Chart of the Moment

Heading into 2016, Hamilton’s economy seems to be picking up speed

Heading into 2016, Hamilton’s economy seems to be picking up speed

After a slow, cold-weather depressed start, the pace of economic activity in Hamilton appears to have improved significantly over the course of 2015.

This observation is based on the fact that over the past nine months, employment in the “ambitious city” has increased by 14,600 compared to a gain of 10,600 during the first nine months of 2014.

At first glance, the net 4,000 increase in total hiring does not appear all that significant. However, a closer look at the composition of jobs added year to date reveals that virtually all of the increase was due to a 30,000 gain in full-time hiring which more than offset a -15,600 drop in part-time employment.

This very strong year-to-date rise in full-time jobs (the largest in more than fifteen years) suggests that rising demand  — particularly for manufactured goods, as well as for financial and business services —  is causing firms, most of which are in the private sector, to take on full-time staff and also to substitute full-time for part-time workers.

Although severely chilled by cold weather early in the year, home sales rebounded quickly in the second quarter due in part to the effects of near record low interest rates and strong full time job gains in the Hamilton CMA.

In addition, by reducing Toronto–Hamilton worker commute times, the recent (July 2014) opening of a new GO Transit Station in downtown Hamilton has contributed to an inflow of first-time home buyers attracted by the city’s more affordable (compared to Toronto) home prices, its strong local infrastructure and its strategic location.

Together, this combination of stronger domestic and external demand should cause sales of existing homes in Hamilton to hit a record high of 15,000 units in 2015, up 4.7% from 14,325 in 2014.

This strong gain in year-to-date sales was accompanied by a dwindling supply of new listings, causing the sales-to-listings ratio to average 75.4% (a ten-year high) and has driven the average price of homes sold up by 9.3%.

Faced with a large inventory of newly completed and unoccupied dwellings late in 2014 and abnormally cold weather early in 2015, new home builders scaled down their construction plans causing housing starts in the first half of this year to tumble by 54% compared to the first six months of 2014.

Looking forward, given the strong fundamentals noted above,there is evidence, in the form of an acceleration in residential building permits, that housing starts will strengthen late this year and well into 2016.

During the remainder of 2015 and throughout 2016 we expect that this steady improvement in residential construction will be accompanied by stronger demand for the CMA’s manufactured goods from both outside Canada (i.e. the US) and from within it.

Moreover, this positive outlook for manufacturing and residential construction should be augmented by the recent acceleration in non-residential building approvals due to very strong year-to-date gains in industrial (+62.6%) and institutional (+95.6%) building approvals.


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