Economic Scan - Ontario 2024

Ontario Environmental Scan 2024

Ontario Environmental Scan

Publication Date: May 2024

DEMOGRAPHICS

• 15.6 million people lived in Ontario in 2023, an increase of 3.1% from 2022 to 2023. Ontario represents 38.9% of Canada‘s total population.
  
• The proportion of seniors aged 65+ is projected to increase from 18.3% in 2023 to 22.1% in 2033.
  
• In 2023, individuals aged 55-64 accounted for 19.6% of the working-age population (aged 15-64). By 2033, that proportion could fall to 17.0%.
  
• The proportion of youth (15-29) is projected to decline from 20.6% in 2023 to 18.6% in 2033.
  
• Labour force participation has risen amongst workers aged 65 and over in recent years as the cost of living has increased.
  
• Average age of the non-Indigenous population in Ontario is 41.6 versus 35.3 in the Indigenous population (Census 2021).
  
• The Indigenous population comprised 2.6% of the total Ontario working-age population, and accounted for 2.5% of the Ontario employment as of 2023.
  
• Ontario has the largest proportion of recent immigrants arriving in Canada, with 44.0% of recent immigrants who arrived between 2016 and 2021. In 2023, Canada welcomed nearly 472,000 new permanent residents, an increase of 7.8% compared to the previous year, as about 44% settled in Ontario. Immigration, Refugees and Citizenship Canada has set a goal of about 485,000 new permanent residents for 2024.
  
• The official-language minority community in Ontario represented 4.1% of the provincial population (2021 Census), and is prevalent mostly in the Northeast Ontario and Ottawa economic regions.
  
• In 2017, 24.1% of the Ontario population aged 15 and over were persons with disabilities. The 2017 Canadian Survey on Disability revealed wide differences in income and employment outcomes of those persons with disabilities when compared with the rest of the population.

Labour Market Conditions

Ontario in 2023¿

• Employment continued to make gains (+2.4%)
• Unemployment rose (+4.1%)
• Participation rate remained stable (65.4% to 65.5%)
• Unemployment rate up slightly (5.6% to 5.7%)

Ontario in 2024¿

• The provincial economy continues to see high inflation, and the highest interest rates since 2001. Employment in Ontario is forecast to increase by about 0.7% - 1.2% in 2024, and to expand further by about 1.5% - 2.0% in 2025.
• The unemployment rate in Ontario is projected to rise to about 6.4% - 7.0% in 2024, and will likely hover around that figure in 2025.

Ontario‘s Unemployment Rate

• Chart

PROVINCIAL Economic Conditions

Ontario‘s Economic Factors in 2023:

• High interest rates
• Slowing household expenditures
• Weakening business confidence

GDP Growth Rate in Ontario

• Chart

Reviewing 2023

• The Ontario economy avoided a recession in 2023, but many components slowed down to account for higher borrowing costs, including household expenditures, business investment and housing markets.
• Inflation continued to rise in 2023, most notably in shelter and food costs.
• GDP is projected to have grown by about 1.1% in 2023. Due to economic uncertainty, GDP forecasts for 2024 have been wide-ranging, but growth is expected to be relatively flat for the year.

Risks to the Ontario Economy in 2024

• Mortgages that are up for renewals may become an issue in 2024 and beyond, as those who purchased properties during the pandemic may see their terms conclude between 2024 to 2026, resulting in higher payments due to elevated interest rates.
• High interest rates will likely continue to affect the Ontario economy, including in investment in residential construction projects, businesses investment, and hiring intentions.

Wages and Low-Income Populations

• About 10.1% of Ontario‘s population were in low-income status, according to the 2021 Census. The prevalence of low-income was especially high for those living alone, and those living in a single-parent household.
• With high inflation and labour constraints, an upward pressure was exerted on wages, as average wages went up by 5.1% in 2023, higher than the Ontario inflation rate of 3.8%. Credit card balances have increased among Canadian consumers, and rental costs remain highly elevated in large metropolitan areas.

Small-Medium Enterprises (SMEs)

• Small enterprises (1-99 employees) represented 97.9% of businesses with at least one employee in Ontario, and employed 37.0% of employees in Ontario as of June 2023.
• Medium-sized enterprises (100-499 employees) represented 1.8% of businesses with at least one employee in Ontario, and employed 15.9% of employees in Ontario as of June 2023.
• Large enterprises (500+ employees) represented 0.3% of businesses with at least one employee in Ontario, and employed 47.1% of employees in Ontario as of June 2023.
• Small and medium-sized enterprises have been hit particularly hard by the economic impacts of high inflation. Lower saving reserves compared to large enterprises has put SMEs at greater risk of not being able to endure tougher economic conditions.

INDUSTRY TRENDS

• Employment increased in both the goods (+2.8%) and services-producing (+2.3%) sectors in 2023 in Ontario.
• Employment gains were recorded in the majority of the industries, continuing the broad recovery across most sectors the past few years.
• Mining, quarrying and oil and gas extraction (+12.0%) and agriculture (+10.5%) had the sharpest employment growth among sectors in Ontario.
• Forestry and logging (-11.3%) and real estate (-8.5%) observed the sharpest losses in employment in 2023.
• Chart: Employment Growth by Industry, 2023

REGIONAL Economic Conditions

• Employment levels grew in seven of eleven economic regions in Ontario in 2023.
• Windsor-Sarnia (+6.9%) observed the sharpest employment growth in Ontario, with its third consecutive year of growth post-pandemic.
• Employment fell the sharpest in Stratford-Bruce Peninsula (-4.1%). The regional labour market saw significant decreases in its transportation and warehousing, and professional, scientific and technical services industries.
• Chart: Employment Growth by Economic Region, 2023