Economics News Around the North: January 25th Edition

Here are the economic news stories that have caught my interest over the last little while in northern Ontario.  The start of the new year has been a bit slow when it comes to economic news in the region but then there is so much else going one politically, economically and otherwise in Ontario, Canada and the world especially as we move into a critical phase with the NAFTA negotiations and the start of election campaigning in Ontario in the run up to the June election.

Here goes....

Architect envisions creative solutions to re imagine existing buildings. TBNewwatch, January 24th.

Well, this looks like a creative way to try and create some type of downtown event centre/conference facility in Thunder Bay.  Of course, you can add Victoriaville as well as the empty Sears store at intercity to the list of underutilized space in Thunder Bay.  Personally, it would be nice to see the Sears store retooled in a circular two level galleria space of small stores around a public space that could be used to house the farmers market.  The only problem would be to find tenants for the small retail spaces given that rents at the ISC are apparently pretty steep.

Record year for airport. The Chronicle Journal, January 25th

The airport's economic role in the city of Thunder Bay and region continues to grow.  Passenger volumes in 2017 were 844,627 which represents an increase of 4.6 percent from 2016.  Since 1997, this represents an increase of over 60 percent.

In not so positive transportation news, cab fares in Thunder Bay are going up by 15 percent. They were already quite high.  And if that is not enough, it looks like the increase in Thunder Bay's tax levy is going to stay at around 3.6 percent as the budget remains pretty much unchanged.  Living in Thunder Bay does sometimes seem like a sort of reverse Walmart marketing jingle - pay more, get less.

On the bright side:

Getting more out of wood. The Chronicle Journal, January 23rd.

More federal funding to support initiatives in the bio-economy.

Conference explores growing economy. Sudburystar.com. January 7th, 2018.

On Feb. 6-7, the Greater Sudbury Chamber of Commerce will host its inaugural PEP (Procurement, Employment and Partnerships) conference and trade show presented by SNC Lavalin in partnership with the Canadian council for Aboriginal Business.

And of interest if you are planning to pursue resource development activities in the region North of 50....

Northern communities face threat of climate change. TimminsPress.com, January 24th.

Meanwhile, in the Sault....

New Sault company aims to create jobs, produce gadgets for all ages at soon-to-open shop. SooToday.com, January 23rd.

Of course, Sault Ste. Marie is disappointed that they did not make the 20 city short list for Amazon's second corporate campus and joins other disappointed Canadian cities, but not Toronto which remains under consideration. 

In North Bay, they are hoping home construction is going to jump start their economy.  Not sure where the housing demand is expected to come from but it is important to be hopeful.  Perhaps if Toronto gets the Amazon campus, given the cost of housing, Amazon workers will live in North Bay and commute to Toronto.

North Bay community is up to housing-construction challenge. North Bay Business Journal. Jan 2nd.

So that is what has caught my eye across this vast expanse at least economically.  One other bright item of news involves this morning's decision in a Thunder Bay courtroom exonerating the Chief of Police. Great to hear. All the best.

Looking Ahead to 2018

Well, it is the New Year and as always it is a time of reflection and looking ahead to see what the New Year might bring for Canada, Ontario, northern Ontario and naturally The Most Serene Kingdom of Thunder Bay where there is always optimism. Of course, 2017 has been a pretty tumultuous year but 2018 is also looking turbulent given the changes poised to take effect as well as events around the globe. However, on the bright side, the global economy is expected to do reasonably well according to Goldman Sachs or then perhaps not if you listen to Morgan Stanley. At least, Canada will not be Venezuela which FocusEconomics expects to be 2018’s most miserable economy though Canada is expected to be in the top ten for nominal GDP.  

Nevertheless, this year will certainly be a test of the aspiring nature of current economic policy in Ottawa and Queen’s Park.  At the top of the list, the United States will dramatically lower business and personal tax rates effective January 1^st.  The last time this happened in the 1980s, Canada countered with the federal tax reforms that lowered rates and broadened the rates.  This time, no such response appears to be coming despite the fact the federal business tax rate in the United States is expected to fall from 35 to 21 percent.  A saving grace is that new US corporate tax rates will match rather than fall below Canadian ones.

If the US economy booms in the wake of its tax cuts, Canada might be expected to benefit from increased trade.  Yet, federal economic leadership is adrift on the trade front given the United States is playing hardball on NAFTA and talks with China and the Asia Pacific are stalled.  The aspirational tone of current trade talks is not bearing fruit given Chinese and American reactions. Indeed, the possibility is high that Trump will pull the plug on NAFTA early in the New Year.

On the plus side, we can take solace in the fact that while the United States is playing hardball on trade, Donald Trump considers Justin Trudeau a “friend”.  One can only imagine our trade talks with the Americans if Donald Trump was dealing with enemies. Perhaps we can look forward to a visit to Canada by President Trump in 2018.

At the federal level, we can also take cheer in the most recent Federal Department of Finance’s long-term projections (a few days before Christmas when no one is paying attention) that the federal budget is now expected to be balanced by 2045 compared to the 2050s as forecast in last year’s long-term forecast.  Given the international situation with North Korea, the United States, Russia, China, and the Mid-East, the world should last so long.  Where is Lester Pearson when you need him?

Added to all this are expected increases in interest rates for 2018 and the tightening of mortgage rules with a new stress test. The stress test will effectively function like an increase in the interest rate for home buyers without the added stress of implementing an actual increase for the Bank of Canada. These changes are anticipated to have a depressive effect on Canadian housing markets especially outside of Toronto and Vancouver.  As for Toronto and Vancouver, being in an economic world of their own, they should only slowdown a bit.

Things are marginally better when moving into Ontario. Ontario’s economy has done relatively well in 2017 though NAFTA talks are inevitably keeping Premier Wynne awake at nights. While Ontario is expected to balance its operating budget, debt will continue to grow based on the forecast capital spending ranging from public transit to high speed rail. Yet, it is also not a done deal that Ontario’s era of deficits is over given what appears to be a ramping up of spending with implications for the future.  Moreover, the increase in the minimum wage and other regulatory changes that are being phased in with respect to employment standards, scheduling, and overtime mark the debut of a massive experiment.  How much change can employers absorb before throwing up their hands and scaling down their operations?

Ontario is also on track to a June election and many of the progressive initiatives of the current Wynne government are designed outflank the NDP given the Conservatives under Patrick Brown have sailed into the centre of the political spectrum with their policies.   The Wynne government’s policies are aspirations for a more socially just Ontario with less weight placed on trade-off between equity and efficiency.  Along with the guaranteed annual income experiment, there is also a new youth pharma care program.  

In the end, all three political parties in Ontario appear to be placing themselves along a centre-left alignment meaning that Ontarians can expect government spending and debt to maintain their current trajectories no matter who wins.   

Of course, more government spending will be seen as good news for northern Ontario given the economic dependence on government. While the resource sector saw some marginal improvements in 2017, the development of the Ring of Fire still appears to be quite distant though 2018 being an election year one can expect to see a number of positive inspiring announcements with respect to its future.  As well, it will be interesting to see if there is any mention of the “success” of the Northern Ontario Growth Plan in the next provincial election campaign.  Any mention of the 25 year plan to boost the economy of northern Ontario that started in 2011 will likely mention the wonderful things yet to come - after all, we have yet to reach the halfway mark.

As for Thunder Bay, its economic engine is government activity as the core sector with subsequent commercial and retail activity an economic multiple of this core.  It is a recipe for stability that works given that the city’s economy has been static in terms of employment for several decades.  Rising public sector salaries and incomes provides a base for municipal taxation and further local public-sector employment and the process will continue until the flow of public money is constricted – which does not appear to be any time soon.

Why tamper with perceived success? This means the current batch of local politicians – provincial and municipal – will all be re-elected come June and October and everyone will go back to sleep.  The northern Ontario economy and Thunder Bay in particular have become a sort of economic Brigadoon – an isolated sleepy region coming magically to robust economic life every 100 years. 

Yet, despite the evidence of slow economic and employment growth from Statistics Canada and the Conference Board, its boosters have often maintained that Thunder Bay is one of the fastest growing cities in Canada and with some of the lowest unemployment rates in the country.  That the low unemployment rates in Thunder Bay's case also mean the labour force has been shrinking faster than employment is apparently not seen as a cause for concern. 

I suppose it depends on what indicators you wish to measure growth with and your interpretation of the evidence. I guess who am I to argue with Thunder Bay’s ruling political class when it comes to the interpretation of economic arguments and indicators. In the end, their attitude towards and understanding of economists is best summarized by the line once made by one city politician:"You want to listen to economists? They record history. They don't make history."

Given the last real boom period in northern Ontario was the resource commodity and baby booms of the 1950s and 1960s, we can expect the regional economy to again awaken circa  2050 – roughly the same time the federal budget is expected to balance again.  By then, perhaps the federal government will carry the public sector spending ball for northern Ontario and give the provincial government and municipalities a rest.

Happy New Year and may God save us all.

Thunder Bay Building Permits: A Reality Check

A recent TBnewswatch story reported  the estimated value of building permits in Thunder Bay in 2017 was up substantially from the year before  at 146 million dollars.  Based on the numbers presented in the story, the increase in 2017 can be calculated at approximately 55 percent.  This is of course an upbeat year end story. Given the coming year will see both a provincial and municipal election, one can expect these types of numbers to be presented by local politicians as evidence that Thunder Bay's economy is doing well. However, it is important to adjust these kinds of number for inflation - that is present them in real dollars - as well as look at more than two years of data.

This is done in Figure 1.  Using annual total value of building permit numbers from Statistics Canada for 1998 to 2016 and adding the 2017 estimate from the City of Thunder Bay's Chief Building Official and then deflating using the CPI, the real value (in 2016 dollars) of total building permits is presented.  The good news is that 2017 is indeed up from 2016 but there has been an overall downward trend from peaks in real value reached in 2012 and 2013. Over a longer term view, a fitted linear trend suggests that there has been a slight increase in the real value of permits since the late 1990s but the 2017 performance is really not much higher than a decade ago or even two decades ago.


One can view the above chart as good news in the sense that construction activity over time in Thunder Bay over the long haul has been reasonably stable and perhaps even characterized by some very modest growth.  It should be noted that this activity is composed mainly of residential followed by institutional and government construction projects.  Indeed, the peaks in Figure 1 are much less impressive once you remove the government and institutional permit values. 

The composition of these permits is provided in Figures 2 and 3.  Figure 2 presents an area graph based on annual numbers while Figure 3 simply aggregates all the permits since 1998.  Nearly thirty percent  building permits since 1998 are of institutional and public sector origin.  Industrial permits are below 10 percent.  Commercial permits have been surprisingly large as a proportion of the total which is actually a cause for some optimism given that they reflect private sector perceptions of economic opportunities in Thunder Bay.

Thunder Bay Employment Flat for Forty Years

My recent Fraser Institute Blog post on employment growth in Canada at the provincial and CMA level since 2007 appears to have attracted a fair amount of interest if only based on the hits via my Linkedin page.  The article was posted on the Fraser Blog on December 4^th and by December 14^th, it had garnered 1,515 views.  The interest has been quite pronounced from Linkedin profiles in Ontario and of course particularly from the Thunder Bay area. As a follow-up, I decided to look at employment levels in Thunder Bay and Greater Sudbury from a longer-term perspective using data from Statistics Canada.

Now Statistics Canada has annual province level unemployment rates and employment data available on its site from 1976.  Its annual CMA level data only appears to go back to 1987.  So, in order to generate CMA employment levels and unemployment rates for Thunder Bay and Greater Sudbury prior to 1987, what I did (acting on the suggestion of my Lakehead colleague Rob Petrunia) was run regressions of CMA level employment and unemployment rates for both cities on the Ontario data along with a time trend variable.  The assumption is that employment levels and unemployment rates in the two cities should reflect what is going on in the province as a whole. The regression results were then used to estimate fitted values for Thunder Bay for the period 1976 to 1987 and for Sudbury from 1976 to 1990 (Sudbury data starts in 1990). 

The results are intriguing.  Figure 1 plots the unemployment rates in the two cities from 1976 to 2016 and there seems to be some good news here.  While unemployment rates in both cities fluctuate a great deal over time, they have generally trended downwards since the late 1970s.  The average unemployment rate in Thunder Bay between 1976 and 1985 was 9.7 percent while in Sudbury it was 11 percent.  Over the period 2010 to 2016, Thunder Bay’s unemployment rate was 6.1 percent while over the same period in Sudbury it was 7.5 percent. 

 

However, the good news seems to end when employment levels are examined in Figure 2 – at least for Thunder Bay.  Sudbury has seen its employment grow over time while Thunder Bay has essentially remained flat. In 1976, estimated total employment (full and part time) in Thunder Bay was 61,224 and in Sudbury it was 60,475.  By 2016, Thunder Bay’s employment was 60,100 while in Sudbury it was 81,700.  In other words, over 40 years Thunder Bay has essentially remained flat in terms of its employment level – indeed there has been a slight decline of 2 percent since 1976.  As for Sudbury, its employment level has grown by 36 percent since its estimated 1976 value.

 

A declining unemployment rate when total employment is growing can be seen as good news.  A declining unemployment rate when total employment is declining means that your labour force is actually shrinking faster than your employment level.  For Sudbury, a lower unemployment rate is good news given that it has been accompanied by rising employment.  For Thunder Bay, a declining unemployment rate is a misleading indicator and masks the moribund nature of its economy given that its employment level has been essentially the same for 40 years. 

Economic News Around the North, December 9th Edition

Winter finally arrived here in Thunder Bay this week with a plethora of  snow, cold and ice.  I left for a short trip to Montreal on Monday afternoon with rain and warm temperatures and returned the next evening to a winter wonderland.  What better way to spend a cold Saturday here than by warming up the house with homemade pizza....



Without further ado, here are some of the stories making the economic news recently in northern Ontario.

Rising tourism boosts local economy. TBNewswatch, November 25th, 2017.

This is yet another positive economic impact story. However, tourism falls far short of the economic impact of Lakehead University as one recalls from this past story.

The Ring of Fire and its associated "production facility" have also been making the news again in the region.

Sault mayor confident in Ring of Fire Smelter pitch. Northern Ontario Business. November 21st, 2017.

Smelter won't go where it's not wanted, Noront. Northern Ontario Business, December 6th, 2017.

The smelter (or the "production facility") is seen as providing volume that would make the troubled Ontario Northern Railway more viable....

Noront facility could make ONR viable: Timmins councillor, Sudbury Star. December 9th, 2017.

Of course, if you don't get the smelter, there is always the option of storing nuclear waste.  Ignace, Manitouwadge and Hornpayne are all still in the running along with two sites near the Bruce Reactor - South Bruce and Huron-Kinloss.

Nuclear fuel bunker shortlist includes 2 sites near Bruce reactor. CTV News Kitchener. December 6th, 2017.

Despite the allure of smelters and nuclear waste disposal sites, there is still a search for economic visions in the north.  The Sault is obviously taking the lead in what is one of northern Ontario's booming sectors - economic development consultants.

Sault Ste. Marie seeks economic development vision.  TheSudburyStar.com. December3rd, 2017.

And another economic development vision seems to be in the offing in Timmins....

Bolivian economic development group in Timmins. Timminspress.com. November 27th, 2017.

On a positive note....

Sudbury adds 600 jobs in November. TheSudburyStar.com. December 2nd, 2017.

However, Sudbury's unemployment rate edged up slightly to 6.2 percent from 6.1 percent.  Meanwhile, Thunder Bay's rate also went up to 6.1 percent from 5.8 percent the previous month.

Another item of relevance to northern Ontario.

Indigenous youth key to Canada's economic growth. Business Vancouver. December 5th, 2017.

Have a great weekend! Its time to enjoy the pizza.

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.

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 30^th 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.

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.

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.

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.

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.

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.

North's CMAs Sluggish When it Comes to Building Permits

The June 2017 building permit numbers from Statistics Canada are out today and they show that the total value of building permits rose in six provinces in June, led by Quebec and Manitoba. Meanwhile, permits were up in 14 of 36 census metropolitan areas (CMAs), led by Toronto, Montréal and Winnipeg with Hamilton reporting the largest decline in June (-60.0%).

The year to year results (June 2016 to June 2017) are shown in the accompanying figure for Canada's CMAs.  All CMAs grew 24.3 percent. They range from a high of 172 percent for Halifax to a low of -81 percent for Moncton.  As for Thunder Bay and Sudbury, they both show a negative performance with -2.7 percent for Thunder Bay and -4 percent for Greater Sudbury.




This building permit report comes in the wake of Conference Board Reports showing that these two cities have sluggish economies. However, with respect to building permits in Ontario they are not doing as badly as Hamilton, Windsor, Peterborough or St. Catharines.  Another intriguing result is the Ottawa area where Ottawa/Gatineau shows annual growth of 13.7 percent but the Gatineau part is at -12.7 percent and the Ottawa part grew at 18.9 percent.

Economic News Around the North: August 3rd, 2017 Edition

Well, we are about to start a long weekend so why not stock up on some reading material related to the northern Ontario economy.  To start off, a couple of big picture items with important implications both economically and politically.

Why Canada would be directly in the way of a North Korean nuclear war. National Post. August 3rd, 2017.

It turns out the world is round after all and the shortest route to the United States from North Korea is a curve and the curve takes North Korean missiles right over Canada on their way to destinations like New York or Denver.  Looking at the map on this story carefully and one can see that the way to Chicago comes pretty close to Thunder Bay.  One wonders if the North Koreans are aware that Thunder Bay (actually the twin Lakehead cities of Fort William and Port Arthur) once styled itself as the up and coming  "Chicago of the North".  Hopefully, the North Koreans have updated their intelligence and will not get Thunder Bay confused with Chicago - not that it will really matter much if we head off into global thermonuclear war.  Where is President Trump's "Wall" when we really need it? I guess, we should all just move to Australia and hang out "On the Beach" with Nevil Shute.

Here in the north, we might want to use our enhanced political clout to get the Ontario government to take on North Korea. However, another story in the National Post is not too taken with the potential for two more northern Ontario riding.

Josh Dehaas: Ontario Liberals plans for two new ridings could violate the Charter and cost PCs the election, National Post, August 3rd, 2017.

In other news:

Thunder Bay Economy Sluggish-Conference Board of Canada. NetNewsLedger, August 3rd, 2017.

Personally, I think sluggish as a description of Thunder Bay's recent economic performance is a bit of an understatement.  However, there does appear to be a fair amount of recent hotel, condo and apartment construction so obviously all things considered a lot of people want to live in Thunder Bay either permanently or temporarily despite the economy and the bad national publicity.  The Economics Department at Lakehead just hired a new colleague so there is another addition to the local population (4 if you include family).  Welcome back to Lakehead Karl & family!

New $15 million plant opens in Timmins. Sudbury Star, July 20, 2017.

It is heavy industry tied to the mining sector.   A  Timmins-based speciality plant called The Bucket Shop for the creation and manufacture of custom heavy equipment buckets for front-end loaders, scoop trams, excavators and even dozer blades for mining and construction industries.  If you are in Timmins, put a visit to it on your bucket list.

Which way Sault Ste Marie? Northern Ontario Business. August 2nd, 2017.

Tom Dodds resigns from EDC.  Sault Star, August 1st, 2017.

Well, things are economically uncertain in the Sault so it is time for a new strategic approach to economic development. According to the story: " Under the new organizational flowchart, the EDC will handle business retention, attraction and expansion; export opportunities, infrastructure development, and tourism. The Innovation Centre will oversee technology and innovation development, provide support for tech companies and start-ups, run the Community Geomatics Centre, and handle special projects like the lottery and gaming initiatives, energy projects, and agricultural opportunities. The municipality, itself, has set up a Community Development Fund and will steer the development of a strategic plan, handle community promotion, arts and culture development and work on the labour front to attract newcomers and bring home ex-pats."

As an economist, restructuring your economic development approach is more of a political gesture designed to convey concern for the economy as economic fundamentals for the Sault like much of the north remain the same.  Still, I am not running for office and if I were I guess I would accept the need to look proactive.

If you are marketing your local economy, this is not good:

Sudbury lands 8th on list of bed-bug ridden cities. CBC Sudbury, August 1st, 2017.

Sault Ste. Marie came in 23rd out of 25.  For once, Thunder Bay did not make this type of list.

Sudbury is getting a new events center (not in the downtown) and an economist even suggests how it will be paid for - by taxpayers.

Robinson: how we'll pay for the events centre.  Sudbury Star. July 24th, 2017.

And as for the goings on in North Bay:

The hard numbers behind North Bay's population decline. BayToday.ca, August 2nd, 2017.

Well, that is all for this edition of  Economic News Around the North.  By the way, here is a great Pan Northern Link for news in general. Have a great long weekend!