Economy

Economy

 

At the macroeconomic level, Halifax is estimated to have had positive but below-target GDP growth in 2017. The Conference Board of Canada estimates that the city’s real

GDP grew to $18.5 billion in 2017 (in 2007 dollars), an increase of 1.7% over 2016. Halifax’s GDP growth rate was lower than the national figure of 3.1% and the second lowest among benchmark cities. Halifax’s modest GDP growth can be attributed to the completion of major projects such as the Big Lift refurbishment of the Macdonald Bridge and the construction of the Nova Centre. Halifax’s forecasted GDP growth remains steady from 2018 to 2022 at an average of 1.8% per year.

 

Per capita income in Halifax increased by only 0.2% in 2017 to $43,380, significantly lower than the Canadian average increase of 2.4%. Halifax ranked second last in per capita income growth among benchmark cities. St. John’s, which has been struggling due to slowdowns in the energy sector, came last. The Conference Board of Canada predicts 1.9% per capita income growth for Halifax in 2018, followed by growth above the 2% level for each of the years from 2019 through 2022.

 

Key Industries

 

Discussion of Halifax’s economy often focuses on major projects such as the naval shipbuilding program and large construction projects, but our economy is dominated by the service sector. In 2017, the employment split between the service sector and the goods sector was 87% to 13%, respectively. Furthermore, almost one-third (31%) of employment

was in industries populated largely by public sector workers: health care, education, and public administration. Given that Halifax is a provincial capital, a regional centre for federal offices, home to Canada’s East Coast Navy, and a regional centre for health care and higher education, the prominence of the service sector, and the public sector more specifically, is not surprising.

 

Investment

 

Construction is the major driver of business investment in Halifax. The construction sector saw a significant increase in activity in 2017 compared to 2016 and performed well above the 10-year average. Annual major project spending in the city, as measured by the Atlantic Provinces Economic Council’s Major Projects Inventory, was $1.9 billion in 2017 and is forecasted to remain the same in 2018. Among these major projects are several residential and non-residential construction developments.

 

The teardown of the Cogswell Interchange will begin in 2019. This infrastructure project will include three kilometers of new bike lanes and paths for active transportation (walking, cycling, skateboarding, etc.), six acres of land for development, and four acres of parks and open spaces. This phase of the project will be complete by 2020. In 2022, the complementary $650 million redevelopment of Cogswell Street will begin, which will include the development of 2.5 million sq. ft. of mixed-use space and up to 2,000 rental and condominium units.

 

Work at Irving Shipbuilding remains Halifax’s largest major project. There are currently over 1,800 shipbuilders employed. Steel cutting commenced for the third Arctic and Offshore Patrol Ship (AOPS), and the first AOPS is scheduled to be delivered to the Royal Canadian Navy this year. Irving Shipbuilding has committed

to over $580 million in contracts in Nova Scotia as part of the National Shipbuilding Strategy. These contracts are estimated to support 9,500 full-time-equivalent person-years of employment and generate $460 million in income and $340 million in consumer spending within the province.

 

Non-residential construction activity decreased for the second straight year due to the completion of several major projects. Investment in industrial and commercial real estate decreased by 18.4%, reflecting the completion of the Nova Centre, the Big Lift, and IKEA.

Some large non-residential projects under construction in 2018 include The Queen’s Marque, Cabela’s, and Dalhousie University’s ideaHUB.

 

Business Confidence

 

A core measure from the Halifax Partnership’s Business Confidence Survey is our Business Confidence Index (BCI), which incorporates several aspects of respondents’ views on current and future economic prospects. The BCI hit another record high this year of 32.9, up from last year’s record figure of 29.1. The BCI ranges from -100 to +100, with figures above zero indicating a positive, confident outlook and figures below zero indicating pessimism. Out of 300 businesses surveyed, 85% said that they were extremely

(14%) or moderately optimistic (71%) about their economic prospects.

The share of businesses that rated Halifax as an above-average place to do business increased from 23% to 27%, with only 12% of businesses responding that Halifax is a below-average place to do business. The 2018 figures for “above average” and “below average” are a record high and low, respectively.

 

Halifax Gateway

 


The Halifax Gateway includes transportation infrastructure such as the Port of Halifax, Halifax Stanfield, Halifax Logistics Park, CN’s auto port and rail infrastructure, and the Port of Sheet Harbour.

 

Last year was a notable one for the Port of Halifax as records set the previous year were broken once again. Cargo volumes at the port, as measured by the number of 20-foot equivalent units (TEUs) of containerized cargo, increased by 16.3%. On June 29, 2017, the Zim Antwerp, a ship with a capacity of just over 10,000 TEUs, landed in

Halifax and became the largest containerized cargo vessel ever to arrive in the harbour.

 

Likewise, 2018 was historic for Halifax Stanfield. More than four million passengers used the facility—a record-breaking first. There was an increase of 6.5% in domestic ridership

and a total increase of 4.5%, although international passenger numbers declined by 5.9% compared to 2016. Preliminary cargo numbers showed that air cargo grew compared to 2016, from 33,330 to 34,051. This growth was aided by the new $5 million cargo pad built in December 2016 to increase international lobster exports. Lobster exports to China and South Korea have been a key driver of growing airport cargo movements in recent years.

 

Municipal Finance

 

HRM Council had to grapple with several fiscal issues for the 2018-19 budget. In 2017-18, new commercial real estate developments led to rising vacancy rates, which in turn caused property tax assessments and related tax revenues to drop. Additionally, the deficit associated with the new Nova Centre has turned out to be larger than expected. In more positive news, revenues from the deed transfer tax were at their highest level in several years.

 

In response, Council passed a 1.97% property tax hike for the average residential property. This increase means that the average homeowner will be paying $37 more per year. The average commercial tax bill fell 1.1%. Commercial property tax revenue now stands at nearly 38% of total property tax revenue, down from almost 41% in 2010-11