Despite continued slow growth into the first half of 2024, Hamilton’s economy is expected to improve dramatically in the second half of next year, according to an economic think tank.
The Conference Board of Canada (CoC) expects the city’s GDP will increase by only 0.9 per cent by the end of 2023, below an Ontario average that should hit 1.3 per cent, with the goods sector being the “biggest drag.”
But the good news is a forecast 1.6 per cent GDP growth by the end of 2024, above a predicted 1.1 per cent average for Ontario, via the easing of supply chain challenges that should aid manufacturing and home building.
Economist Viktor Cicman told Global News high interest rates and high inflation have impacted consumers and businesses, with both being “tapped out” and reducing spending this past year.
He says recent signs show the inflation rate across Canada is slowing, coming down about half a per cent between October and September to 3.2 per cent.
“So by next year it will be just near the point where we want to see it, around two per cent growth each year,” Cicman said.
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“Interest rates will also start to go down and so consumers will slowly regain their footing and businesses as well start hiring again.”
Supply chain issues for the manufacturing sector and slow housing construction activity have seen stifled growth of less than one per cent in both areas for 2023.
Despite the unemployment rate falling to historical lows last year, an average of 4.9 per cent, the outlook for 2023 will likely see that number around 5.3 per cent due to employment growth stalling and a loss of just under 1,000 jobs.
Retail trades will be hardest hit as consumer spending wanes, online shopping expands and companies move toward automation.
The CoC suggests some 4,000 jobs could be lost, an 8.4 per cent decline, in retail and likely will stay on that downward trend over the next three years.
Global demand for manufacturing picking up, particularly with steel exports, should benefit city manufacturers, while increased housing starts are expected to boost the local construction sector.
Strong job gains for 2024 are likely in the services sector through the continued long-term recovery from pandemic-related restrictions supporting hiring at restaurants, hotels and other entertainment venues.
“We will see pent-up demand for a lot of those services going forward, and … health care is a hub in Hamilton with an aging population. That’s one area as well that we do see good employment growth and good growth overall,” Cicman predicts.
When 2023’s numbers are finalized, some 2,000 new jobs are expected to have been created in health care, a gain of 3.2 per cent.
Over five years, job gains in that area could be in the 3.5 per cent per year range, according to Cicman.
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