Recovery is underway thanks to ‘strong vaccination campaign’: Central 1 analysis

TORONTO —The latest Economic Analysis of Ontario 2021-2022 was released recently illustrating how after over 18 months of strict public health restrictions, the economic recovery is underway in Ontario, supported by a strong vaccination campaign and the implementation of vaccine passports for entry into non-essential businesses.

This report, by Central 1 regional economist Edgard Navarrete, examines the current and future economic scenario for the 11 regions in Ontario.

Some of the highlights from the analysis include:

• From now until the end of 2022 the goods sector, which has been relatively insulated from the pandemic effects, will remain stable, but services sector growth will outstrip goods-sector growth as non-essential service-sector employers continue to recover and hire at a greater pace to return to full capacity utilization.
• Ontario’s employment growth is forecast to increase by 4.3 per cent in 2021 and by an additional 3.2 per cent in 2022.
• Increased job opportunities will entice many to return to the labour market, pushing up labour force growth, yet employment growth will outstrip labour force growth in many regions ensuring the unemployment rate province-wide continues to slide down to 8.2 per cent in 2021 and declining further to 7.3 per cent by 2022.
• While future residential investments in Ontario are forecast to remain strong in 2021 and moderate into 2022, the opposite will occur for private-non-residential investments. In 2021, large amounts of government spending on projects will lift non-residential permit volumes off setting somewhat large losses in commercial and industrial investments. By 2022, the tide will turn and businesses will step off the sideline and begin investing in future capacity.
• Ontario-wide, residential permit volumes are forecast to increase 39.6 per cent in 2021 and 2.6 per cent in 2022. Non-residential permit volumes are forecast to decline 5.4 per cent in 2021 and rebound 5.4 per cent in 2022.
• Ontario’s resale housing market will remain tight for the remainder of 2021 with demand outpacing supply, ensuring average selling price continues to climb. By 2022, as mortgage rates begin to rise and affordability erodes pricing out many potential buyers, the resale market will moderate considerably from the heights reached over the pandemic but remain well above recent trend.
• Province-wide, sales are forecast to climb 20.6 per cent in 2021 and slide down 1.2 per cent by 2022.
• Supply chain issues will continue to dampen the scope of recovery particularly in the goods sector in key areas for Ontario such as manufacturing, enhanced by skills shortages as a result of the pandemic.