There's an article from the Financial Post out, entitled "Canadian economy to ‘weather oil-price storm,’ but expect very weak first quarter: TD." In the article are some TD predictions on the 2015 Canadian economy:
"TD Economics estimates gross domestics product will grow 1.9% this year,
compared to 2.5% in 2014. The first quarter of 2015 will be especially
weak — at an annualized pace of just 0.5% — but each quarter will
improve after that. The bank is forecasting overall GDP growth in 2016
of 2.2%."
US growth isn't looking particularly strong in the first quarter and I'm not at all surprised by TD's prediction that the first quarter GDP growth for Canada will be just 0.5%. I haven't really seen any economic indicators related to the first quarter that have been particularly good.
Obviously Alberta is sucking due to low oil prices, but Ontario isn't doing so great either (just check out the previous post here on low construction starts in Ontario in February or the mediocre employment numbers in January and February).
Amazingly there's an RBC report (warning PDF) that Ontario will have 3.3% GDP growth in 2015. And that report is from this March! Personally, I don't see it. With weak US growth in the first quarter, Ontario's likely won't be so great and it will be hard to make up the weak first quarter number to get to 3.3%.
Showing posts with label rbc. Show all posts
Showing posts with label rbc. Show all posts
Wednesday, April 1, 2015
Friday, February 20, 2015
Will Ontario's Cold Winter Weather Affect 2015 First Quarter GDP?
At the risk of sounding like Zerohedge.com and their fascination with winter weather and US GDP, I'm wondering about the effects of the record cold this winter in Ontario will have on first quarter GDP. Last year we had a similarly cold winter and ended up with a weak first quarter GDP number of 0.6% (annualized). Ontario's population growth has been around 1.1% lately so that means that per capita GDP actually declined.
GDP in 2014 did bounce back considerably to 4.0% in Q2 and 3.2% in Q3 (again annualized) which is excellent by Ontario standards in the past ten years. US GDP growth in the first quarter of 2014 was weak at -2.1% which no doubt affected the Ontario economy, although maybe the weather did too.
This year January was probably worse than average weather wise and February has certainly been colder than average and with the Great Lakes mostly frozen over, March could be colder than average too. Is that enough to have an effect on Ontario's GDP number? Less people will be going out with the cold and that could effect bars and restaurants, although that's not that big a part of the economy.
US growth is obviously a more important factor. The latest prediction of US first quarter growth is 2.7%, which is considerably more than the -2.1% of last year, so that should have a positive effect on Ontario growth (although the US prediction has declined somewhat of late). Ontario's January employment numbers were just meh with only a few thousand jobs created so the quarter isn't starting out with a band. Could the cold affect the February numbers? Hiring decisions could be pushed back by the cold.
RBC has predicted in this PDF, that Ontario's GDP growth would be a healthy 3.1% in 2015. I'm skeptical and a weak first quarter could make that number hard to achieve.
GDP in 2014 did bounce back considerably to 4.0% in Q2 and 3.2% in Q3 (again annualized) which is excellent by Ontario standards in the past ten years. US GDP growth in the first quarter of 2014 was weak at -2.1% which no doubt affected the Ontario economy, although maybe the weather did too.
This year January was probably worse than average weather wise and February has certainly been colder than average and with the Great Lakes mostly frozen over, March could be colder than average too. Is that enough to have an effect on Ontario's GDP number? Less people will be going out with the cold and that could effect bars and restaurants, although that's not that big a part of the economy.
US growth is obviously a more important factor. The latest prediction of US first quarter growth is 2.7%, which is considerably more than the -2.1% of last year, so that should have a positive effect on Ontario growth (although the US prediction has declined somewhat of late). Ontario's January employment numbers were just meh with only a few thousand jobs created so the quarter isn't starting out with a band. Could the cold affect the February numbers? Hiring decisions could be pushed back by the cold.
RBC has predicted in this PDF, that Ontario's GDP growth would be a healthy 3.1% in 2015. I'm skeptical and a weak first quarter could make that number hard to achieve.
Monday, February 16, 2015
Ontario January 2015 Employment Numbers
I've meant to get around to looking at the latest employment numbers for Ontario. Canada added a decent 35.4K jobs in January compared to the month before. Ontario not so much.
Ontario added a meager 1300 jobs in January, although that was an improvement over the last two months where Ontario actually lost jobs. That means over the last three months Ontario actually lost 43.4 thousand jobs, which makes for a pretty poor three month period. Employment numbers can jump a lot from month to month, but this poor performance over three months has to be taken seriously and detracts from the narrative that Ontario is growing well (and can't be great for the fourth quarter of 2014 GDP number).
The composition of the jobs also changed detrimentally last month. Ontario lost 23.2 thousand full time jobs while gaining 24.4 thousand part-time jobs. This would seem to be continuing a trend where in Ontario the proportion of jobs that are part-time is increasing.
Interestingly, over four months Ontario has actually lost 19.1 thousand full-time jobs, while the working age population increased by 31.9 thousand. Part-time jobs did increase by 24.4 thousand over that period.
One has to think that these low job numbers are going to have an effect on GDP, and income and sales tax revenue for the province. RBC is predicting Ontario will have 3.1% GDP growth in this PDF. I'm skeptical. Considering the low dollar hasn't done a lot to stimulate job growth over the past four months, I don't see a lot of job growth in 2015. That report is also predicting employment growth of 1.4% in 2015.
Ontario added a meager 1300 jobs in January, although that was an improvement over the last two months where Ontario actually lost jobs. That means over the last three months Ontario actually lost 43.4 thousand jobs, which makes for a pretty poor three month period. Employment numbers can jump a lot from month to month, but this poor performance over three months has to be taken seriously and detracts from the narrative that Ontario is growing well (and can't be great for the fourth quarter of 2014 GDP number).
The composition of the jobs also changed detrimentally last month. Ontario lost 23.2 thousand full time jobs while gaining 24.4 thousand part-time jobs. This would seem to be continuing a trend where in Ontario the proportion of jobs that are part-time is increasing.
Interestingly, over four months Ontario has actually lost 19.1 thousand full-time jobs, while the working age population increased by 31.9 thousand. Part-time jobs did increase by 24.4 thousand over that period.
One has to think that these low job numbers are going to have an effect on GDP, and income and sales tax revenue for the province. RBC is predicting Ontario will have 3.1% GDP growth in this PDF. I'm skeptical. Considering the low dollar hasn't done a lot to stimulate job growth over the past four months, I don't see a lot of job growth in 2015. That report is also predicting employment growth of 1.4% in 2015.
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