Forecast - Ontario - September 2024
Paul Young
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Ontario
Ontario’s economy is expected to grow 1.4% this year, before picking up to 2.1% in 2025. Growth momentum improved in the first half of 2024, but the province faces a mix of factors—high interest rates and a tough real estate market are weighing, while torrid population growth is supporting aggregate demand. These factors should all pivot through 2025.
Housing activity across the province remains subdued, with sales down and inventory building, especially in the Toronto condo segment. Overall resale listings haven’t been higher in Toronto since the 2009 recession. Still, the market balance has held up just enough to keep prices from cascading lower. While condo prices are under pressure, GTA single-detached prices are steady. Look for stable activity and prices through the rest of the year before interest rate cuts help more meaningfully in 2025. Construction activity looks to remain solid.
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In the commercial real estate sector, GTA office vacancy rates continue to rise, now topping 19%, according to CBRE. Multifamily cap rates are also increasing, and nonpermanent resident caps should weigh particularly hard on Ontario’s population growth given a high concentration of international students. Population growth should cool into the 1% range gradually through 2025 if current federal plans are met.
Job growth remains positive, but can’t keep up with population inflows. While job growth has ebbed below 2% y/y, labour force growth has accelerated to 3% y/y, pushing the unemployment rate above 7%. Unemployment is particularly high among youth and lower-skilled workers who are competing with massive nonpermanent resident inflows. Investment in the auto sector is encouraging, although EV production in Oakville has been delayed by two years until 2027.
The Province of Ontario is projecting a $9.8 billion deficit for FY24/25, versus a $3.0 billion shortfall now estimated for FY23/24. The near-term fiscal outlook has clearly deteriorated on a combination of weaker revenues and firm spending demands. The Province sees a $4.6 billion deficit for FY25/26, before a return to balance in FY26/27, a year later than previously planned.
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Source: 满地可银行
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Paul Young CPA CGA (1996)
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Paul is a former IBM Customer Success Manager that has deployed over 300 data and AI solutions across industry and geographies for the past 8 years. Paul is a Financial Planning, Analysis, and Reporting SME working with data including integration of macro and micro indicators as part of the integrated business planning and reporting cycle.
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Seeking employment - https://www.dhirubhai.net/posts/paul-young-055632b_hi-all-linked-in-followers-and-contacts-activity-7199365291288506369-qGVf?utm_source=share&utm_medium=member_desktop
Blog – What is next for ESG Reporting – August 2024 - https://www.dhirubhai.net/posts/paul-young-055632b_introductory-to-esg-and-sustainability-reporting-activity-7233711298838978561-UB6d?utm_source=share&utm_medium=member_desktop
Stock Market – Australia – September 13, 2024 - https://www.dhirubhai.net/pulse/stock-market-asx-september-13-2024-paul-young-uytrc/
Stock Market Week-Ending September 14, 2024 - https://www.dhirubhai.net/pulse/stock-market-week-ending-september-14-2024-paul-young-i90ic/
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Stock Market for W/E September 7, 2024 - https://youtu.be/lw4GXHlaZAk?si=r4pzGhoHvxHLScnc or https://www.dhirubhai.net/posts/paul-young-055632b_stock-market-for-we-september-7-2024-activity-7238691424135716865-CmT6?utm_source=share&utm_medium=member_desktop
Revenue decline 3 of 5 S and P 500 - https://www.dhirubhai.net/posts/paul-young-055632b_3-out-of-5-companies-miss-revenue-estimates-activity-7238238374031941634-7Frv?utm_source=share&utm_medium=member_desktop
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The S&P 500 (#SP500) plunged 4.25% for the holiday-shortened week, posting its worst weekly performance since early March 2023.
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