Improving US Economy: When will its Impact be felt in Ontario?
The province of Ontario is in an unusual situation given that it could boom again if the US economy thrives. Stats show the province isn’t responding like it used to. There’s a time lag, and economic recovery may be still a little ways off yet.
The latest US job growth numbers are out and performance was much better than the experts expected. In June, the US saw 281,000 new jobs. Job gains are one of the most significant signs of economic activity.
As the US’s biggest trading partner, we stand to gain a lot when the US economy recovers. This is the 4th straight month of gains. To contrast that with our economy, consider that in all of 2013, Ontario saw 96,000 jobs created.
Mark Zandi, Moody’s Analytics chief economist said “The job market is steadily improving … Judging from the job market, the economic recovery remains fully intact and is gaining momentum.” regarding the US Economy.
Given some estimates of Ontario’s economy in the next few years are positive, some of them are based on a lower dollar. In fact, the loonie is rising at just above 84 cents US.
However, the latest report from RBC and its manufacturing index, the US economy may already be fueling our return to health.
Adjusted for seasonal influences, the headline RBC Canadian Manufacturing PMI registered 53.5 in June, up from 52.2 in May, to signal the sharpest overall improvement in business conditions since December 2013. The rise in the headline index was mainly driven by stronger rates of output and new business expansion. From Wall Street Journal.
Quebec, Alberta and BC had the best improvement. Clearly, Ontario has some hurdles (aging population, corporate tax rate). Certainly the harsh winter we just suffered through has had a bad impact in the US and here in Ontario. There’s little doubt that as the US economy gets rolling, it will produce jobs here in Ontario, and in particular, the GTA.
According to a report in Troy Media, an upswing in growth should happen in 2016 and 2017 where we may see 3% growth. It’s my opinion, that the loonie will not fall against the greenback and oil prices likely won’t decline. That creates challenges for Ontario manufacturers. The solution is creativity. There is little we can do about current investment levels or currency advantages, therefore, we need to accept it and become more innovative.
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