Ontario Economic Report
What is the Ontario Economic Report (OER) all about? The OER details the state of the province using innovative research published for the first time. The OER includes the Business Confidence Survey (BCS), the Business Prosperity Index (BPI), and the 2017 Economic Outlook.
What does the Business Confidence Survey (BCS) reveal? The data shows that there is a considerable confidence gap between our members’ organizational and provincial economic outlooks. This trend continues in 2017.
· Day-to-day challenges: hiring and electricity costs are directly impacting their ability to invest and grow.
· Among those who attempted to recruit a new staff member in the past 6 months, only 14% did not encounter any challenges in the process.
· Only 24% of businesses surveyed are confident in Ontario’s economic outlook
What does the Business Prosperity Index (BPI) reveal? The BPI looks at income generation from business production and investment activities, and measures the excess resources business have after meeting their operational needs. For this version of the BPI, we track business prosperity in Ontario from 2000 to 2015. Moving forward, this index will be updated annually.
· The BPI reveals that the share of prosperity derived from the production of goods and services has declined substantially over the past 15 years.
· The contribution of the production of goods and services to Ontario business prosperity has fallen by 24%, even as business prosperity generally rose by 39% over the same period.
· A hesitation to grow or invest in the face of growing financial resources indicates that Ontario possesses a higher risk operating environment.
· Ontario businesses are holding onto liquid capital rather than re-investing in their businesses (i.e. purchasing new equipment, expanding their footprint, or hiring new labour).
· Cost of living, especially the cost of housing, is high, which means households have less disposable income and businesses have difficulty attracting new talent.Without strong household spending, market activity is weak, and with weak market activity business profitability suffers.
What does the Economic Outlook for 2017 tell us?
· In 2017, Ontario is predicted to see increases in population size, labour force size, and positive net migration, while the rate of unemployment will continue to decline.
· The unemployment rate is expected to continue its multi-year decline, with a projected rate of 6.5% in 2017.
· Labour market participation will hold steady at 65%. Median residential housing prices will rise in all regions across the province.
Because of the challenges identified in the OER, the OCC will focus on three key policy priorities in the coming year:
· Health Transformation
· Skills and Workforce Development
· Environment and Infrastructure
In addition to these key policy areas, the OCC will continue advocacy on the energy file in order to reduce costs businesses in Ontario face.