March 12, 2013
An Economic Profile of our Nation’s Capital
Chief Economist, CanaData
When we think about Ottawa, it’s usually the political intrigue that comes to mind first.
But Census Metropolitan Area (CMA) Ottawa, which includes both an Ontario component and a Quebec (Gatineau) side, is one of the largest population centres in the country. Therefore, there is a considerable economic impact to take into consideration as well and that will be the focus of this article.
Among the nation’s 33 largest cities (by population), Ottawa-Gatineau (+1.3%) ranked 15th in year-over-year employment growth in January 2013. The national figure was +1.6% and Toronto, by way of comparison, was +4.6%. (Toronto is currently doing quite well in job creation, ranking 5th overall.)
Ottawa stood slightly above the middle of the pack in job creation. City employment growth is ranked from fastest (best) to slowest (worst).
As for its unemployment rate in the latest month, Ottawa-Gatineau stood in 12th position at 6.4%. Canada’s overall unemployment rate in January was 7.0%. Toronto performed relatively poorly with an 8.2% jobless rate and a 27th-place spot.
The city jobless rates are ranked from lowest (best) to highest (worst).
Over the past year, employment in the private sector in Canada has risen 1.8%. Employment in the public sector – which is proportionally more important for Ottawa than in most of the nation’s major cities – has increased by a lower rate, +1.2%.
The fact that public sector employment nation-wide has increased at all is a surprise. All levels of government have spent the past couple of years touting the benefits of (and need for) spending restraint.
It appears the “feds” have done better on payroll reductions than the rest of the country. “Public administration” employment in Ottawa in January 2013 was -3.4%, falling from 164,000 to 159,000.
According to the latest information from Statistics Canada, construction employment in Ottawa-Gatineau has been charging ahead in the latest 12 months, up 23.7% to 42,800 on-site positions in December 2012 versus 34,600 in December 2011.
Home starts in Ottawa in full-year 2012 versus full-year 2011 were +7%, with singles at -22% and multiples, +23%. In other words, similar to Toronto, it was the multiple-unit market that maintained strength in the residential sector.
(As an aside, I remember staying at a hotel near the Parliament buildings in June of last year and counting eight high-rise construction cranes from my window. That’s an impressive figure.)
Statistics Canada’s new homes sales price index for Ottawa-Gatineau in November of last year was +2.8%, which compared favorably with the national average of +2.2%.
According to the Canadian Real Estate Association (CREA), the average sales price of an existing home in Ottawa in December 2012 was $337,000, which was basically flat (+0.5%) on a year-over-year basis. The national increase was +1.6%.
The average price of a “resale” home in Ottawa is 70% of what one would expect to pay in Toronto.
Vancouver home prices are the highest in the country and they are 143% of what the market is currently bearing in Toronto – or double the price of existing homes in Ottawa.
The city’s second most prominent employer, beyond the public sector, is high-tech. While it’s primarily an indication of how technology firms are doing in the U.S., it’s still worth recording that the NASDAQ index has beaten Dow Jones Industrials, the S&P 500 and the TSX since the end of the recession.
Versus their trough levels – which occurred in February 2009 for all four indices – NASDAQ is +128%; the DJI is +96%; the S&P 500, +104%; and the TSX, +56%.
Ottawa has a relatively stable economy, with a great deal of support coming from the public sector. Toronto and Montreal, while well-diversified, still have large industrial sectors (autos and airplanes) that can display volatile swings.
And cities in the rest of the country are, to varying degrees, being held back by commodity prices that have not returned to their pre-recession peaks.
Ottawa also has a fairly aggressive program of rapid transit expansion underway. A $2.1 billion “Confederation” light-rail line will travel 2.5 kilometres under the city’s downtown as part of its total east-west length of 12.5 kilometres.
In transit work, Ottawa is matching what is taking place in many of the nation’s other major cities, with Toronto and Vancouver in the vanguard.
Also in line with several other major Canadian cities, a sports entertainment complex is important on the local construction scene. A major renovation project at Frank Clair Stadium is underway. Various legal problems have pushed the completion date back to 2014.
When the seating is finished, the city will be home to a new team – the city’s third, after the long lamented Rough Riders and the more recently deceased Renegades – in the Canadian Football League (CFL).
Elsewhere in the country, work on a new Ivor Wynne Stadium is proceeding in Hamilton, to host the Tiger-Cats in the CFL. The venue will also ring to the cheers of fans watching soccer matches during the 2015 Pan Am Games.
In hockey, an arena is under construction in Quebec City (a modern Colisée), with the hopes that a new NHL franchise can be acquired or an existing attendance-challenged team lured to the site.
And in Edmonton, City Council has just worked out an agreement with the Katz Group on funding for a new hockey arena for the Oilers. Â
In 2017, Ottawa will be the focus of national celebrations for Canada’s 150th birthday.
Switching gears for a moment, the next federal election is tentatively scheduled for October 19, 2015.
The hot-button political topics at this time are the Liberal Party Leadership race and the question of what, pray tell, are we to make of the shenanigans in the Senate?
First, one Senator is arrested for domestic violence and placed on suspension by Prime Minister Harper. Then several other high-profile Senators become embroiled in a scandal over their expense claims and the true locations of their residences.
Let’s close by returning to the opening lines of this article and filling in some of the detail.
CMA Ottawa-Gatineau is the fourth largest city in the country by population, behind Toronto, Montreal and Vancouver.
At 1.27 million, the breakdown is approximately 950,000 citizens living on the Ontario side of the dividing river (the Ottawa River or Rivière des Outaouais) and 320,000 on the Quebec side.
For more articles by Alex Carrick on the Canadian and U.S. economies, please see his market insights. Mr. Carrick also has an economics blog.
