NORTHERN ECONOMIST 2.0

Wednesday, 20 September 2017

The Not So Giving North?

Well, here is some interesting data on median donations by Ontario CMA in 2015 available from Statistics Canada (Table 111-0001). It is of course useful as an index of local generosity to charitable causes. Please note it is not a complete index as it only takes into account the value of donations and charitable activity also can involve a great deal of donated volunteer time - which this measure does not capture. Nevertheless, Figure 1 is somewhat disappointing when one looks at the performance of northern Ontario.

The median donation ranges from a high of $470 for Wellington Centre to a low of $140 dollars for Petawawa. With the exception of Elliot Lake which is in the middle of the distribution, northern Ontario cities are all clustered in the bottom third. Elliot Lake comes in at $340 followed by Kenora at $290, North Bay at $270 and Thunder Bay at $260. Timmins and the Sault are at the bottom of the northern median donation list at $160 and $210 respectively. It is a somewhat disappointing performance given our self-perception as being very community minded.

Of course, a possible explanation could be that the value of donations is a reflection of lower incomes in the North. However, as my last post demonstrated, income growth has been pretty robust in northern Ontario. Moreover, as Figure 2 shows, the median income of donors across Ontario CMAs shows that the northern Ontario CMAs are more dispersed across the income range. Donor incomes in northern Ontario CMAs are not clustered at the bottom. Elliot Lake, is at the bottom of the donor income plot and yet is the most generous northern Ontario CMA whereas Sudbury which has the highest median donor income is near the bottom when it comes to median donation values.

Needless to say, I am not too despondent over this. While all I can offer is anecdotal evidence, I think that donors in northern communities probably are much more giving of their time than money when it comes to charitable activity. Thunder Bay for example has numerous community events - most recently the 2017 18U World Cup - that are only possible via the selfless activity of numerous volunteers. Then there are the activities of food banks and other facilities that also rely heavily on donated time. So, in the end, when it comes to charity, I think money is not everything. Still, it would be nice to see those numbers go up. If Elliot Lake can do it, why not everyone else.

Wednesday, 13 September 2017

Household Incomes in Ontario: Northern Exceptionalism

Statistics Canada has released the figures for median household income in Canada from the 2016 census providing comparisons for the period 2005 to 2015. The median total income of Canadian households rose from $63,457 in 2005 to reach $70,336 in 2015 - an increase of 10.8 percent. This growth was led by the resource intensive provinces and Ontario appears to have done particularly poorly- it had the lowest growth rate at 3.8 percent. Even Quebec did better at 8.9 percent - the second lowest growth rate. Almost every metropolitan area in Ontario saw growth below the Canadian average - with an interesting set of exceptions.

What is interesting in these numbers given Ontario's poor performance is the performance of the major northern Ontario cities, what I like to term the N-5: Thunder Bay, Timmins, Greater Sudbury, Sault Ste. Marie and North Bay. Incomes in three of these five cities all grew above the Canadian average - a much better batting average than the rest of the province. Moreover, all five of these cities grew above the Ontario average.

Figure 1

Of course, median household incomes in these northern Ontario cities are still below the Ontario median (See Figure 1) but over the course of a decade they appear to have closed the gap substantially despite the forest sector crisis and other assorted slings and arrows. Indeed, as Figure 2 shows that median household incomes in Timmins, Sudbury and North Bay all grew above the Canadian and Ontario average. Thunder Bay and the Sault did not top the national performance but they still topped the provincial performance.

Figure 2

If you are wondering about income growth in some other Ontario cities, for the record: Toronto (4%), Hamilton (5.3%), Ottawa (4.4%), London (-2.1%), Windsor (-6.4%). The urban north of the province appears to have done surprisingly well in the median household income sweepstakes and this probably represents another factor in why house prices to date have been as robust as they have been in places like Thunder Bay and Sudbury.

Thunder Bay Housing Coming Down

A report by Moody's Analytics reported in today's Globe and Mail says that higher interest rates, newer mortgage-lending rules and declining affordability are together going to put a damper on the growth of Canadian housing prices. Indeed, the price of single family homes in Canada is forecast to only grow at 1.3 percent annually over the next five years but there will be considerable variation across the country. Larger urban centers with growing populations particularly in southern Ontario will do better while many other cities will see declines.

As the accompanying graph constructed from data provided in the Globe article shows (July forecast), Toronto and Hamilton are still expected to lead the pack at growth rates of 7.7 and 5.8 percent respectively but after that the growth rates drop off and indeed move into negative territory.

Thunder Bay is expected to see annualized declines of 5.4 percent. Reasons for this are falling median incomes, slow population growth rates and slow rates of household formation - along of course with the fact that interest rates are on the way up. Other housing price reports on the Moody site also show that Greater Sudbury is forecast to have price declines. The May 2017 report for example (the April forecast) noted Sudbury prices over the next five years would decline by 1.2 percent annually. The same report also had Thunder Bay declining by 1.2 percent annually with a substantial revision now in the new report. What has changed over the last few months? Interest rates.

I think interest rates are really the big factor here given that Thunder Bay's housing prices managed to double over the last 10-15 years despite the weak economy and flat population growth. Not quite the growth of the GTA but still quite remarkable given the local demographics and economic performance.

Friday, 8 September 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.

Monday, 4 September 2017

Northern Ontario Wildlife & Vistas

It is Labour Day and the official end of summer break and the start of a new academic year. Traditionally, this weekend also marks the end of summer fashions such as white shoes though strict adherence to such practices have rarely characterized the social circles I move in. Summer in Thunder Bay can be quite pleasant though this year was a little cooler than usual. Nevertheless, the scenery this year was greener than usual due to the rain and the cool temperatures. The trees in my yard filled out very nicely and their canopies provided a home for quite a few birds including this visitor under my pear tree...a Red Tailed Hawk I believe.

Red Tailed Hawk from my dining room window

And from the basement window

We were alerted to the hawk's presence by some shrill shrieks outside and it appears the hawk had managed to find something to eat. The hawk's presence may be a factor in why the yard has been so quiet today when it comes to bird song in general.

On another day while walking along the nearby trail, came across one of nature's armoured tanks. I was surprised to see this out in the middle of the day and plodding along on its way to the nearby river.

Also managed to get out to Nipigon this summer for a day trip that involved a visit to the waterfront, a short hike along the trail to Red Rock and then a very nice lunch at the Edgeview Restaurant. A shot of the Nipigon River from the trail and another that also manages to include the new bridge - which incidentally is still a ways from being finished.

Not a bridge too far, a bridge that does not yet go far enough

The scenery in Nipigon was very pleasant and the visit also include a stop at the recently unveiled Paddle to the Sea Park. Those of you who are of a certain age will likely remember the children's book and NFB film.

And one final picture from my summer sojourns around Thunder Bay and the North. A shot of me and one of my minions! Every self respecting economist must have an abundance of minions to support their policy prescriptions and points of view.