According to a new Scotiabank study, Ontario can expect to experience moderate growth through 2013 and 2014 at slightly less than the national pace, with further expansion anticipated across several export industries, and substantial infrastructure investment. Manufacturing has been a key driver to the province's growth this past year and will continue to be so, says the study.
Manufacturing gains
Manufacturing shipments increased nearly 5% last year, led by transportation equipment. According to Statistics Canada’s Public and Private Investment Intentions, manufacturing investment is set to increase 8% this year, concentrated in machinery & equipment. Significant auto sector investments are occurring in a number of locations including Ingersoll, Cambridge, and a research facility in Oshawa. Production increases are scheduled for facilities in Woodstock, Alliston and Oshawa. Since 40% of Ontario’s production is oriented towards cross-over utility vehicles, their increasing popularity has benefited the province. While motor vehicle assemblies will continue to climb, gains are forecast to slow to 5½% this year and just under 2% in 2014.
Adding to exports and employment, the aerospace sector’s growth in 2012 should extend into 2013 given an historically high level of unfilled orders. Beyond transportation equipment, machinery manufacturing has witnessed a solid expansion, with average annual shipments rising nearly 9% in the three years following the recession. Food and beverages, representing a one-eighth share of total provincial shipments, also should continue to record modest, but steady growth. The development of liquids-rich U.S. natural gas shales is reinvigorating Ontario’s petrochemical industry, with producers undertaking investments to switch from oil-based feedstocks to ethane (a Natural Gas Liquid).
Industrial sector leads investment
According to the Investment Intentions Survey, total business investment will soften this year, despite pockets of new initiatives in sectors such as autos and food processing. Commercial construction declined last year, but looking forward, office building construction will contribute to growth through 2014, led by the financial sector.
For more details of the study, visit www.scotiabank.com.
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