As the election
campaign for Thunder Bay Mayor and City Council begin to heat up, there will be
attention focused on how Thunder Bay’s economy has been doing over the last
four years. The Conference Board and
Statistics Canada both provide data for quick snapshots about how Thunder
Bay has done since 2014. First, real GDP
numbers for Thunder Bay (in 2007 dollars) from the Conference Board show that the
city’s economy since 2014 has grown at annual rates ranging from a low 0.7
percent in 2015 to a high of 1.4 percent in 2017 with a forecast growth of 1
percent in 2018. While the local economy
is growing, its growth rate is well below that for Ontario and Canada which in
2017 alone saw real GDP growth at 3.2 and 3.1 percent respectively according to
the Conference Board. Indeed, out of 29 CMAs in 2017, Thunder Bay ranked second
last in real GDP growth – just ahead of St. John’s which saw growth of -1.7
percent.
It turns out that in
the wake of the 2014 municipal election, growth faltered in Thunder Bay and
that is also borne out by the employment numbers. According to Statistics Canada, Average
monthly employment in 2014 was 61,608 and fell to 59,650 in 2015 and then began
to rebound (see Figure) and to date in 2018 averages 61,967. So, this suggests that the last four years
have seen just over 300 jobs added to the Thunder Bay economy which works out to about 75 jobs a year. (By the way, don't be fooled by what looks like dramatic employment growth since 2015 - after all, the scale on the Figure ranges from 58,000 to 62,500) However, this masks the ebb and flow across sectors. Manufacturing, public administration,
finance, insurance and real estate employment have all declined while there
have been increases in accommodation and food services, transportation and
warehousing and retail. Other sectors
have been stable.
The shrinkage of
employment in the finance, insurance and real estate sector is a function of
declining house sales and weak housing starts. As the Conference Board noted in its Winter
2018 Outlook: “Thunder Bay’s uneven
economy and slumping population have impaired residential construction. While
housing starts clocked in at just under 300 units last year, this was due to an
upswing in construction of multi-family homes, particularly apartments, which
are relatively infrequent here. Tellingly, CMHC data show that area builders
have had no unsold apartments since August 2016. Such projects are risky in an
economic environment like Thunder Bay’s, so builders wait for pent-up demand to
accumulate, then pre-sell their units.”
What is also
interesting is the comparison of employment between Thunder Bay and Ontario as
a whole. In 2016, according to the Conference
Board, 16 percent of employment in Thunder Bay was industrial versus 20 percent
for Ontario. As for office employment,
it was 20 percent in Thunder Bay and 28 percent for Ontario. At 5 and 15 percent respectively, the shares
in Transport and Warehousing and Wholesale and Retail Trade are the same as for
Ontario as a whole. However, when it
comes to non-commercial services (i.e., health, education and public
administration), Thunder Bay’s employment share is 27 percent compared to 19
percent for Ontario. When it comes to other services (arts, entertainment,
recreation, accommodation and food) Thunder Bay is at 16 percent compared to 13
percent for Ontario.
So, the long and short
of Thunder Bay’s economic performance over the last four years is that while
not a disaster, it has been uneven. Real
output growth has been weak and total employment has essentially remained
stable and within that there is a shift to services particularly of the
non-commercial variety meaning more emphasis on public as opposed to private
sector employment growth. The lack of population growth combined with an aging
population has led to a weakening of the housing sector. That is the current reality.
