The Conference Board of Canada says southwestern Ontario can expect cooler economic growth this year after strong economic conditions last year.
The agency says rising interest rates will take a bite out of both consumer spending and housing market activity. Potential home buyers will also feel the pinch of tighter mortgage rules.
The latest board report shows the Windsor and London areas will see economic growth between 1.4% and 2.4%.
"Windsor’s economy is forecast to cool this year, with real GDP advancing by 2.1% in 2018, following four straight years in which growth exceeded 3%. U.S. light vehicle sales appeared to have reached a cyclical peak, signalling slower manufacturing growth. This will be the main headwind to the city’s economic growth, with rising interest rates playing a secondary role," the report shows. "However, employment is expected to bounce back from last year’s 1.0% decline, generating a total of 4,700 net new jobs over 2018–19. Still, the labour force is projected to grow at a faster pace this year, causing the unemployment rate to jump by almost a full percentage point to 6.5%."
"London is forecast to see real GDP growth moderate slightly from 2% in 2017 to 1.8% this year. The CMA’s manufacturing sector is anticipated to grow more slowly but continues to post solid gains as U.S. vehicle sales gradually cool from record highs," states the report. "Meanwhile, the city’s construction sector is similarly poised to make healthy gains, as new home construction is anticipated to hover comfortably around the annual average of the last 10 years. On the downside, lacklustre performances in several services industries, including wholesale and retail trade, finance, insurance, and real estate, and education will serve as a key economic headwind. Job growth is forecast to pick up in 2018 following two disappointing years."
The board says Toronto’s economy will decelerate to a decent rate of 2.4% in 2018 with easing growth across most industries.