Hamilton economy on upswing in 2010
Manufacturing upturn fuels growth for first time in 3 years
January 28, 2010
Steve Arnold
The Hamilton Spectator
http://www.thespec.com/News/Business/article/713281
Hamilton's economy will grow in 2010 for the first time in three years, a new study by the Conference Board of Canada concludes.
Driving a major part of that growth will be the first upturn to manufacturing output since 2003.
"All of the signs point to a good year for Hamilton," said Jane McIntyre, one of the authors of the Conference Board's quarterly Metropolitan Outlook report. "It's all part of the general world economic recovery."
McIntyre said recovery in the battered manufacturing sector -- which saw output shrink by 31 per cent from 2003 to 2009 and employment in Hamilton fall by almost 18,000 jobs, will be an especially good news story.
Manufacturing output is "finally starting to show some signs of life," she said. "That's going to drive improvements in the service industries and other areas."
The signs McIntyre reads include real gross domestic product, employment, unemployment rate, personal income per person, population, retail sales and housing starts. All of them, except employment, are forecast to increase this year over last and to continue rising through 2014.
The drop in jobs, and matching rise in unemployment, will be smaller than in the past three years, and the situation is expected to get better after this year.
Driving the key recovery in manufacturing will be improved demand in the U.S. for Canadian exports and the recovery in the steel-consuming auto industry.
Specifically, the Conference Board predicts demand for autos and parts this year will increase by more than 10 per cent, contributing to a growth in manufacturing output of 3 per cent.
Ruth Liebersbach, president of the Hamilton Chamber of Commerce, said the Conference Board outlook matches the chamber's reading of the economic tea leaves.
"It mirrors what we see as a fragile recovery," she said, attributing the fragility to continued slow growth in employment.
"As long as employment is down, people are going to remain cautious, but that increase in housing starts shows that people are starting to open their pocketbooks again," she said.
The uptick in manufacturing activity will be matched by a rise in construction across the city, especially in the housing market.
Last year, housing starts dropped to about half their 2008 level.
This year, the Conference Board said they're expected to spike to almost 2,500 from 1,857.
Starts of single-family homes began to bounce back in the third quarter of '09 and are predicted to surge 56.2 per cent this year.
Starts of multiple units -- apartments and townhouses -- will rise this year partly in response to provincial and federal government funding of social housing projects.
Together, housing starts are forecast to rise 34.4 per cent.
Construction activity outside housing will continue to boom because of road and sewer projects, work on the Hamilton cardiac care centre, $290 million in hospital renovations and construction of the CANMET Materials Technology Lab at the McMaster Innovation Park.
The improvement could be even greater, McIntyre added, if construction of the proposed light rail transit system goes ahead.
An improved outlook in manufacturing and construction will also drive an upsurge in the service sector where growth is expected to run between 2.6 and 3.1 per cent.
All of that activity will help boost the city's real estate sector, added Joe Ferrante, president of the Realtors' Association of Hamilton-Burlington.
"I think we're positioned in a good spot now," he said. "Any overall improvement in the economy is going to be good for real estate."