To say that Barrie’s economy is hot is an understatement. Since mid-2017, growth of total employment in the Barrie Census Metro Area (CMA) has averaged 15.8% year over year. This is by far the fastest pace of any of Canada’s 33 large urban areas.
Moreover, almost three-quarters of the jobs added over the past six months have been full-time and the bulk have been in the private sector. This very strong pattern of job growth combined with a slightly slower rate of labour force growth has caused Barrie’s unemployment rate to retreat from a high of 6.6% in August to a thirteen-and-a-half-year low of 3.3% in December, the lowest among CMAs in the country.
Across major industries, it appears that increased hiring by motor vehicle and automotive parts production companies is responsible for a disproportionate share of the 14,500 new jobs created in Barrie over the past twelve months. After shedding almost 5,000 jobs in 2016, manufacturing accounted for almost half of the new jobs since the beginning of last year. Specific firms which added staff include: Suzuki Canada, which opened their Canadian head office in 2017; SBS-Drive Tech and KBS Molding, both affiliates of the Burger Group of Companies; Prodomax Automation; Linear Transfer Automation; and Innovative Automation.
Midway through last year, existing home sales cooled significantly in the wake of the introduction, on April 24th, of the Ontario government’s “Fair” Housing Plan which applied a 15% speculation tax on properties purchased by foreign buyers and imposed rent controls on all rental properties built after November 1, 1991.
Given this sharp slowdown in home sales and the hostile regulatory climate for new rental projects due to the expanded rent controls, it is not surprising that the number of housing units started in the second half of 2017 was almost half (-41%) the number started during the second half of 2016. Virtually all of this pronounced drop in starts was the result of a 72% decline in apartments that more than offset gains in starts of row and semi-detached units.
We subscribe to the “consensus” view that the effects of the Office of the Superintendent of Financial Institution (OSFI)’s new minimum qualifying rate for uninsured mortgages that took effect on January 1 of this year, will temporarily depress home sales and housing starts in the first half of this year.
However, in light of the fact that Barrie’s inventory of completed and unabsorbed dwelling units is at a twenty-seven-year low, we expect home sales and new residential construction to strengthen in the second half of this year or early in 2019. Factors contributing to this improvement include the recent strength of full-time employment, the development of land at the south end of the city annexed from Innisfil in 2010 and the increased accessibility to the CMA afforded by recent upgrades to GO train service along the Barrie rail line.
After contracting sharply in 2016, the value of non-res building projects approved year to date in 2017 has edged up by just over 1%. This increase is due in large part to a sharp rise in institutional construction projects which has more than offset declines in industrial and commercial spending.
Within the institutional category, work has started on Georgian College’s Advanced Technology, Innovation and Research Centre. This academic institution, in partnership with Lakehead University, has started to offer engineering degrees. With respect to commercial construction, after a prolonged hiatus, efforts to develop Barrie’s downtown core are underway driven in part the Meridian Place and Memorial Square which will create an accessible “go to” space in the city centre.
Looking ahead, it is highly unlikely that Barrie’s job engine can maintain its current unsustainably-fast pace. However, a number of recent indicators suggest that in the near term it will continue to outperform the majority of CMAs in the country.
First, the prospect for a positive resolution of ongoing NAFTA discussions has improved the outlook for Canadian auto and auto parts manufacturers. Second, the impact of recent U.S. tax cuts should underpin consumer demand for motor vehicles and motor vehicle parts in both the U.S. and Canada. Finally, despite a recent decline, consumer confidence in Ontario is significantly higher than it was 12 months ago.
Barrie: year-over-year per cent change in employment and unemployment rate