Auto report good news for Oshawa Print

Motor vehicle sales are driving employment growth in Oshawa, a new report says.

With Canadian consumer confidence at its highest level since last spring, and new job creation advancing at a rate of 15,000 a month, vehicle sales continue to strengthen, according to Scotia Economics' latest Global Auto Report.

The report notes that Oshawa posted the strongest employment growth among Ontario cities last year, with payrolls advancing by five per cent.
The outlook for Oshawa and other communities with strong automotive sectors is rosy, Scotia Economics says.

"The resource-rich provinces of Alberta, Saskatchewan and Newfoundland will lead the improvement in car and light truck sales across Canada in 2011," said Carlos Gomes, Senior Economist, Scotia Economics.  "Commodity prices posted a double-digit increase in 2010, and will continue to advance this year alongside a strong and sustained economic recovery, particularly in the fast-growing emerging nations."

Alberta will lead the improvement in vehicle sales across Canada in 2011, with purchases expected to climb to 210,000 units, up from 200,000 last year and only 182,000 in 2009. Volumes will be buoyed by a double-digit increase in oil sands production - the sharpest gain in five years. The revival in the oil patch has already lifted employment in Edmonton three per cent year over year - a percentage point above the national average, and one of the strongest advances among major Canadian cities. Population flows are also once again attracted to Alberta, and will lift the vehicle-buying age population in the province by more than two per cent annually over the next several years - the largest increase among the provinces.

Vehicle sales in Saskatchewan have also started to rebound alongside rising mineral production. Purchases jumped six per cent last year to 46,000 units and will reach 48,000 in 2011 - a level matching the recent peak set in 2008. The agricultural sector will also start to bolster economic activity in 2011, reversing double-digit declines since the third quarter of 2009.

Newfoundland and Labrador is also benefitting from the rebound in the energy sector, with vehicle sales jumping by 11 per cent last year to a record high of 32,000 units - more than 20 per cent above the average of the past decade. However, the gain will moderate in 2011, as the province now has the youngest vehicle fleet in Canada. In addition, a declining driving age population will also dampen sales gains.

Looking at the rest of Canada, purchases in British Columbia will climb to 157,000 units in 2011, up from 154,000 in 2010. Activity will be bolstered by strengthening exports to Asia - the destination for 40 per cent of the province's overall exports. In particular, exports to China have surged by 60 per cent over the past year, and are now more than double 2007 levels.

Fleet volumes in British Columbia will also start to edge higher this year, reversing the 60 per cent plunge since 2006. In fact, the slump in fleet purchases was sharpest in British Columbia, roughly double the decline in the rest of Canada. This likely reflects the prolonged weakness in the province's forestry sector, which until recently, was the largest source of export earnings.

Sales in Manitoba are expected to advance to 46,000 units in 2011, matching the 2008 annual peak, and up from 44,000 last year. The province has the most stable auto market in Canada, with volumes posting an annual peak-to-trough decline of only seven per cent during the latest downturn - significantly outperforming the 12 per cent drop in the rest of Canada. The stability in the auto market reflects Manitoba's diversified economy, which enabled the province to avoid a contraction during the latest global economic downturn.

Vehicle sales in Ontario jumped eight per cent last year, climbing to 576,000 units from a 13-year low of 536,000 in 2009. A 40 per cent surge in vehicle production bolstered purchases and job creation across the province last year. Vehicle assemblies are likely to climb an additional nine per cent in 2011, helping to lift car and light truck sales in Ontario to 586,000 units - the highest level since 2007, and only three per cent below the average of the past decade.

Car and light truck sales in Quebec were higher than expected in 2010, advancing by six per cent to 415,000 units. Purchases were supported by ongoing government stimulus, which helped lift fleet purchases by eight per cent last year. However, despite the recent acceleration in the global economic expansion, sales gains in the province will moderate to about two per cent in 2011 - held back by cutbacks in government spending. In particular, infrastructure expenditures in Quebec are expected to decline by about six per cent per annum over the next several years.

Nova Scotia was the only province to post a small decline in vehicle sales last year, but will likely post a small gain in 2011. Activity in the province will be supported by the upcoming 2011 Canada Winter Games in Halifax, which will boost tourism. Car and light truck sales are likely to be flat in both New Brunswick and PEI this year, following double-digit increases in 2010. In both provinces, activity was supported by ongoing capital projects, but job growth has recently weakened.

Photo of Camaros being built at GM's Oshawa Assembly Plant, courtesy of General Motors.