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Toronto's multi-channel economic engine once again tops the nation in CIBC rankings

TORONTO, Ontario, January 03, 2013 — For the second year running, Toronto has taken the top spot among the country's major cities in CIBC World Markets' latest Canadian Metropolitan Economic Activity Index rankings.

"What's so impressive about Toronto's performance is that the city has topped our ranking for more than a year," says CIBC Deputy Chief Economist Benjamin Tal in his latest Metro Monitor report. "Given that our index measures momentum as opposed to a level of activity, Toronto's ability to maintain momentum for such a long period is impressive. Also note that Toronto ranked in the top five for more than seven consecutive years, with the only exception being the 2009 recession when the city's ranking slipped to 7th place."

While Toronto did not lead the pack in any of the bank's sub-measures of economic momentum, it ranked high enough in many categories to place it in top position overall. "Simply put, the multi-channel nature of Toronto's economic engine is the secret not only behind its current top position, but also behind its ability to maintain a relatively high grading over the past two years. This can be easily seen in the robust activity of the city's economy during the economic recovery, with the city outpacing the national average by a wide margin."

Over the past year, Toronto has benefited from a recovery in the manufacturing sector, helped by the positive spin-off of the improvement in U.S. auto demand. The construction sector, spurred on by activity in both the residential and non-residential segments of the industry, also played an important role in the city's consistent outperformance.

As of the third quarter, housing starts in the city rose 30 per cent year-over-year with 99 per cent of this growth coming from the condominium market. Population in the city is rising at a strong pace of just over two per cent on a year-over-year basis, while employment growth is hovering around its strongest showing in more than a decade.

"The coming year, however, will pose a major challenge to the city's ability to maintain its current economic momentum," notes Mr. Tal. "A softening housing market, the end of many federal and provincial governments' infrastructure stimulus projects, a projected slower growth trajectory in the manufacturing sector and softer retail trade activity will work to slow overall economic momentum in the city in 2013."

Calgary ranked second in the analysis, up from ninth last year. This reflects strong population growth and a healthy labour market. Calgary enjoys one of the lowest unemployment rates in the nation (5.1 per cent as of the third quarter of 2012) while the quality of employment is relatively elevated (ranked 2nd among all cities). "As a result, consumer spending in the city has been relatively strong, with retail sales rising by an estimated nine per cent over the past year," says Mr. Tal. "As opposed to Toronto, the residential housing market is playing only a marginal role in supporting activity in the city."

The city of Regina also showed strong growth moving up to third from eighth a year ago. Momentum is helped by very strong population growth (ranked 4th in the nation) and a healthy labour market, with the city experiencing the second lowest unemployment rate among the country's 25 census metropolitan areas (CMA). "The city's robust population growth has spurred housing market activity, with housing starts rising by a strong 80 per cent year-over-year in the third quarter. Regina is also supported by an improving manufacturing sector, with activity in 2012 estimated to outpace the national average for the second year in a row."

Winnipeg's fourth place ranking reflects strength in both the construction and the manufacturing sectors. Housing starts in the city rose by 50 per cent in the year ending September 2012 while non-residential activity rose at a rate second only to Saskatoon. At the same time, some improvement in demand for transportation equipment has boosted activity in the manufacturing sector. Consumer fundamentals in the city are also in good shape with a relatively healthy labour market and the nation's second lowest personal bankruptcy rate.

CIBC Metropolitan Economic Activity Index (2012 Q3)    

Rank   CMA 3Q Moving Average
1. Toronto 20.6
2. Calgary 19.5
3. Regina 18.4
4. Winnipeg 18.4
5. Saskatoon 18.2
6. Edmonton 17.8
7. Ottawa 16.8
8. Vancouver 14.0
9. Halifax 13.8
10. Saguenay 12.2
11. Montréal 11.2
12. Québec City 10.5
13. London 10.4
14. Hamilton 9.6
15. Kitchener 9.4
16. Kingston 9.1
17. Trois-Rivières 8.6
18. Thunder Bay 7.3
19. Victoria 6.8
20. St. John's 6.6
21. St. Catharines-Niagara 6.0
22. Windsor 4.0
23. Saint John -0.8
24. Sherbrooke -0.8
25. Sudbury -2.4


About the CIBC Metropolitan Economic Activity Index
Using 9 key macroeconomic variables, CIBC's metropolitan index of economic activity is structured in a way that approximates the change in each city's level of economic activity. With data going back in history, the index monitors not only the current performance of a given city but also tracks its cyclical behaviour against the national economy and other census metropolitan areas (CMA). The focus is on the 25 largest CMAs in Canada.

The macro variables used to develop the index are:

  • Population growth;
  • Employment growth;
  • Unemployment rate;
  • Full-time share in total employment;
  • Personal bankruptcy rate;
  • Business bankruptcy rate;
  • Housing starts;
  • MLS Housing resales; and
  • Non-Residential building permits.

The complete CIBC World Markets report is available at:

News source: CIBC


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