Hamilton economy in 'extraordinary pain' but will see strong comeback next year: report
Hamilton has lost roughly 8,500 jobs during the pandemic but all of them will likely return in 2021
Hamilton has lost roughly 8,500 jobs as its economy goes through a period of "extraordinary pain" during COVID-19 according to a new report from the Conference Board of Canada.
But it predicts the city is poised to see a strong recovery.
Todd Crawford, the Conference Board of Canada's associate director of economic forecasting, told CBC News said this pandemic has hit the economy harder than anything in the past few decades because both supply and demand were down with most businesses forced to close.
The city's unemployment rate jumped from 4.5 per cent in 2019 — a record low — to 7.4 per cent this year according to the data. That 7.4 percent is slightly higher than most other cities in Ontario and will account for almost 10 per cent of all jobs lost in the province.
Crawford predicts unemployment will be at its worst right now, in the middle of the second quarter.
"Employment, we forecast, will contract by almost six per cent in the second quarter alone," he explained.
"It's really concentrated in this period of forced closures for businesses right now and it's really not a huge surprise things are declining."
The city said it was dealing with a pandemic-related $23-million budget shortfall in the middle of April.
Also not a surprise for Crawford, hotels and restaurants are being hit the hardest. He said the industry could contract by 40 per cent.
The report notes real estate and population growth have been stunted by COVID-19 as well.
"The pandemic and its resulting travel restrictions will slow Hamilton's recent strong growth in net in-migration, which hit 8,325 in 2019—the highest level since 1989. This year we expect 6,520 net new arrivals—a 21.7 per cent decline compared with last year. This will cut Hamilton's population growth to 8,094, down from 9,133 in 2019," reads the report.
"The local retail trade sector will contract in 2020, as a depressed economy, a weak labour market, and slower household disposable income growth force nervous consumers to tighten their purse strings. Retail sales are forecast to fall by 3.3 per cent, leading retail trade output to contract by 3.8 per cent. A rebound of 5.2 per cent is expected in 2021."
Economy set to make 2021 comeback
Hamilton's GDP is set to decline by 3.2 per cent this year but will jump by 6 per cent and kick off a steady and strong resurgence — as long as the pandemic continues to become less of a threat and there isn't another set of shutdowns.
"When economic activity contracts so swiftly, on the other side of it you will have a stronger rebound," Crawford said.
He added Hamilton was in a great economic position before the pandemic, which has softened the impact.
The city is also planning an economic recovery task force to deal with the aftermath of COVID-19.
By summer, if the virus hasn't rebounded, Crawford thinks people will begin spending more as businesses open up and restrictions fade away.
"If cities like Hamilton, which have seen very strong population growth, which do have a strong and vibrant housing market, which do benefit from high-paying jobs … can just get through this lockdown period and successfully navigate the re-opening hopefully we can all put this in our rearview mirror and start the recovery in mid-summer moving on into the fall."