Tuesday, February 19, 2008

Ontario manufacturing underperforms

Ontario's economy has been lagging the rest of the country for some time. The "economic engine" of Canada is clearly sputtering.

The easy explanation is that the Ontario economy is weak because of the province's greater dependence on the manufacturing sector. This weakness reflects the struggle by Ontario manufacturers to adapt to the sharp run up in the Canadian dollar, higher energy prices and intense competition from China.

However, manufacturers elsewhere in the country also face these pressures. And they seem to be doing a better job of coping. While manufacturing shipments from Ontario dropped 1.2% in 2007, shipments rose 1.7% elsewhere in the country. Moreover, out of a total of 21 subsectors, the rest of Canada outperformed Ontario in 15.
Click on chart for larger image.

Maybe Dalton McGuinty needs to consider what his government is doing wrong before asking the feds for help. Any suggestions?