Ontario GDP stalled in 2024 amid high costs and weak manufacturing

In unaffordable Ontario there’s not much cash left to spend at the end of the month to keep the economy firing.

Ontario’s economy barely grew in 2024 with manufacturing and consumer-sensitive sectors shrinking, according to Statistics Canada data released last Thursday.

After adjustment for inflation, Canada’s 2024 GDP was $2.27 trillion, $877 billion of it in Ontario. In 2024, Ontario’s GDP increased just $11 billion, or 1.2 per cent, from the previous year. Canada’s economy, excluding Ontario, grew 1.8 per cent.

Ontario’s GDP growth was second lowest of any province. It has also endured unemployment above the national rate for over four years, in March sitting at 7.5 per cent, second highest among all the provinces.

Unaffordable Ontario has consumers tapped out

The new data suggests one story behind Ontario’s weak economy is that high costs have left people tapped-out, without much left at the end of the month for discretionary spending. Many subsectors sensitive to consumer demand went in reverse last year:

• residential building construction down 17 per cent since 2021 peak

• food services and drinking places are down 11 per cent since 2019

• sporting goods and hobby shops down 10 per cent from their 2022 peak

• sales at food and beverage stores down nine per cent from 2020

• building materials and garden supply shops down four per cent from 2023

• furniture and home furnishings stores down three per cent from 2022

• repair and renovation construction down two per cent since 2022

Since the Doug Ford Ontario PC government was elected in June 2018, the average price of a benchmark house in the Greater Toronto Area soared 74 per cent, rising from $757,000 to peak at $1,313,800, according to data from the Canadian Real Estate Association.

Meanwhile, CMHC’s annual Rental Market Survey shows the rent for a two-bedroom apartment in the Greater Toronto Area increased $507 a month or 35 per cent from October 2018 to October 2024, rising from $1,467 to $1,974.

In general, household consumption fuels about two-thirds of GDP, with the remaining amounts coming from businesses and government. But with such large portions of household incomes now being drained off to pay rent or mortgages, less remains for discretionary purchases.

Ontario manufacturing significantly down

A second major story in Ontario’s malaise is manufacturing decline. Manufacturing industries contributed $97.0 billion to Ontario economy in 2023 but just $92.4 billion in 2024, a decline of 4.7 per cent. Over $2 billion was lost just in transportation vehicle manufacturing, the province’s largest subsector.

Among Ontario’s ten largest manufacturing subsectors, seven shrank between 2023 and 2024, despite Doug Ford’s 2018 “guarantee” to create 300,000 manufacturing jobs in Ontario.