LONDON, Ont. — A new economic report shows Ontario's auto industry is not revving up the economy as much as expected.
The Royal Bank of Canada provincial outlook notes auto sales have been booming across North America and production at Ontario auto plants was expected to “ramp up vigourously.”
Instead, Ontario auto production was down 7.9 % at the end of August, compared to the same period last year.
The report said Ontario appears to be losing ground to plants in Mexico and the southern U.S.
“Our concern is that Ontario’s relative position in this industry may become more permanently impaired unless investment in capacity starts to trend higher,” reads the report.
Auto production was not the only weak spot. The RBC reports notes that Ontario exports of machinery, primary metals, industrial chemicals and paper also fell in the first half of the year.
The RBC economists said consumer spending and the housing market in Ontario is still relatively strong, but the bank downgraded its 2013 economic growth forecast for the province from 1.7% to 1.3%.
“Businesses remain generally cautious in their capital spending. In short, we find little evidence that economic momentum is building as anticipated.”