September 21, 2022
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ECONOMIC IMPACT & RESOURCES
PEI minimum wage to increase twice in 2023
Prince Edward Island’s minimum wage will reach $15 per hour by the end of next year.
The first increase will be by 80 cents on January 1, 2023 to $14.50 per hour. The second increase will be 50 cents on October 1, 2023 to $15.00 per hour.
The Employment Standards Board reviews minimum wage annually and provides their recommendation to government after the review is complete. To read the board’s report, visit: Minimum Wage Order (Board and Lodging).
Start-up businesses can apply to PEI Ignition Fund
Applications are now open for Innovation PEI’s 2022 fall Ignition Fund competition, which offers up to $25,000 to launch or expand a business in Prince Edward Island.
The Ignition Fund is a competitive based fund for entrepreneurs seeking start-up capital for a new innovative business venture or to develop and launch a new innovative product. Applicants must be committed to establishing and operating a new business in this province. Projects will be judged on their innovation and potential economic impact for Prince Edward Island.
Applicants are encouraged to discuss their projects with an Innovation PEI Business Development Officer or attend one of the information sessions.
Information on the sessions and how to apply can be found at: Ignition Fund. The deadline for applications is Monday, October 24th at 1:00 p.m.
Canadian inflation rate cooler than expected in August
Canada’s inflation rate eased for a second month in August on lower gasoline prices, a welcome development that may give the Bank of Canada confidence its interest rate hikes are working.
The consumer price index rose 7 per cent from a year ago, down from 7.6 per cent in July and a four-decade high of 8.1 per cent in June, Statistics Canada reported on Tuesday. Economists expected a reading of 7.3 per cent. During the month of August, prices fell 0.3 per cent, the largest monthly decline since the early months of the COVID-19 pandemic.
So-called core inflation — which excludes more volatile prices to generate a better gauge of underlying pressures — also decelerated. The average of the central bank’s three key measures dropped to 5.23 per cent from a revised 5.43 per cent in July, a record high.
The loonie fell about two-tenths of a cent to trade at $1.3308 per U.S. dollar as of 8:36 a.m. Toronto time. Bonds rallied, pushing the yield on benchmark two-year debt down about 5 basis points to 3.802 per cent.
While the numbers aren’t likely to derail bets on further rate increases in coming weeks, the deceleration suggests the Bank of Canada’s “front-loading” of hikes is cooling the economy and slowing demand enough to wrangle price pressures down quickly — without requiring rates to increase too far into restrictive territory.
Two weeks ago, policy makers led by Governor Tiff Macklem raised the policy interest rate by another 75 basis points to 3.25 per cent in one of the bank’s most aggressive hiking cycles ever. The rate had been holding at an emergency pandemic low of 0.25 per cent until March.
The policy rate is Canada’s highest since 2008 and also one of the highest among major advanced economies. The Federal Reserve announces its next decision Wednesday, with another outsized hike expected.
Earlier this month, Bank of Canada Senior Deputy Governor Carolyn Rogers said borrowing costs will need to rise further. She said the bank will be paying particular attention to core measures of inflation and survey results on expectations in order to assess how “broad and entrenched price pressures are.”
Markets are fully pricing in a 50 basis-point hike at the Bank of Canada’s decision next month, and another 25 basis point increase in December. Macklem and his officials are expected to stop hiking there.
Recent economic data shows Canada’s economy has already begun to gear down dramatically from a strong first half. In August, employment levels unexpectedly fell for a third straight month and the unemployment rate jumped to 5.4 per cent, from a record low of 4.9 per cent.
The latest monthly readings for economic growth show the expansion has stalled since April.
Gasoline, durable goods and shelter prices rose less in August on year-over-year basis than in July, but prices for food purchased from stores continued to increase — rising 10.8 per cent, the fastest pace since 1981.
Regionally, prices rose at a slower pace in August than in July in every Canadian province.
However, prices are still rising faster than wages. Last month, average hourly pay rose 5.4 per cent from a year earlier. Although Canadians experienced a decline in purchasing power, the gap was smaller in August than in July, the statistics agency said.
Inflation rates in some Canadian cities
Statistics Canada also released rates for major cities, but cautioned that figures may have fluctuated widely because they are based on small statistical samples (previous month in brackets):
- John’s, N.L.: 6.0 per cent (6.5)
- Charlottetown-Summerside: 8.7 per cent (9.9)
- Halifax: 7.8 per cent (8.6)
- Saint John, N.B.: 7.4 per cent (7.9)
- Quebec City: 7.2 per cent (6.7)
- Montreal: 7.2 per cent (7.3)
- Ottawa: 7.3 per cent (7.4)
- Toronto: 6.8 per cent (7.5)
- Thunder Bay, Ont.: 5.7 per cent (6.0)
- Winnipeg: 8.0 per cent (8.6)
- Regina: 7.3 per cent (8.2)
- Saskatoon: 6.2 per cent (7.4)
- Edmonton: 5.6 per cent (7.6)
- Calgary: 6.7 per cent (8.2)
- Vancouver: 7.4 per cent (7.7)
- Victoria: 7.4 per cent (8.2)
- Whitehorse: 7.6 per cent (7.7)
- Yellowknife: 6.7 per cent (8.0)
- Iqaluit: 4.8 per cent (5.2)
OTHER NEWS
Job vacancies hit record high in Q2: Statistics Canada
Canadian job vacancies hit a record high in the second quarter, nearing one million open positions, Statistics Canada data shows.
In a report Tuesday, StatsCan said Canadian employers were looking to fill 997,000 vacancies in the second quarter, up 4.7 per cent from the prior quarter – and 42.3 per cent higher than in the second quarter of 2021.
Vacancies rose in six provinces in the quarter, led higher by Ontario’s 6.6 increase. Nova Scotia, British Columbia, Manitoba, Alberta and Quebec also saw rising job vacancies.
On an industry level, vacancies remained elevated in health care – little changed from the prior quarter, but up 28.8 per cent year-over-year. Service-sector openings were elevated on a quarter-over-quarter basis, with vacancies in the accommodation and food services sectors up 12.7 per cent from the first quarter.
The rising job vacancy rate comes as wages have failed to keep up with inflation. According to StatsCan, average hourly wages increased 4.1 per cent year-over-year in the second quarter, against the backdrop of an average increase in consumer costs of 7.5 per cent in the quarter.
That disconnect between wage gains and inflation does come amid the Bank of Canada urging employers and employees against letting price pressures unduly influence wage expectations, warning that allowing earnings expectations to become unmoored will lead to a “wage-price spiral” that will fuel inflation.
The central bank says it remains committed to getting inflation back to its target of two per cent, and that higher wages will make such a mission more difficult.
New Brunswick releases updated climate change action plan
The New Brunswick government released its renewed climate change action plan today, which will help the province adapt to climate change.
Our Pathway Towards Decarbonization and Climate Resilience features three pillars: government leadership and accountability, reducing greenhouse gas emissions and preparing for climate change.
The province has led the country in reducing emissions since 2005, lowering emissions by 37 per cent. The government has committed to reaching 46 per cent below 2005 levels by 2030.
Through the action plan, the province is positioning itself to attract clean investments, create good jobs and opportunities for businesses that take advantage of new technology, and market New Brunswick as a green hub through decarbonization. The government has committed to reaching net zero – removing as much carbon from the atmosphere as is emitted – by 2050.
The move towards net zero by 2050, and the pathway towards clean energy, will pose significant challenges for the province to meet its energy needs. Crossman said the province will continue to require the support of the federal government to achieve the climate objectives.
Over the next two years, the government is committed to delivering on 14 of the 30 actions in the plan. These will include:
- Supporting the transition to zero-emission freight by implementing an incentive program and completing a zero-emission freight strategy.
- Setting clear electricity efficiency performance targets and reporting requirements for NB Power.
- Ensuring New Brunswickers have equitable access to energy efficiency programs through long-term financing and/or payment options.
- Supporting regional service commissions in developing and implementing regional transportation plans.
- Developing a performance standard to ensure landfill gas management systems are meeting requirements related to increased methane capture and reduced emissions.
- Maintaining biodiversity by publishing a list of climate-sensitive species and setting a new target for protected areas.
The remaining 16 actions, such as assessing the carbon stock of forests and wetlands and training tradespeople in skills related to energy-efficient buildings, will take longer than two years to complete.
The Climate Change Act requires that New Brunswick’s Climate Change Action Plan be reviewed every five years.
NEWS FROM OTHER COUNTRIES
U.S. central bank hikes interest rate again, up to 3.25%
The Federal Reserve raised its benchmark interest rate by three quarters of a percentage point in its latest move to get ahead of runaway inflation.
The decision by the U.S. central bank was in line with what economists were expecting, although there was some thought that the Fed might hike by even more — a full percentage point.
Instead the Fed raised its trend-setting rate by 75 basis points for the third time in a row. The Fed’s rate is now at its highest point since 2008, and policy-makers are signalling they aren’t done yet: officials forecasted that they will boost their benchmark rate to roughly 4.4 per cent by year’s end, a full percentage point higher than they had forecast in June.
That aggressive path for rates speaks to just how big a problem policy-makers think inflation is. Inflation rates have roared to multi-decade highs around the world in recent years, prompting a range of actions by central banks to get it under control.
All things being equal, central banks raise their rates when they want to cool down an overheated economy, and they cut their rates when they want to stimulate borrowing to grow the economy.
At a press conference following the decision, Fed chair Jerome Powell made it clear that the central bank is not afraid to keep rates where they are, or go higher, for as long as it takes to rein in inflation.
They “want to be very confident that inflation is moving back down” before contemplating cutting rates again, he said.
The Fed’s move will make it costlier to take out a mortgage or other forms of loans — and no doubt cool consumer spending in the process. The Fed is trying to cool down inflation without sparking a recession, and pulling that off may be difficult, said Desjardins economist Royce Mendes.
“With the Fed laser-focused on containing inflation, there’s now a greater likelihood that … their aggressive actions will result in a recession,” he said.
IFA releases 2022 franchisee inflation survey
The IFA released its first annual survey on the impacts of inflationary pressures on franchised businesses. The survey, conducted by FRANdata, revealed that inflation is having a moderate to significant impact on 90 percent of franchised businesses, but being part of a franchise system has helped these businesses navigate rising prices. The report shows that the lodging sector, quick-service restaurants, and child-related services are the most impacted by inflation.
Key findings include:
- 90% of franchisees are experiencing a moderate to substantial inflation impact.
- The most impacted sectors include lodging (90%), quick-services restaurants (83%), and child-related services (61%), which report a substantial increase.
- 89% of units have had to raise their prices of goods and services to absorb cost increases.
- Sixty-four percent of respondents reported lower earnings due to rising prices, with quick-service restaurants, retail stores, and the beauty-related industry being the top three industries to feel the impact on their bottom line.
- The most significant cost increases are driven by rising fuel prices, increases in labor cost and inventory costs.
- 60% of franchisees expect increases in cost to get worse in near future.
- 92% of franchisees with 11+ units say growth is constrained by labor issues.
Click here for the full report
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