Economic and Investment Update – July 2022
Key Highlights
- The Consumer Price Index (CPI) continues on a 39-year high, rising to 8.1 per cent in June
- Bank of Canada raises the policy rate by 100 basis points – the largest increase since 1998
- National unemployment rate hits another record low, falling to 4.9 per cent in June
- Real Gross Domestic Product (GDP) remains unchanged in May
- Small Business and Entrepreneurship sees demand for consultations driven by Professional, Scientific & Technical Services, Retail Trade, and Accommodation & Food Services in June
- Vaughan-headquartered Bausch + Lomb announces two new collaborations with foreign-based companies to expand services offerings
SELECT Economic Indicators
The Consumer Price Index (CPI) maintains a 39-year high, climbing to 8.1 per cent in June
The Consumer Price Index (CPI) reached 8.1 per cent in June, up from a 7.7 per cent year-over-year basis in May. In Ontario, prices increased 7.9 per cent over the same period last year in June, rising at a faster pace than seen in May and June.
Gasoline prices were the largest driver of inflation over this period – consumers were hit with a 6.2 per cent month-over-month increase in the cost of fuel, which was 54.6 per cent higher than June 2021.
Bank of Canada raises the policy rate by 100 basis points – the largest increase since 1998
The Bank of Canada increased its target for the overnight rate in July to 2.5 per cent, up by 100 points and the largest single increase since 1998. This increase continues the policy of tightening which began in April, and the Bank of Canada anticipates that interest rates will need to rise further given the rate of economic growth in the country and the persistent levels of inflation.
The Bank also indicated their forecast and are expecting Canada’s economy to grow by 3.5 per cent in 2022, 1.75 per cent in 2023, and 2.5 per cent in 2024. The policy of tightening of monetary conditions combined with fewer supply disruptions should help decrease the rate of inflation. The Bank’s July outlook has inflation easing to about 3 per cent by the end of 2023 and returning to the 2 per cent target by the end of 2024.
National unemployment rate hits another record low, falling to 4.9 per cent in June
National unemployment reaches a new low of 4.9 per cent in June, the lowest level since data became available in 1976. In Ontario, unemployment also dropped from 5.5 per cent to 5.1 per cent, while the Toronto Census Metropolitan Area (CMA) – which includes Vaughan – remained at the same unemployment rate as May, staying at 6 per cent.
Youth unemployment in Ontario (aged 15 to 24) highest decreased to 10.5 per cent, while unemployment dropped 0.3 per cent for adult women (25 years and over) in Ontario to 4.3 per cent, and 0.2 per cent for adult men, decreasing to 4.2 per cent.
Employment in service-producing sectors declined by 0.5 per cent in June, with the largest decline seen in retail trade – dropping 2.5 per cent in one month. Whether this trend continues amidst lower consumer confidence and decreased spending power will be revealed in the coming months. The goods-producing sector saw employment increases, rising 0.8 per cent in June. Manufacturing employment grew in June, increasing 1.5 per cent, up 2.2 per cent compared to the same month last year. Construction employment also grew in June, with Ontario accounting for nearly all of the increase – up 3.3 per cent over the previous month in Ontario. Compared with the same period last year, construction employment has grown by 8 per cent, a faster pace than most industries.
Hourly wages for employees rose 5.2 per cent compared with the previous year in June, which was a higher increase than the 3.9 per cent seen in May. Despite the increase, the rise in wages still falls behind the rate of inflation, decreasing purchasing power for Canadians.
Workers who work all their hours at home dropped slightly in June, from 19.2 per cent to 17.9 per cent. However, changes to work location in summer months may be affected by jobs in tourism and hospitality industries, where fewer workers are able to complete work at home.
Real Gross Domestic Product (GDP) remained unchanged in May
Real Gross Domestic Product (GDP), which measures the inflation-adjusted value of goods and services produced in the economy, remained unchanged in May. This zero per cent change comes after ten consecutive months of growth as measured by economic output.
Growth of 0.4 per cent in services-producing industries was offset by a 1 per cent decline in goods-producing industries.
Transportation and warehousing increased for the fourth consecutive month, up 1.9 per cent in May, but lags significantly (by 7 per cent) behind pre-pandemic levels. In Vaughan, transportation accounted for $1.16 billion in economic output and employed more than 15,500 workers in 2021.
Manufacturing declined in May after seven months of increases, falling by 1.7 per cent. The construction sector also dropped for the second month, decreasing 1.6 per cent in May. This coincides with the strikes seen in Ontario in the construction industry in the month of May, which saw delays in many projects across the province. Construction and manufacturing are two of the largest industries in Vaughan by both economic output and employment – they accounted for nearly 75,000 jobs and $8.6 billion in real GDP for the City.
LOCAL TRENDS, INVESTMENTS, AND SUCCESS STORIES
Small Business and Entrepreneurship sees demand for consultations driven by Accommodation & Food Services, Retail Trade, and Professional, Scientific & Technical Services in July
ED’s Small Business and Entrepreneurship top five industries seeking consultations in April were:
- Accommodation & Food Services (28%)
- Retail Trade (24%)
- Professional, Scientific & Technical Services (17%)
- Other (12%)
- Other Services (Except Public Administration) (8%)
Vaughan-headquartered Bausch + Lomb announces two new collaborations with foreign-based companies to expand services offerings
Vaughan-headquartered Bausch + Lomb, a leading global eye health company, in partnership with Novaliq GmbH, a German biopharmaceutical company focused on ocular therapeutics, announced in July the submission of a new drug in June to the U.S. Food and Drug Administration for a treatment developed that may treat the signs and symptoms of dry eye disease. Also in July, Bausch + Lomb announced a strategic agreement with Israeli ophthalmic medical device start-up Sanoculis to enter into an exclusive European distribution agreement for a minimally invasive surgical procedure to treat glaucoma.
Vaughan is located in a growing life science and health tech cluster of more than 350 companies in York Region, and the City is home to other global and Canadian industry leaders such as AB Sciex, Cardinal Health, Toronto Research Chemicals (TRC), a division of LGC Group, and Sterling Industries.