The Big Three Are Still Big

Employment growth in Canada has been particularly robust in the west and nowhere is this more evident than when examining recent employment growth amongst Canada’s CMAs.

  Figure 1 shows the ranked percentage growth in employment for Canada’s CMAs from the period 1997Q1 to 2012Q1.  As can be seen, the top three growth centers are Calgary, Kelowna and Edmonton.  Canada’s three largest cities – Toronto, Montreal and Vancouver – are definitely the middle of the pack.  Employment growth has also been rather high in smaller to medium sized urban centers such as Barrie, Guelph and Ottawa-Gatineau.  However, the top three performers are all in the west while the bottom three are all in Ontario.

 

However, as Figure 2 illustrates, when total employment is ranked by urban center, Toronto Montreal and Vancouver still vastly outrank the next largest CMA – Calgary –by a substantial amount.  Canada’s three largest cities are still in a league of their own and while their employment may not be growing as fast as many other cities, they are so large that their share of total employment still dominates the Canadian economy. 

 

As Figure 3 shows, the Big Three’s share of Canadian employment rose rapidly from 1997 to about 2002 and then leveled off until about 2008.  Since 2008, their employment share has begun to trend upwards again (the trend is a 3^rd order polynomial fit). 
While the resource driven Prairie centers have seen extremely robust growth, over one third of Canada’s employment is still concentrated in these three largest cities making them the dominant urban economic engines of the country.   Calgary and Edmonton on their own have yet to supersede Vancouver though when combined now generate more employment than Vancouver with 1.4 as opposed to 1.3 million jobs.

Comments

[Mark_dowling]

One dreads to think how poor employment growth in Thunder Bay would be if Ontario and Toronto were not directing billions of dollars in subway, streetcar and GO train contracts to the Bombardier facility. While it is primarily an assembly facility and thus much of the headline cost goes elsewhere, the reality is that its position hundreds of kilometres from the nearest plausible customer for its products makes it a jobs programme in all but name.

[Mike Smitka, Washington and Lee University]

Just back from 2 auto industry functions (one was the PACE Supplier of the Year awards, where I spent time talking with a contingent from a supplier based in Ontario), so I mistook the title as an anachronistic reference to the Detroit Three [today the Big Three in NAFTA are GM, Ford and Toyota -- with Chrysler Honda Hyundai and Nissan trading off places among the Middle Four].
The above post is actually helpful in thinking about the issue, as the same need to correct for the size of the base versus percent changes comes to the fore, though here it is industry rather than geography.
In the US auto industry employment growth is strong but to echo the above, against a small base (manufacturing and retail are 2% of total US employment, and 4% of recent US employment gains).
I must apologize for never playing with Canadian data (my main focus is on the Japanese economy...) but my hunch is that the auto industry is more important to the overall Canadian economy than to the US economy. If true, then a corollary is that the partial recovery in the industry likewise contributed disproportionately to job growth, particularly in Ontario.
Note that in the US the automotive employment glass is not yet half full, relative to losses earlier in the Great Recession. I do have some analysis on my blog at autosandeconomics.blogspot.com but would love to learn more of the Canadian side of the story.

[Livio Di Matteo]

Thanks for the blog reference Mike. Windsor, London and St. Catharines-Niagara have been particularly hard hit as manufacturing employers in large part because of the downturn in the auto sector. Autos and auto parts was and still is probably Ontario's largest export.

[anonymous]

Any hint as to what CMA stands for?

[Jacques René Giguère]

Census Metropolitan Area. I just had to beat Determinant...

[Robillard]

Is there a narrative behind the rapid growth of Central Ontario cities, such as Barrie and Peterborough, and Toronto ex-urbs, such as Guelph and Oshawa? And how does that story contrast with the slow growth of employment in Southwestern Ontario cities, like St. Catherines, London and Windsor?

[Robillard]

Oops, I missed Livio's comment there. The first part of my question still stands though.

[Livio Di Matteo]

Robillard:
That is a good question. I think Barrie, Guelph and Oshawa are close enough to Toronto and with relatively cheaper housing that they have attracted population as commuter towns. With this population growth naturally comes employment growth also. Not so sure about Peterborough but it too may be experiencing some of this commuter town effect.

[Determinant]

Peterborough is experiencing bad numbers. I know Peterborough. This is a known dodgy number for the area. Last year Statscan reported Peterborough gained 2000 jobs in manufacturing employment. The city has a population of 80k, the surrounding area pushes that to 140k. When the numbers came out last year, nobody, but nobody, believed them. They wanted to, they really wanted to, the Economic Development Office wanted to know who to throw the party for. They couldn't see where the jobs were. They were phantom jobs, nobody knew where they were. That was the line taken by the local paper and anybody it could interview about the subject.

Peterborough is a bit too far to be a comfortable commuter town for Toronto. The new subdivision developments aren't that big, the city has not increased its population by 50% over the past decade, nor its workforce. They are closing one high school.

I used to live there.

This is a city that has an 11% unemployment rate and has been among the worst in Ontario in that regard for several years now.

I'm sorry Livio, these Statscan numbers have serious credibility issues because the numbers do not match behaviour on the ground.

[Neil]

A third order polynomial that is going up at the start must be going up at the end. That's how math works. Third order has two inflection points. Use a fourth order and all of a sudden you get a different trend.

A different graph smoothing option, say a moving average, would probably be more helpful. And the real message in that last graph appears to be that the Big 3's employment has been growing at roughly the same rate as the national average over the past decade, and but is less cyclical than the country as a whole, so their share bumps upwards during recessions.

It's not clear to me what the point of the article is. Canada's largest 3 cities remain substantially larger than any other cities in the country, despite higher growth rates in many medium sized cities. That seemed pretty obvious.