Peel's Economic Pulse

Executive Summary

The Global Economy

The global economic recovery which started in 2009 faltered in 2011, resulting in the attainment of a lower than expected expansion in global output. For the full year 2011, the pace of growth in global output fell below both the growth registered in 2010 as well as below the forecast made at the beginning of the year.

The year started with an extension of the global recovery. The pace of growth quickened as economic growth in the major developed economies continued to strengthen. At that time, global growth was characterized as entering a more mature stage of the recovery which appeared to be laying the base for sustained global economic expansion. However, as the year progressed, a number of challenges emerged and profoundly influenced economic performance across the globe. These challenges included:

The earthquake in Japan in the first quarter of the year;
The intensification of challenges in some European economies;
Fiscal consolidation in many developed countries; and
Slower growth in emerging economies

These factors influenced a slowing in the growth of global output in 2011. Based on estimates by the International Monetary Fund (IMF), the growth in global output slowed to about 3.8 per cent in 2011, down from a growth of 5.2 per cent in 2010. The slowing was more pronounced in advanced economies where growth was halved to 1.6 per cent in 2011. Growth also slowed in emerging economies but at a much slower rate, moving from 7.3 per cent in 2010 to 6.2 per cent in 2011. Similarly, the growth in the volume of international trade also slowed to 6.9 per cent in 2011, down from 12.7 per cent in 2010.

In addition to slower growth, global unemployment levels remained stubbornly high in 2011. According to the Organization for Economic Co-operation and Development OECD, historically high unemployment remained “one of the most pressing legacies of the recent crisis”. An estimated 45 million persons in OECD countries remained unemployed in 2011, most of whom were young people.

Current prospects for global growth remain under the cloud of slower growth in the United States (US) economy as well as an expected mild recession in Europe. In addition, emerging economies are expected to register another slowing in growth in 2012 as a weaker global economic environment and a slowing in internal demand are expected to constrain the rate of economic expansion.

Canada and Ontario
The Canadian economy registered a second consecutive year of growth in 2011. Measured by the change in total real Gross Domestic Product (GDP), the total output of the Canadian economy posted a growth of 2.6 per cent in 2011. This represented the continuation of an economic rebound following the recession in 2009 when total real Canadian GDP fell by 3 per cent. Â However, this also marked a slowing in the rate of Canadian GDP when compared with the 3.4 per cent growth in GDP registered in 2010.

The slowing in the pace of growth in the Canadian economy reflected to a large extent, the restraining impact of a slowing global economy on demand for Canadian goods and services. Reflecting this, growth in Canadian trade with the rest of the world slowed in 2011 and contributed to the overall slowing in Canadian GDP growth observed. However, a resilient domestic economy kept the growth momentum in the Canadian economy as both private consumption and investment remained relatively robust in 2011.

Alongside the continued growth in the Canadian economy, the Canadian labour market continued to improve in 2011. For the year 2011, the Canadian economy created 265,200 new jobs, an increase of 1.6 per cent. Â Most of the jobs created were full time positions in the service sector.

For 2012, Canadian economic performance is expected to remain positive. Current forecasts suggest that the economy will register a growth in the region of 2 per cent to 2.5 per cent. Growth is expected to remain anchored on strong domestic performance. External influence on growth is expected to remain relatively tame given the tepid growth expected in the US, a mild recession in Europe and a less robust growth in emerging economies.

The Region of Peel
Changes in Peel’s economy were positive in 2011 reflecting a myriad of positive influences during the year, chief among which were:

The positive macroeconomic environment:Â In 2011 Peel’s economy continued to benefit from the very accommodative macroeconomic policies which characterized the Canadian economy. In particular, interest rates remained near historic lows as the authorities sought to provide an environment that was supportive of continued economic recovery.
The continued impact of many strategic advantages innate to Peel: Â The many strategic advantages that are present in the Region of Peel remained the bedrock for positive economic changes in Peel in 2011. These strategic advantages include its location in the large economic center of the Greater Toronto Area (GTA), and the highly developed road and transportation network which allows for easy and quick access to the largest market in the world, the USA. These characteristics continue to support the attractiveness of Peel Region as a destination of choice for residents and businesses.

Reflecting these influences, most indicators of economic performance in Peel registered positive changes in 2011 as follows:

Total population: According to the 2011 census, in 2011, the total population in the Region of Peel was 1.297 million persons. This represented an increase of 11.8 per cent or 137,359 persons between the census year 2006 and 2011.
Total taxable assessment base: The change in Peel’s total taxable assessment base remained positive, registering a growth of 1.74 per cent in 2011, a comparable rate of growth to the 1.78 per cent registered in 2010.
Employment: Total employment in Peel’s labour market increased by 9,600 positions or by 1.6 per cent in 2011. A 2.8 per cent increase in full time employment supported growth.
Unemployment rate: With continued increase in employment, Peel’s annual average unemployment continued to fall, moving down from 9.9 per cent in 2010 to reach 8.5 per cent in 2011.
Building permits issued: In 2011, building intentions in Peel, as measured by the total value of building permits issued, continued to rebound from relatively low levels reached in 2009. For the full year 2011, the total value of building permits issued in Peel was $2.644 billion, up 28.5 per cent relative to the $2.057 billion attained in 2010.
Housing starts: In 2011, the total number of housing starts recorded in Peel increased by 50.8 per cent to 6,423 units, the highest number of starts registered in Peel since 2008.Â

Amidst growth in key economic indicators in Peel, the lingering effects of the recession continued to influence changes in other indicators. As at December 2011, there were 87,718 business establishments in the Region of Peel, down from 88,066 business establishments in the Region as at December 2010.

In the labour market, although labour market conditions continued to improve, the lingering effect of the recession continued through elevated unemployment rates. Peel’s unemployment rate fell by 1.4 percentage points in 2011 to reach 8.5 per cent. However, at 8.5 per cent, the unemployment rate remained above historic average. This helped to keep the level of Ontario Works (OW) caseloads at elevated levels. In 2011, the total number of OW caseloads registered in Peel was 184,501 cases, up 5 per cent when compared with the 175,776 cases recorded in 2010. Measured in terms of monthly average caseloads, this translated into an increase from 14,648 cases in 2010 to 15,375 cases in 2011.

Peel’s Economic Outlook
Changes in Peel’s economy are expected to remain positive in the short to medium term. The continuation of a very accommodative macroeconomic environment is expected to continue to be a key underlying factor for the expected growth. However, a number of challenges are likely to remain. The most influential challenge is expected to be the sluggish growth expected in the global economy. This is likely to constrain the growth in demand for Canadian goods and services which is likely to affect a number of Peel’s export oriented industries in sectors like manufacturing, trade and transportation and warehousing. These industries account for a significant proportion of business activity and employment in Peel’s economy.

Over the longer term Peel’s growth prospects remain positive. The Region is expected to become the home of an increased number of persons with an expected annual average growth in population of over 1 per cent to 2031. Its business sector is expected to also continue to expand to underpin an increase in employment by a similar annual average rate of 1 per cent through to 2031.

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