FAO report shows U.S. tariffs to slow Ontario economic growth in manufacturing, exports

There was more commotion during Question Period at Queen’s Park over the latest quarterly economic report from Ontario’s Financial Accountability Office (FAO).

The report found the number of manufacturing jobs in Ontario recently fell to the lowest level since record keeping began in 1976.

But the drop isn’t just due to the impact of U.S. tariffs on our province, the problems in the manufacturing sector go back further.

Ontario NDP leader Marit Stiles was fuming in the legislature this morning after some stark economic news from the FAO.

“I was putting Shaun Cassidy posters on my wall in 1976, “ Stiles said. “Donna Summers was teaching us how to disco in 1976, Speaker. This Premier is a jobs disaster.”

In the final quarter of last year manufacturing jobs, as a share of all employment in Ontario, fell below 10 per cent for the first time since 1976.

The report’s main finding is that Ontario’s economy has struggled the last six months as U.S. tariffs have hurt the manufacturing sector and exports.

In the second quarter, real GDP – the broadest measure of economic activity –  fell by 0.6 per cent. 

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If you exclude the pandemic, that’s the biggest drop since the 2008 recession.

Financial Accountability Officer Jeffrey Novak says “I think the point of the report is we’re in a point of weak economic growth.” 

Fueling the real GDP decline, the FAO says Ontario’s exports dropped 5.8 per cent in that quarter, as U.S. businesses cut back on purchasing Canadian goods.

Deputy Financial Accountability Officer Paul Lewis says it’s been a tariff effect, but also struggles that the sector has had.

Novak also says “over the last few years, especially, there’s been a lot of challenges in the manufacturing sector.” 

The FAO says 20,600 manufacturing jobs have been shed in just the last two years.

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And manufacturing real GDP has declined in seven of the last eight quarters, long before the tariffs. 

Manufacturing is down nearly ten per cent over that time — to its lowest level since 2015 if you exclude the pandemic.

Also in the report, jobs were down 1,900 in the third quarter after losing 38,000 in the second. This was the first back to back quarterly decline in employment since the 2008 recession — again, if you exclude the pandemic.

But perhaps some good news. 

Early indicators suggest the third quarter could be better, meaning Ontario could avoid a recession.

The overall annual real GDP growth this year is forecast by the FAO to be 0.9 per cent – slightly higher than the 0.8 per cent forecast by the Ford government.

Ontario Finance Minister Peter Bethlenfalvy says “they expect the economy to grow in 2025 in Ontario higher than we put in our Fall Economic Statement.” 

The FAOs next report is due out early next year.

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