470 for Wellington Centre to a low of $140 dollars for Petawawa.  With the exception of Elliot Lake which is in the middle of the distribution, northern Ontario cities are all clustered in the bottom third.  Elliot Lake comes in at $340 followed by Kenora at $290, North Bay at $270 and Thunder Bay at $260.  Timmins and the Sault are at the bottom of the northern median donation list at $160 and $210 respectively.  It is a somewhat disappointing performance given our self-perception as being very community minded.

Of course, a possible explanation could be that the value of donations is a reflection of lower incomes in the North.  However, as my last post demonstrated, income growth has been pretty robust in northern Ontario.  Moreover, as Figure 2 shows, the median income of donors across Ontario CMAs shows that the northern Ontario CMAs are more dispersed across the income range.  Donor incomes in northern Ontario CMAs are not clustered at the bottom.  Elliot Lake, is at the bottom of the donor income plot and yet is the most generous northern Ontario CMA whereas Sudbury which has the highest median donor income is near the bottom when it comes to median donation values.

Needless to say, I am not too despondent over this.  While all I can offer is anecdotal evidence, I think that donors in northern communities probably are much more giving of their time than money when it comes to charitable activity.  Thunder Bay for example has numerous community events - most recently the 2017 18U World Cup - that are only possible via the selfless activity of numerous volunteers.  Then there are the activities of food banks and other facilities that also rely heavily on donated time.  So, in the end, when it comes to charity, I think money is not everything.  Still, it would be nice to see those numbers go up.  If Elliot Lake can do it, why not everyone else.

Wednesday, 13 September 2017

Household Incomes in Ontario: Northern Exceptionalism

Statistics Canada has released the figures for median household income in Canada from the 2016 census providing comparisons for the period 2005 to 2015.  The median total income of Canadian households rose from $63,457 in 2005 to reach $70,336 in 2015 - an increase of 10.8 percent.  This growth was led by the resource intensive provinces and Ontario appears to have done particularly poorly- it had the lowest growth rate at 3.8 percent.  Even Quebec did better at 8.9 percent - the second lowest growth rate.  Almost every metropolitan area in Ontario saw growth below the Canadian average - with an interesting set of exceptions.

What is interesting in these numbers given Ontario's poor performance is the performance of the major northern Ontario cities, what I like to term the N-5: Thunder Bay, Timmins, Greater Sudbury, Sault Ste. Marie and North Bay.  Incomes in three of these five  cities all grew above the Canadian average - a much better batting average than the rest of the province.  Moreover, all five of these cities grew above the Ontario average.

Figure 1



Of course, median household incomes in these northern Ontario cities are still below the Ontario median (See Figure 1) but over the course of a decade they appear to have closed the gap substantially despite the forest sector crisis and other assorted slings and arrows.  Indeed, as Figure 2 shows that median household incomes in Timmins, Sudbury and North Bay all grew above the Canadian and Ontario average.  Thunder Bay and the Sault did not top the national performance but they still topped the provincial performance.

Figure 2



If you are wondering about income growth in some other Ontario cities, for the record: Toronto (4%), Hamilton (5.3%), Ottawa (4.4%), London (-2.1%), Windsor (-6.4%).  The urban north of the province appears to have done surprisingly well in the median household income sweepstakes and this probably represents another factor in why house prices to date have been as robust as they have been in places like Thunder Bay and Sudbury. 

Thunder Bay Housing Coming Down

A report by Moody's Analytics reported in today's Globe and Mail says that higher interest rates, newer mortgage-lending rules and declining affordability are together going to put a damper on the growth of Canadian housing prices.  Indeed, the price of single family homes in Canada is forecast to only grow at 1.3 percent annually over the next five years but there will be considerable variation across the country.  Larger urban centers with growing populations particularly in southern Ontario will do better while many other cities will see declines.

As the accompanying graph constructed from data provided in the Globe article shows (July forecast), Toronto and Hamilton are still expected to lead the pack at growth rates of 7.7 and 5.8 percent respectively but after that the growth rates drop off and indeed move into negative territory. 

Thunder Bay is expected to see annualized declines of 5.4 percent.  Reasons for this are falling median incomes, slow population growth rates and slow rates of household formation - along of course with the fact that interest rates are on the way up. Other housing price reports on the Moody site also show that Greater Sudbury is forecast to have price declines.  The May 2017 report for example (the April forecast) noted Sudbury prices over the next five years would decline by 1.2 percent annually.  The same report also had Thunder Bay declining by 1.2 percent annually with a substantial revision now in the new report. What has changed over the last few months? Interest rates.


I think interest rates are really the big factor here given that Thunder Bay's housing prices managed to double over the last 10-15 years despite the weak economy and flat population growth.  Not quite the growth of the GTA but still quite remarkable given the local demographics and economic performance. 

Friday, 8 September 2017

Economic News Around the North: September 8th Edition

Summer is over, autumn is back and winter is coming.  It is the start of a new academic school year and life takes on a brisker pace here in Thunder Bay both on and off campus.  Traffic is noticeably up everywhere in town and the drivers are in a hurry.  So, without any more delay, here are the recent stories I feel have some economic significance for northern Ontario.

Vale to shut Clarabelle Mill Crushing plant. CBCNews Sudbury. September 7th, 2017.

As noted in another story in the Sudbury Star, Vale is not closing the mill itself, but only the crushing plant.  This is expected to affect 13 jobs but no plans for workforce reduction have been announced yet.  It should be noted that it has apparently been a good month for commodity prices.

Also in Sudbury...

Sudbury city councillor wants a closer look at de-amalgamation. CBCNews Sudbury, September 6th, 2017.

Sudbury city councillor Michael Vagnini wants to put forth a motion to re-examine the amalgamation of 8 areas that took place in 2001 to create Greater Sudbury.  Laurentian University economist David Robinson says amalgamation hasn't worked.  Vagnini notes that municipal employment in the former cities together has grown 30 percent since 2001 which suggests rising costs (and taxes) underpin his concerns.  Of course, breaking everything asunder after it has been put together will involve substantial transition and transaction costs and the key question should be what are the benefits and what are the costs.  If Sudbury explores this option, is Thunder Bay next?  One can make the case that having twin cities at the Lakehead led to economic competition that may have generated some growth and development benefits.  It could be more than a coincidence that amalgamation in 1970 which resulted in monopoly municipal government also coincided with the start of decades of slower economic growth.

Of course, Thunder Bay has enough issues on its plate without embarking on revisiting its own amalgamation.  If anything, it apparently could use some good news and this week has seen a spate of good news stories especially from its local CBC outlet.  There have been stories on the start of school, the excitement of the XXVIII WBSC U-18 Baseball World Cup 2017 which is being held in Thunder Bay and the community spirit it has brought to the fore as well as a story on making clowns feel better given that nasty Stephen King character.  However, the most interesting story has been a set of stories on why Thunder Bay is important to Canada and in particular, this one:

What makes Thunder Bay important? Economically, it's our location. CBCNews Thunder Bay, September 5th, 2017.

Its an upbeat boosterish piece not out of place with the pre-World War I brochures that used to extol Port Arthur and Fort William as the future hubs of the Dominion.   In many respects, little changes in Thunder Bay when it comes to its approaches to marketing economic development.  This morning also had an interview featuring young professionals noting all the potential that Thunder Bay has when it comes to opportunity and that the economy seems to be doing well because restaurants are opening. Don't get me wrong.  I think Thunder Bay is a great place to live and work but I think these types of self-obsessed feel good efforts directed at ourselves reflect a fundamental insecurity and an insular preoccupation with ourselves.  We really should be aiming any marketing campaign outside of the city, not at ourselves and I'm a bit surprised by the relentless onslaught of feel good stories by the local outlet of the national broadcaster.  Perhaps there has been a recent local management change or perhaps the PMO has sent the national broadcaster a directive that there must only be "sunny ways" stories in rural remote regions.

In other upbeat news with a more direct quantifiable economic impact:

Rainy River gold mine prepares to process ore. tbnewswatch. September 7th, 2017. 

Brookfield prepared to exit stake in North American Palladium as metal soars. The Globe and Mail. September 8th, 2017.

North American Palladium posts $8M profit in turnaround quarter. The Northern Miner. September 7th, 2017.

Indeed, the upbeat news from mining and the promised Ring of Fire Road has led to at least one First Nation being "anxious" for a gateway role in the Ring of Fire as this Chronicle Journal story notes.

In related mining news, it would appear the good news from the Ring of Fire has also caught the attention of other interests.  Indeed, it is infectious.

Should Ontario Northland be the railroader for the Ring of Fire? BAYTODAY.ca, September 7th, 2017.

City continues ferrochrome plant pitch. saultstar.com. August 29th, 2017. 

And in Timmins, more mining progress.

Sage Gold bulks up for mill sample. Northern Ontario Business. September 1st, 2017.

So, it looks like everything really is sunny in northern Ontario this week though even when it comes to the mining sector there are some critiques.  I guess we all need to make a conscious effort to spend more time out in the sunshine especially before the winter sets in.

And one last bit of good news, just out from Statistics Canada.  Canada's unemployment rate declined slightly to 6.2 percent.  Thunder Bay's rate for August is 6.5 percent (down from 6.7) and Sudbury's is 5.2 percent (down from 5.4)

 Have a great weekend.











Monday, 4 September 2017

Northern Ontario Wildlife & Vistas

It is Labour Day and the official end of summer break and the start of a new academic year.  Traditionally, this weekend also marks the end of summer fashions such as white shoes though strict adherence to such practices have rarely characterized the social circles I move in.  Summer in Thunder Bay can be quite pleasant though this year was a little cooler than usual. Nevertheless, the scenery this year was greener than usual due to the rain and the cool temperatures.  The trees in my yard filled out very nicely and their canopies provided a home for quite a few birds including this visitor under my pear tree...a Red Tailed Hawk I believe.

Red Tailed Hawk from my dining room window
And from the basement window

We were alerted to the hawk's presence by some shrill shrieks outside and it appears the hawk had managed to find something to eat.  The hawk's presence may be a factor in why the yard has been so quiet today when it comes to bird song in general.

On another day while walking along the nearby trail, came across one of nature's armoured tanks.  I was surprised to see this out in the middle of the day and plodding along on its way to the nearby river.




Also managed to get out to Nipigon this summer for a day trip that involved a visit to the waterfront, a short hike along the trail to Red Rock and then a very nice lunch at the Edgeview Restaurant.  A shot of the Nipigon River from the trail and another that also manages to include the new bridge - which incidentally is still a ways from being finished.

 
Not a bridge too far, a bridge that does not yet go far enough

The scenery in Nipigon was very pleasant and the visit also include a stop at the recently unveiled Paddle to the Sea Park.  Those of you who are of a certain age will likely remember the children's book and NFB film.

And one final picture from my summer sojourns around Thunder Bay and the North.  A shot of me and one of my minions!  Every self respecting economist must have an abundance of minions to support their policy prescriptions and points of view. 


































Saturday, 2 September 2017

Lakehead is Looking for a President

Lakehead University is looking for a new President and Vice-Chancellor - and so are Laurentian and Algoma apparently.  That is a lot of change in northern Ontario higher education in just a very short time.  Lakehead has issued a call for consultative input so if you are interested in contributing, check out the call that was issued in this last week's media relations bulletin.  If you are interested in any thoughts I might have on the matter, feel free to read my post on Worthwhile Canadian Initiative.  Have a great long weekend!
 

Tuesday, 29 August 2017

Another Look at Northern Ontario Economic Activity...And the Pictures are Not Pretty

When looking at trends in the northern Ontario economy, we often look at evidence on population growth, unemployment rates, personal incomes or employment creation.  Well, here is another indicator courtesy of Statistics Canada Table 11-001 - Summary of charitable donors, annual.  Now this data is on charitable contributions and provides information on the value of donations (more on that in a later post) but it also provides data on the number of taxfilers by jurisdiction.

Why is the number of taxfilers an interesting number?  If your economy is growing and there is substantial economic activity, more people are either working or setting up businesses and income is being generated and by extension the number of income tax taxfilers should be going up. So what do the numbers look like?

Figure 1 presents the number of income tax taxfilers for Thunder Bay and Sudbury from 1997 to 2015 and for Sault Ste. Marie, North Bay and Timmins for the period 2008 to 2015 (which is what is available),  Needless to say, things look a little flat in these northern Ontario cities especially compared to Ontario as a whole in Figure 2 which has seen steady growth in the number of taxfilers despite having a fairly moribund economy until just a couple of years ago.




Figure 3 provides the percent change for these northern Ontario cities and Ontario as a whole for the period of commonly available numbers spanning the years 2008 to 2015.  The number of taxfilers has shrunk in four out of the five cities - only Thunder Bay has managed a slight increase.  North Bay shrank by -0.3 percent and Sudbury by -0.5 percent which is rather modest compared to Timmins and the Sault.  The number of taxfilers in Timmins shrank by 3.1 percent and the Sault by 2.6 percent.   Thunder Bay, on the other hand registered a very miniscule increase of one tenth of one percent. Ontario as a whole saw an increase of 9.2 percent in the number of taxfilers between 2008 and 2015.



So - more evidence of the blatantly obvious I suppose.  Growth in northern Ontario's economy has essentially come to a halt.   Given the coming provincial election, it will be entertaining to say the least to watch how the three party leaders handle the issue.



Wednesday, 16 August 2017

Does Economic Performance Actually Matter in Northern Ontario?

In my last post, I made mention of the recent Conference Board of Canada Reports that presented current evidence and forecasts of economic activity for the cities of Thunder Bay, Sudbury, Timmins and Sault Ste. Marie.  The evidence suggested a rather sluggish economy though an upcoming webinar by the Conference Board argues that resource dependent communities such as those in northern Ontario are starting to rebound from the two-year downturn sparked by the decline in commodity prices.  This would certainly be the case in the more mining intensive northern Ontario communities.

However, based on the Conference Board Reports to date I think a more comparative analysis of some of the key indicators is useful particularly because of the story they seem to tell.  Along with Thunder Bay, Sudbury, Sault Ste. Marie and Timmins, the numbers are also presented for Ontario and Canada.

Tuesday, 15 August 2017

Economic News Around the North: August 15th Edition

We are in mid-August and the summer is drawing to a close.  The economic news has been pretty slow in northern Ontario.  Here are the stories of economic significance to northern Ontario over the last week or so.  They are mainly focused on the Conference Board Reports which were issued in late July and early August and that show the northern Ontario economy is not growing as fast as either Ontario or Canada.

Thunder Bay economy advances "sluggishly".  Tbnewswatch, August 9th, 2017.

Incidentally, Netnewsledger in Thunder Bay ran this story August 3rd (and was reported in my last northern Ontario economic news post.) I suppose narrative is everything.  According to the Conference Board Report in the above story, real GDP in Thunder Bay will rise 0.2 per cent in 2017 and 0.9 percent in 2018 following a 0.2 per cent increase in 2016.  Compare this to the Canadian economy which is expected to grow 2.3 per cent in 2017 and just under 2 percent in 2018.  Ontario is forecast to surge at 2.3 percent in 2017 but then scales back to 1.8 per cent in 2018.  Real GDP growth in Thunder Bay is forecast at below 1 per cent until 2021,  Yet, apparently life in Thunder Bay goes on with personal income per capita expected to grow at greater than 3 per cent from 2018 to 2021.  While the overall economy is not growing, having 30 percent of your employment in the broader public sector is lending a certain punch to average personal incomes.

Meanwhile in Sudbury, the Conference Board projects real GDP will grow at 1.2 percent in 2017 and 1.0 percent in 2018 but real GDP growth over the period 2018 to 2021 is also not expected to top 1 percent.  Yet, the narrative in Sudbury is a little different.

Sudbury to grow in 2017: Conference Board. Thesudburystar.com. August 4th, 2017.

In other Sudbury economic news:

Vale looking at layoffs in Sudbury. Thesudburystar.com. August 12th, 2017.

In terms of the size of Vale's economic footprint in Sudbury: "Vale operates five mines in Sudbury, as well as a mill, a smelter, a refinery and employs nearly 4,000 workers. It mines nickel, copper, cobalt, platinum group metals, gold and silver."

Timmins and the Sault also made their way into the Conference Board's Mid-Sized Cities Outlook and the report forecast real GDP in the Sault to grow 0.6 percent in 2017 and for Timmins to grow 1.4 percent in 2017.  Of the four cities covered in these Conference Board Reports it would appear that Timmins is doing the best with the manufacturing sector as well as the primary and utilities sectors driving growth.  Thunder Bay is forecast to grow the least. 

Timmins ready for economic growth says Conference Board of Canada. timminspress.com, July 27, 2017.

Sault growth behind that of Ontario, Canada. saultstar.com. July 28th, 2017.

So what about North Bay?  Well, no Conference Board Report for them.  They are neither a "big" northern CMA like Thunder Bay or Sudbury or a "Mid Size" city like Sault Ste. Marie and Timmins.  I'm sure that North Bay at least self-identifies as a Mid-Sized city and I wish to state that I consider North Bay one of the northern urban league of  five - the N5 as I sometimes like to refer to them.  

Still, here is an item of interest regarding the employment impact in northern Ontario - particularly North Bay -of an Electricity Trading Agreement entered into last fall with Quebec by the Ontario government.

Fedeli request leads to FAO probe on Ontario-Quebec Power deal. BayToday.ca. August 11th, 2017.

And another page in the inexorable march of retail change in the north:

Self-checkout threat to local jobs very real, labour warns. Nugget.ca, August 5th, 2017.


Enjoy the rest of the summer.