Economic Outlook For Oshawa Derek Burleton VP & Deputy Chief Economist TD Economics May 2018
Global Economies Break Pattern Of Serial Disappointment Average Annual Growth %, 16Q4 - 17Q4 3.0 Average growth 2.5 Range for trend growth 2.0 1.5 1.0 0.5 0.0 Canada Eurozone U.S. Japan Source: National Statistical Agencies via Haver Analytics, TD Economics.
Global Outlook World economy close to full capacity Wages and inflation generally on the rise Not all economies facing the same threat of inflation: Price pressures in the U.S. most visible Not fully synchronous central bank response Fed furthest along in normalizing policy Greater caution shown by BoJ/ECB
Significant Risks To Growth And Inflation Geopolitical (Syria, Iran) Trade war Corporate debt Episodes of financial volatility/stress
Bond Yield Re-Pricing Swift, But Aligned To Fundamentals Change From Oct. 1, 2017 0.8 U.S. 5 Year Treasury Note 0.6 Canada 5 Year Benchmark Bond German 5 to 8 Years Securities 0.4 0.2 0.0 -0.2 -0.4 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Source: Federal Reserve Board, Bank of Canada, Deutsche Bundesbank, Bank of England, TD Economics 5
Financial Volatility Not A Cause For Concern At This Time Financial Stress Index 8 Lehman 7 6 5 Bear Stearns 4 Euro Area Crisis 2018 Sell- 3 Off 60% Probability of Recession 2 35% Probability of Recession 1 20% Probability of Recession 0 -1 -2 2001 2003 2005 2007 2009 2011 2013 2015 2017 Source: TD Economics 6
U.S. Repeated Fiscal Stimulus Causes Rare Large, Repeated Revisions Median Bloomberg Forecast for 2018 Real GDP Growth, % 2.8 Budget = $300 bn 2.7 Tax bill signed into law = $1.5 trn 2.6 2.5 President asks for tax bill on his desk by Christmas 2.4 2.3 2.2 2.1 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 Source: Bloomberg survey as of April 2018, TD Economics 7
Canadian Economy Downshifts As 2017 Came To A Close Quarterly Real GDP, Year/Year % Change 3.5 3.0 Forecast Real GDP 2.5 2.0 1.5 1.0 0.5 0.0 2002-2016 2017 2018 2019 2020 Source: Statistics Canada, TD Economics 8
Ontario To Grow At Close To National Average Real GDP , Year/Year % Change, 2018-19 Average 2.5 National Average 2.0 1.5 1.0 0.5 0.0 Atlantic Manitoba Saskatchewan Ontario Canada Quebec British Alberta Columbia Source: Statistics Canada, forecast by TD Economics as at March 2018 9
Ontario's Key Indicators Mixed 6-month average*, Y/Y % change 8 Canada Ontario 6 4 2 0 -2 -4 Manufacturing Shipments Employment Retail Trade Average Home Prices Source: TD Economics , *Latest 6 months of data available compared to same period one year ago 10
Ranking Of Average Employment Growth Across Industries Average Employment Growth, % Change (2018-19F) Wholesale Trade Transportation & Warehousing Scientific & Tech Services Manufacturing Educational Culture& Recreation FIRE Construction Healthcare Accomodation & Food Public Admin Primary and Utilities Retail Trade -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 Source: Statistics Canada, forecast by TD Economics as of April 2018 11
Ontario Government Faces A Considerable Debt Challenge % of Nominal GDP % of Nominal GDP 1.0 45 0.5 40 0.0 35 -0.5 30 -1.0 25 -1.5 20 -2.0 15 -2.5 10 Budget Balance (left scale) Net Debt (right scale) -3.0 5 -3.5 0 01-02 03-04 05-06 07-08 09-10 11-12 13-14 15-16 17-18f Source: 2017 Federal Fiscal Reference Tables and 2017/2018 Government Budgets & Fiscal Updates 12
Auto Sector Facing Much Uncertainty Units (000's) Units (000's) 22,000 4,000 Forecast 20,000 3,500 18,000 3,000 16,000 2,500 14,000 2,000 12,000 1,500 10,000 NA Auto Sales (lhs) Canadian Auto Production (rhs) 8,000 1,000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018F Source: WardsAuto.com; Forecast by TD Economics as of December 2016
Oshawa's Unemployment Rate Has Fallen Below It's Long-Term Average Unemployment Rate, % 12 10 2001-2017 Average 8 6 4 2 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Statistics Canada, TD Economics 14
International Migration To Remain Supportive Of Population Growth In The GTA Net International Migration, Greater Toronto Area, Persons 140,000 120,000 100,000 80,000 60,000 40,000 20,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Statistics Canada, TD Economics 15
Provincial Policy Also Weighing On GTA Housing Activity Existing Home Sales, Greater Toronto Area, Units 35,000 Fair Housing Plan Announced 30,000 B20 Implemented 25,000 Forecast 20,000 15,000 2014 2015 2016 2017 2018 2019 2020 Source: CREA, forecast by TD Economics as of March 2018 16
Balanced Market In Durham Region Existing Home Sales-to-listings ratio (12-mma) 100 GVA GTA Durham Region 90 Seller's Territory 80 70 60 Balanced Market 50 40 Buyer's Territory 30 20 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Source: CREA, TD Economics. Last data point March 2018
GTA Home Price Outlook Average Existing Home Prices, Greater Toronto Area, Year/Year % Change 20 Forecast 15 10 5 0 -5 -10 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: CREA, forecast by TD Economics as of March, 2018 18
www.td.com/economics @TD_Economics This report is provided by TD Economics for customers of TD Bank Group. It is for information purposes only and may not be appropriate for other purposes. The report does not provide material information about the business and affairs of TD Bank Group and the members of TD Economics are not spokespersons for TD Bank Group with respect to its business and affairs. The information contained in this report has been drawn from sources believed to be reliable, but is not guaranteed to be accurate or complete. The report contains economic analysis and views, including about future economic and financial markets performance. These are based on certain assumptions and other factors, and are subject to inherent risks and uncertainties. The actual outcome may be materially different. The Toronto-Dominion Bank and its affiliates and related entities that comprise TD Bank Group are not liable for any errors or omissions in the information, analysis or views contained in this report, or for any loss or damage suffered. 19
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