Halifax Economic Report JANUARY 2017 J.K. MacAdam Economist and Project Development Specialist
Highlights 2016 was another positive year for the Halifax economy, with growth in shipbuilding, the health care sector, and the education sector. The Labour Force Survey showed overall net gains in part-time employment. It was a record year for aircraft and cruise ship passengers in 2016. Current Economic Indicators for Halifax Period YTD 2015 YTD 2016 % Change Labour Markets Real GDP at basic prices (2007 $ millions) Annual 18,200 18,678(f) 2.6% Population (Thousands) Annual 418.0 423.0(f) 1.2% Employment (Thousands) Annual 224.2 225.9 0.9% Unemployment rate (%) Annual 6.3% 6.1% -0.2 Labour force (Thousands) Annual 239.1 240.7 0.7% Participation rate (%) Annual 68.6% 68.0% -0.6 Consumer Markets Average weekly earnings (Current $) Jan-Nov 870 888 2.1% Consumer price index (2002 = 100) Annual 128.2 129.8 1.6 Retail sales (Current $ millions) Jan-Nov 6,246 6,517 4.3% Aircraft Passengers (Thousands) Annual 3,703 3,909 5.6% Cruise ship passengers (Thousands) Annual 222.3 238.2 7.2% Containerized Cargo (Thousands TEUs) Annual 418.4 480.7 14.9% Housing and Construction Markets Housing starts Annual 2,599 2,305-11.3% Housing resales Annual 4,773 5,100 (f) 6.9% Value of building permits (Current $ millions) Jan-Nov 646.0 517.4-19.9% Non-residential construction (2007 $ millions) Annual 375.9 284.9-24.2% (f) - Forecasted Data Sources: Statistics Canada, Canada Mortgage and Housing Corporation, Conference Board of Canada, Halifax International Airport Authority, Port of Halifax Last year was a strong year for the Halifax economy, with the Conference Board of Canada projecting real GDP growth of 2.6%, ranking Halifax third amongst major cities. 1 This growth was supported by the Halifax Shipyard s construction of arctic offshore patrol ships and projects such as The Big Lift and the completion of the Nova Centre. For 2017, the Conference Board is projecting another good year for Halifax with a forecasted GDP growth of 2.5% supported by ongoing work at the Halifax Shipyard, major construction projects such as the Queen s Marque and The Maristella at Kings Wharf, and solid growth in the service sector. Labour Force After a strong third quarter, the labour market softened in the fourth quarter of 2016. The final Labour Force Survey (LFS) numbers show a small 0.7% growth in jobs for 2016, which is unchanged from the YTD growth reported in September. The unemployment rate has decreased from 6.3% to 6.1% due to 1 Conference Board of Canada s Autumn Forecast. The Winter Forecast will be released on February 28 th. 1 P age
the labour force growing slower than employment. Halifax s labour market growth was driven by parttime employment in 2016 with 2,500 part-time jobs being added to the Halifax labour market and 500 full-time jobs being removed. The LFS numbers did show that the trade sector had a strong fourth quarter with there being 1,500 jobs added since the third quarter due to increased retail sales during the holiday season. The service sector had the largest employment gains in educational services (1,900), health care (1,300) and construction (700). There were significant drops in employment in information, culture and recreation (-1,800), in accommodations and food services (-900), and in public administration (-900). 235 Quarterly and annual average employment in Halifax 230 225 220 215 224.4 226.0 210 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016 Quarterly Annual Average Source: CANSIM Series Table 282-0122 Non-Residential Investment Non-residential construction decreased by 24.2% in 2016 due to some of the larger projects such as The Nova Centre and The Big Lift nearing completion. In addition to infrastructure spending, there are significant expansions underway at Dartmouth Crossing for the new IKEA and Cabela stores and site preparation has begun on The Queen s Marque, which will cost almost $200 million. Shell is continuing its search for offshore oil and natural gas after closing the Cheshire Well. 2 P age
120000 100000 80000 60000 40000 20000 Nova Scotia Non-Residential Investment Spending ($1,000s) 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2012 2012 2012 20122013201320132013201420142014201420152015201520152016201620162016 Total non-residential Industrial Commercial Institutional and governmental Source: CANSIM Series Table 026-0016 Housing Market According to CMHC s Housing Market Outlook Fall 2016, total housing starts in Halifax decreased by 11.3% in 2016. The losses came from the slowdown in apartment and multi-unit starts, which were down 540 units compared to 2015. This was offset slightly by the 33.4% increase in single-unit starts from 425 to 567 units in 2016, breaking a recent shift towards multi-unit development. Total housing starts are forecasted to be between 2,525 and 2,725 units in 2017, with increased housing activity in the North End of Halifax and Downtown Dartmouth. Halifax Housing Starts 2,500 2,000 1,627 2,041 1,941 2,053 1,610 1,500 1,000 500 991 678 511 425 567-2012 2013 2014 2015 2016 Single-detached Apartments and Semi-detached Source: CANSIM Series Table 027-0048 Housing resales are forecasted to increase by 6.9% from 4,773 in 2015 to 5,100 in 2016. Halifax s average resale home prices are expected to remain flat until 2018, as shown in the graph below. During this time period, the average resale home price is forecasted to be between $281,000 and $293,000 according to CMHC s Fall Housing Outlook. 3 P age
4.0% 3.0% 2.0% 1.0% Growth in Halifax Resale Home Prices 0.0% 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016(f) 2016-2017(f) 2017-2018(f) Source: CMHC Housing Outlook Fall 2016 and Fall 2014 Halifax Gateway Halifax Stanfield International Airport (HSIA) recorded its busiest year ever with just under four million passengers in 2016. This represents an increase of 7.4% in domestic ridership and an increase in total ridership of 5.6%; international passenger numbers declined by 4.2% over 2015. Passenger flights were on average 75.6% occupied, up slightly from 75.4% in 2015. The HSIA has built a $5M cargo pad to help meet international demand for Nova Scotia lobster. The cargo planes that use the new cargo pad are expected to generate $1 million in exports for the province per flight. 2 The Port of Halifax had another robust year in 2016 with total TEUs increasing by 14.9% compared to 2015. This was due in particular to strong first and fourth quarters. In 2016, five fewer cruise ships landed in Halifax, but total passengers were up 7.2%. This is due to larger ships landing in Halifax such as the Quantum Class, the largest cruise ship in the world. Retail Sales Overall retail sales were up 4.3% YTD as of November. This is much improved compared to 2015 s decrease in retail sales. Non-gasoline retail sales were up 4.9% during the same time period. Consumer prices, measured by the CPI, grew by 1.6 points or 1.2%. Average weekly earnings grew faster than inflation at a rate of 2.1% from January to November. In 2017, retail sales are predicted to grow as gasoline prices are forecasted to increase. Commercial and Residential Property Taxes Since 2007-2008, HRM s residential and commercial property tax revenues have been increasing. This is due to the residential and commercial developments taking place in Halifax. There were two significant spikes in the commercial and residential tax base, one in 2011-2012 and another in 2013-2014. These resulted from the construction of large commercial and residential projects such as the Halifax Public Library, the Nova Centre, King s Wharf, the Life Science Centre and the Ocean Sciences Centre at Dalhousie University, the Trillium and the Roy. The share of total property tax revenue coming from residential properties has been increasing during this time period, while the commercial portion has been decreasing. This is the result of rapid construction of multi-unit residential development driving total residential property assessments. 2 https://hiaa.ca/2016/12/lobster-worth-millions-takes-flight-holidays/ 4 P age
$300,000 $250,000 $200,000 $150,000 $100,000 $50,000 Residential and Commercial Taxes in HRM ($1,000s) 60.0% 55.0% 50.0% 45.0% $- 40.0% 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 Residential & Resource Tax Commercial Tax, Business Occupancy + Tax Agreements Residential (% of Total Property Tax) Commercial Tax (% of Total Property Tax) Source: https://www.halifax.ca/budget/budgetbooks.php The table below shows how Halifax compares to some other Canadian cities for which data were readily available in terms of the share of property tax revenues and total municipal revenues that come from commercial property taxes. Halifax ranks second in both cases, but is within a sub-group of cities that all have similar shares. No claim is implied as to whether these shares for Halifax are good or bad, too high or too low; rather, we present these data points as background information for the discussions that will occur in the coming months regarding the new commercial taxation powers granted to Halifax by the provincial government in November 2016. Municipality (2016 Data) Commercial Share of Total Property Taxes Commercial Property Tax Share of Total Revenues Calgary 30.0% 9.0% Halifax 48.2% 24.4% Saskatoon 29.8% 13.1% St. John's 33.0% 20.9% Toronto 45.9% 17.9% Vancouver 42.9% 24.2% Victoria 49.3% 27.8% Winnipeg 10.8% 6.3% The Halifax Partnership The Halifax Partnership is Halifax s economic development organization. We help keep, grow and get business, talent and investment in Halifax. We do this through leadership on economic issues, our core programs and partnerships across all sectors, and by marketing Halifax to the world. If you have any questions or concerns about this document, its methodology, or how its indices are measured, please contact the Partnership at info@halifaxpartnership.com for further details. 5 P age