Economy

Growth in real gross domestic product (GDP), the annual sum of goods and services produced, is a key metric for tracking the health of an economy. Population growth is also important as more people typically implies more workers, which in turn means higher levels of production. When population growth exceeds GDP growth, however, GDP per capita falls. This is problematic because GDP per capita, the annual amount of goods and services that each person is able to enjoy, is the metric that best tracks material standard of living. When GDP per capita falls, so do average living standards.

Halifax experienced positive real GDP growth in 2023 and an increase is forecasted for 2024. However, Halifax was only in the middle of the pack among benchmark cities in both cases. This tepid economic growth coupled with record-setting population growth generated declines in real GDP per capita. If population growth remains vigorous, productivity will need to improve substantially to reverse the downward trend in our material standard of living.

Retail sales in Halifax grew by 2.8% from 2022 to 2023, while manufacturing sales,^{1, 2}at 4.5%, showed solid growth over 2022. The Atlantic Economic Council forecasts $4.2 billion in major project spending in Halifax in 2024, a 20% increase over 2023. A further increase of 18% is predicted for 2025.

Consumer confidence climbed during the first half of 2023 from an all-time low at the end of 2022. The latter half of the year saw the Consumer Confidence Index fall and then climb again. As 2023 closed, the index remained well below pre-pandemic values.

Halifax Partnership’s Business Confidence Survey, carried out by Narrative Research, gathers views from business owners on Halifax’s economy.

In past years, data were gathered via telephone interviews with representatives of 300 Halifax businesses. Response rates for telephone surveys have been declining in the opinion research sector, and in 2024, only half the data were collected via traditional telephonic interviews. The other half were collected via an online survey. Upon completion of the data-gathering, a decision was made to report solely the telephone surveys to allow for consistency with previous editions. So, this year we report the results only of the 150 telephonic surveys. Margins of error around results are accordingly somewhat larger than in past years.

As with residents, business confidence weakened in 2024.

The Business Confidence Index (BCI), which ranges from a scale of -100 to +100, is based on five questions that span the past, current, and future performance of Halifax’s economy.

In 2024, the BCI fell to 25.0, the second consecutive decline and its lowest level since 2015. Asked to rate Halifax as a place to do business, nearly 15% of businesses rated Halifax below average, the highest share since 2015. About 57% said the city was average, while 25% rated it above average.

Ratings of various aspects of doing business in Halifax in 2024 were similar to 2023. Connections to universities and colleges, quality of life for residents, telecommunications and internet services, and Halifax Gateway connections remained at the top of the rankings, while cost of living for residents, the tax environment, and energy costs remained at the bottom.

Across 15 rated aspects, seven aspects were rated as net advantages,⁴while eight were rated as net disadvantages.⁵

At -73.6, cost of living for residents registered a new record low for any one aspect across seven years of surveying, and the cost of labour slipped into net negative territory for the first time in 2024. Quality of life for residents remained firmly positive but did drop to a new low.

Halifax Stanfield International Airport and the Port of Halifax saw continued growth in 2023.

Passenger numbers at Halifax Stanfield were up 15% although the number of itinerant flights⁶was static over 2022.

Flight, air passenger, and air cargo numbers all remain below pre-pandemic highs.

Air cargo at Halifax Stanfield grew by 6.6% in 2023, while cargo levels through the Port of Halifax reached a new record high in 2023.

Many tourism sector metrics showed strong growth from 2022 to 2023 with figures returning to pre-pandemic levels.

Overnight stays in hotels reached a new high in 2023. The total figure, which includes room shares, was just below the record set in 2019.

Cruise vessel calls and cruise passenger numbers both grew substantially from 2022 to 2023 although figures have not recovered to pre-pandemic levels.

Total hotel room supply in Halifax dipped slightly from 2022 to 2023.

Canada’s weak performance on productivity measures, as well as the sobering implications of what this means for our current and future standards of living, have been prominent in recent headlines. Previous editions of the Halifax Index have pointed out that Nova Scotia fares poorly in interprovincial comparisons of productivity measures. This situation remains largely unchanged in 2023.

It is heartening to see a significant rise in the share of surveyed Halifax businesses who said they expect to utilize cutting-edge technology in the coming year and also to see no drop in the shares planning to make major investments in facilities, equipment, and R&D.

Less comforting was Nova Scotia’s rank near the bottom among provinces in terms of capital expenditure per capita; business R&D per available worker; and investment per labour force in non-residential buildings, intellectual property products, and engineering construction.

There is some brighter news. Nova Scotia outpaced the national average in annual growth in capital expenditures per capita and ranked fourth among provinces for investment in machinery and equipment.

For this year’s labour productivity metric, the value of output per hour worked was compared across provinces only for service-producing businesses⁷ rather than for the entire provincial economy. This approach mutes the outsize impact of the oil and gas sector in the three main energy-producing provinces. Even with this adjusted approach, however, Nova Scotia ranked near the bottom of the pack ahead only of the other two Maritime provinces.

Just as stemming the tide of looming population decline became the central rallying cry from the Now or Never (Ivany) report a decade ago, addressing and reversing our stagnant productivity performance is critical to ensuring rising standards of living and improved well-being into the future.

The innovation economy in Halifax is at an interesting juncture: there were a record number of business failures and new companies in 2023. One reason for optimism is that young ventures continued to find investment capital. While IMV Inc. failed, others like cleantech venture CarbonCure Technologies and manufacturer Site 20/20 made landmark announcements.

On the surface, 2023 witnessed little change in the size of the Halifax startup community. Slightly more than 300 innovation-driven companies employed about 3,800 people, the same as in 2022. A deeper look into the data and news reports, though, shows it was an important year for the startup community’s composition, revenue growth, and funding.

In 2023, 43 companies failed, a huge increase from 16 the previous year. While most of these ventures were essentially experimental companies launched by one or two entrepreneurs each, the failed companies included the drug discovery company IMV Inc., once the flagship of Halifax’s life sciences cluster.

Counterbalancing this wave of failures was an equally strong flood of new companies, especially in the IT sector. There were 70 companies that launched in Halifax in 2023, an increase of 62% over the previous year. Some of these companies are headed by entrepreneurs who have successfully exited previous ventures, such as Travis McDonough (the former CEO of Kinduct Technologies Inc.) and Tukan Das (former CEO of LeadSift). The bottom line: Halifax shed a lot of weak companies and replaced them with a new generation of ventures, many with experienced leadership at the helm.

The overall figure for investment funding in 2023 is inauspicious: $167.1 million, down 30% from the previous year. However, that drop can be attributed to the decline in funding by publicly listed companies. In 2022, Meta Materials Inc., raised about $64 million by selling shares on the Nasdaq. But that company suffered upheavals in 2023 and, combined with the failure of IMV, two capital-hungry companies were removed from the fundraising totals.

The big funding news was cleantech superstar CarbonCure raising US$80 million (C$105.7 million) in a venture capital round led by Swiss impact investor Blue Earth Capital. It was the biggest VC funding round in Nova Scotia’s history and should help to propel the Dartmouth company toward its goal of capturing 500 million tonnes of carbon dioxide annually by 2030.

There was more eye-catching funding news: angel funding (equity investments in startups by wealthy individuals) in Halifax companies rose in 2023, but it fell drastically in the rest of Atlantic Canada. Angel funding in Halifax climbed 27% to $11.7 million in 2023 – accounting for 74% of all the angel financing in Atlantic Canada. Angel funding is essential at this point in the startup community’s development because of the record number of new companies. Many of these companies will need pre-seed and seed funding in the next few years, and it will be hard to find investment if angels are not writing cheques.

More successful startups are ramping up sales. The poster child for this is Site 20/20, which makes automated traffic signals for construction sites. It placed sixth in Deloitte’s prestigious Technology Fast 50 list of Canada’s fastest-growing startups on the back of remarkable 2,392% revenue growth from 2019 to 2023.

In addition, 13 Halifax startups shared their full revenue data with Entrevestor for the past two years, and their revenue growth was 85% on a weighted-average basis. As well, seven other companies shared their revenue growth metrics, and four of these indicated their revenue increased 75% or more. One reported growth of 997%. In the last two years, revenue growth by Atlantic Canadian startups has generally been in the 40% to 50% range, so the numbers from Halifax startups are impressive.

Halifax’s entrepreneurs are becoming a more diverse bunch although the pace of progress is slow. Some 104 Halifax startups were led by immigrants in 2023 – more than one-third of all startups in the city, an increase of 13% from 2022. Women run 72 companies, one more than the previous year. The number of innovation-driven startups headed by Black founders was unchanged at six, and the city added an Indigenous-led startup, bringing the number to four.

For more information on startups in Halifax and across Atlantic Canada, see Entrevestor's 2023 Startup Data Report.

Government is a key driver of Halifax’s economy through the Province’s role as the largest employer and the Municipality’s major capital investments. After recovering its financial position post-pandemic, the Province forecasts rising debt levels and greater expenditures in the coming years. Such expenditures, including those in health care and housing, may prove to be of critical public value. However, forecasts of rising debt levels can be a cause for concern.

The Province expects to maintain ongoing budget deficits in the years to come. Its net debt-to-GDP ratio was near its 20-year low at 33.3% for 2023-24, but it is expected to rise in each of the next four years. Compared to other provinces, Nova Scotia was in the middle with the fifth-highest net debt-to-GDP ratio and net debt per capita ($17,665) in 2023.

The Halifax Regional Municipality expects to increase its revenue by 6.1% in 2023-24 and its overall expenditure⁹by 5.2%. Most of its revenue (74.8%) comes from property taxes, less deed transfer taxes. Deed transfer taxes alone constitute 5.9% of total revenue. The municipality expects to collect $1,196 million¹⁰in revenues, spend $1,043 million on its own activities, and pass an additional $201 million it collects onto the Province (primarily for schools and education). The Municipality expects to increase its net debt by $8.7 million in 2023-24 and spend $36.6 million in debt-servicing costs.

As important as how much it spends, is what the municipality spends money on. The municipality’s largest expenditures go to fiscal services¹¹($231.2 million), mandatory provincial costs ($201.4 million), and Halifax Transit ($145.5 million). In absolute terms, spending on Halifax Transit increased the most (+$14.0 million) in 2023-24; fiscal services decreased the most (-$26.1 million).