Investment

Halifax’s real GDP increased by 6.0% in 2021 to $21.9 billion. This was the seventh-largest economic recovery across all 41 Canadian census metropolitan areas (CMAs)¹and the second largest across benchmark cities. The Conference Board of Canada expects Halifax’s GDP to grow by 2.6% in 2022 and then at an average annual rate of 1.6% from 2023 to 2026. Growth and recovery were propelled by Halifax’s success in managing the pandemic in 2021. This put a spotlight on the city and helped attract businesses and people from across the country and around the world.

Halifax’s 15.2% growth in retail sales was also an important factor in the city's recovery. This growth was the third largest across the major cities covered by The Conference Board and an example of how pent-up demand from 2020 fuelled increased economic activity in 2021. However, the exceptional growth of 2021 will give way to an estimated 1.8% drop in retail sales in 2022. Growth in this sector is forecasted to hit 1.8% in 2023 and then rise to 3.0% each year through to 2026 .

The total number of active businesses²increased year over year across all benchmark cities. Halifax saw the second-smallest increase in 2021 but also had the smallest decline in 2020. The number of active businesses in Halifax was 2.3% above the pre-pandemic high as of December 2021.

With the onset of the pandemic, consumer confidence in Halifax, as measured by Narrative Research’s Consumer Confidence Index, plunged in the first three quarters of 2020 to a low of 83.6 in Q3 2020. Gradual recovery occurred until Q3 of 2021, with the Index bouncing back to a value of 94.6. Since that time, Halifax experienced the arrival of the Omicron variant and the reinstatement of many public health restrictions. Furthermore, inflation has accelerated rapidly, and geopolitical tensions have risen sharply with the Russian invasion of Ukraine. As a result, consumer confidence dropped again, ending 2021 at 87.9 and then hitting an all-time low of 81.5 in Q1 2022.

Halifax Partnership's Business Confidence Survey, carried out by Narrative Research, gathers views on Halifax’s economy from business owners. The Business Confidence Index (BCI) is calculated on a scale of -100 to +100 and is based on 5 questions that cover the past, current, and future performance of Halifax’s economy.

Halifax’s spring 2022 BCI stands at 42.0, which is a new record high. Despite the pandemic, successive record highs for the BCI were reached in 2020, 2021, and 2022. Meanwhile, the share of respondents rating Halifax as an above-average place to do business also remained in record territory with 2022’s 39.4% keeping pace with the 39.5% recorded in 2021.

Halifax’s workplace safety culture received the highest net advantage score³at +70.4%. Quality of life for residents (+68.4%) came second followed by connections to universities and colleges (+66.6%). On the other end of the scale, energy costs received a net disadvantage score⁴of -44.3% followed by cost of living for residents (-43.1%) and the tax environment (-38.2%).

The Halifax Gateway includes the Port of Halifax, Halifax Stanfield International Airport, the Halifax Logistics Park, the Port of Sheet Harbour, and CN’s transportation infrastructure, all of which, as expected, saw massive declines in traffic in 2020.

However, there were strong rebounds in multiple aspects of the Gateway in 2021, including 17.0% growth in the number of 20-foot equivalent containers (TEUs) shipped through the HPA.⁵The 595,751 units shipped were the most on record.

Port-wide cargo throughput also increased by 8.3%, above the pre-pandemic level. 2021 saw air cargo and air passengers grow by 5.4% and 8.1%, respectively, but still well below 2019 levels.

Although the number of air passengers increased, plane movement at Halifax Airport fell by 5.7% in 2021. Most of the suspended routes are, however, expected to resume in 2022, including flights to and from various locations in the U.S. and Europe.

Two Gateway statistics that saw no change were cruise ships and passengers, both remaining at 0 for the second straight year. This will change in 2022 as the federal ban on cruise travel ended in November 2021. The Port of Halifax has scheduled 152 ships to call in 2022. The first ships are scheduled to arrive in April and will have an estimated 4,819 passengers onboard.

After a big decline in 2020, overnight hotel stays in Halifax picked up steam in 2021. Total overnight stays grew by 266,703 room nights (+30.5%) but were still unable to reach the record high seen in 2019. Overnight stays at traditional hotels grew by 42.5%, but room share stays fell 1.7%.

Hotel room supply grew by 187 in 2021, an increase of 3.0%. This brings the total hotel room supply in the city to 6,336. With plans for more hotels to be developed in 2022 – like The Moxy Halifax scheduled for Q4 2022 – supply growth is expected to remain strong.

Halifax’s tourism industry is showing signs of recovery, but still has not fully reached pre-pandemic levels. However, with the ending of the state of emergency and the lifting of public health restrictions, Halifax may be poised for solid tourism growth in 2022.

The total number of businesses in Nova Scotia’s tourism industry is already at its highest level ever, including a record number of active businesses in accommodation as well as food and beverages services, at 278 and 1,238, respectively. 14,700 of the 27,440 people employed in the accommodation and food services industry across Nova Scotia are employed in Halifax.

A growing population and labour force is critical to maintaining economic growth. In a future marked by demographic changes and tightening labour markets, increasing productivity may be an even more important ingredient in driving economic expansion and improving living standards. Productivity can be increased by improving the skills of workers through education and training, by innovating what is produced and how it is produced, and by investing in equipment and technologies used in production processes.

Businesses in Halifax seem more optimistic about the economy than they ever have been, with 91.0% of businesses moderately or extremely optimistic about current economic prospects, 71.5% saying economic conditions are better now than 5 years ago, and 88.8% moderately or extremely optimistic about economic conditions over the next 5 years.

In 2022, 88.0% of businesses expect to increase sales, and 73.2% intend to hire additional staff, the highest values ever recorded. Intentions to engage in a variety of productivity-enhancing activities, such as investing in new equipment and introducing new products, softened during the pandemic but remain above longer-term averages.

As Halifax-level data were not available, provincial productivity figures were used in this analysis. Strong growth in capital expenditures in 2021 and 2022 were a welcome sign, but Nova Scotia’s relative performance is worrying. Nova Scotia ranked dead last among provinces in 2021 for per capita capital expenditures and second to last in 2019 in output per labour hour.

Halifax’s burgeoning startup community experienced a strong flow of direct investment and higher revenues in 2021, which financed a hiring binge by scaleups and larger companies. However, the increasing cost of tech talent and complications presented by the pandemic have created problems felt most acutely by early-stage companies.

The metric that really shows the strength of the city’s science-driven enterprises is the record $307.5 million they raised in equity investment in 2021, more than doubling the $121.7 million raised the year before. Though one company accounted for two-thirds of the funding in 2021, it is important to highlight that 21 companies raised more than $1 million each. The overall metrics showed robust growth: venture capital investment in Halifax companies hit a record $84.5 million while the city’s startups increased staffing by about 34% to more than 3,600 employees. Revenues increased 42% (suppressed somewhat by slower growth by maturing companies.)

Fewer companies were launched in Halifax in 2021 than in any of the previous 5 years. With 34 new companies and a similar number of failures this year, the number of startups in total was unchanged at 290. (Some older companies moved to Halifax or emerged from “stealth mode” during 2021.) The lack of growth in companies was caused partly by COVID, which closed university campuses for the 2020-21 academic year.

This year, Entrevestor produced diversity metrics for the Atlantic Canadian startup community. In Halifax, immigrants are founders, co-founders, or CEOs of 24% of startups. Women-led companies account for one-fifth of the startups, an improvement over previous years. Entrevestor found groups that remain under-represented in forming innovation-driven startups. Companies with Black founders/CEOs comprised 1.7% of the total, 0.7% of the companies had Indigenous leadership, and 0.7% had 2SLGBTQ+ leadership.

As a provincial capital, a federal regional centre, and home to a major military base, the public sector is one of the largest employers in Halifax and a major driver of the economy. The role of government expanded over the past 2 years as health-care spending jumped and programs were introduced to mitigate the economic effects of the pandemic on businesses and individuals.

Although debt levels increased, Nova Scotia currently has the third lowest net debt per capita across all provinces. According to the 2022-23 Nova Scotia budget, the net debt of the province is expected to be $16.8 billion for 2021-22 and increase to $18.4 billion by 2022-23. The 2021-22 figure equates to $16,756 per capita and 33.5% of GDP. The net-debt-to-GDP ratio is expected to rise to 40.0% by 2025-26.

The largest share of municipal spending in 2022-23 is budgeted for corporate services (fiscal) with an increase of 29.1%. This category incudes the maintenance and operation of municipal facilities and capital investments. Expenses budgeted for environmental and climate change items total $3.92 million, a 75.0% increase over the previous year. Across departments, the only reduction in municipal spending is budgeted for Library Services (-0.3%).

Overall, the municipal spending budget increased 9.8% over 2021-22 to $1,105.9 million. Municipal revenue in 2021-22 was driven by property taxes (excluding deed-transfer taxes) of close to $830 million, followed by “other revenues,” which include transfers from other governments, generating about $141 million. The introduction of the climate action tax led to the biggest annual increase in property taxes in recent years.

The largest percentage increase across revenue sources for the year came from deed-transfer taxes (+29.2%) while the largest decline was seen for “other revenue” due to the wrapping up of pandemic-related transfers from the federal and provincial governments. Revenue through payments in lieu of taxes and tax agreements also declined. Following an increase of 4.6% in the previous fiscal year, total municipal revenue increased by only 0.7% in 2021-22, However, it is forecast to increase by 6.0% in 2022-23.