Ottawa could see 16,000 new jobs created in the city over the next three years, according to a new report by BMO Economics.
While some of the job growth will come from the private sector, the report predicts that government spending – and hiring – will begin increasing after several years of cuts.
"Ottawa, traditionally an area of stability within Ontario's economy, is also faced with challenges stemming from government spending restraint," said Robert Kavcic, a senior economist with BMO Capital Markets, in a press release.
"While, this restraint has posed a near-term headwind for Ottawa's economy, improving government finances should support growth in the years ahead.”
Federal government restraint has pushed Ottawa’s unemployment rate above seven per cent, according to the report.
The unemployment rate remains higher than it was at the peak of government stimulus spending, when it reached 4.9 per cent. However at 5.9 per cent in December it’s still one of the lowest rates in Ontario.
The report predicts that the local unemployment rate will remain below six per cent through 2016.
Growth in the high tech sector will create jobs in the city, according to the report. But it won’t have as big an impact as the communications industry did in the 1990s.
The report points to Cisco Systems’ plan to hire 1,700 people in Ontario as one example. The company currently has a large office in Kanata and many of the new jobs will be located there.
Home prices in Ottawa, which are lower than those in other major cities, are an advantage, according to the report.
Price increases are also beginning to slow and while sales of existing homes were down by 3.1 per cent in 2013, BMO said that current rates are consistent with the 10-year average.
Despite the drop in new home sales, there are currently almost 7,000 residential units under construction in the city – a 40-year high.
BMO will also be creating new jobs in the city. The bank is setting up a new Eastern Ontario division, based in Ottawa.