Economic and Investment Update – June 2022
Key Highlights
- The Consumer Price Index (CPI) reaches a 39-year high, climbing to 7.7 per cent in May
- Nearly three in four Canadians report that increased prices are affecting their ability to meet day-to-day expenses
- National unemployment rate drops to a new record low at 5.1 per cent
- Real Gross Domestic Product (GDP) slows in April, increasing 0.3 per cent
- Small Business and Entrepreneurship sees demand for consultations driven by Professional, Scientific & Technical Services, Retail Trade, and Accommodation & Food Services in June
- Vaughan-based Quality Cheese Inc. receives federal investment to increase production, resulting in the addition of 25 full-time jobs
- Vaughan-headquartered PSP Services Inc. partners with Gratify Pay to integrate Buy Now Pay Later service enhancing in-store and e-commerce solutions
SELECT Economic Indicators
The Consumer Price Index (CPI) reaches a 39-year high, climbing to 7.7 per cent in May
The Consumer Price Index (CPI) rose 7.7 per cent in May, up from a 6.8 per cent year-over-year basis in April. In Ontario, prices increased 7.8 per cent over the same period last year in May, rising at a faster pace than seen in April and March.
Gasoline prices were the largest driver of inflation over this period – consumers were hit with a 12 per cent month-over-month increase in the cost of fuel, which was 48 per cent higher than May 2021. Grocery prices continue to rise, with Canadians paying 9.7 per cent more in May for food purchased from stores compared to the same period last year. This marks the fifth month in a row of increases exceeding 5 per cent, still at the largest increase since September 1981. From 2010 to 2020, there were only five months in the decade where groceries increased by 5 per cent or higher. Rent prices continue to rise nationally, increasing 4.5 per cent in May – the same increase April – compared to the same period the previous year.
Growth continued year-over-year in prices for services, increasing to 5.2 per cent nationally in May following a 4.6 per cent gain in April. As a result of the easing of public health measures, Canadians are seeking out leisure activities. Higher year-over-year prices for traveller accommodations were most notable in Ontario, rising 56.8 per cent – a strong indicator of increased demand.
Inflation remains a concern across the country as Canadians struggle with the rising cost of living. A survey completed between April 19 and May 1 by Statistics Canada indicated that nearly three in four Canadians reported that rising prices are affecting their ability to meet day-to-day expenses such as transportation, housing, food, and clothing. As a result, many Canadians are changing their behaviour due to this new reality, including adjusting their spending habits and delaying the purchase of a home or moving to a new rental.
Average hourly wages for employees rose 3.9 per cent on a year-over-year basis in May, reflecting that on average, Canadians continue to experience a decline in purchasing power as prices rose faster than wages.
More than half of businesses surveyed (55.2 per cent) in the second quarter of 2022 anticipate inflation to be an issue when discussing wage increases with employees over the next 12 months – including over three-quarters of businesses in accommodation and food services – according to the Canadian Survey on Business Conditions. In early 2022, more than 4 in 10 businesses (44.9 per cent) indicated that they plan to increase wages for existing employees over the next 12 months.
National unemployment rate drops to a new record low at 5.1 per cent
National unemployment reaches a new low of 5.1 per cent in May, the lowest level since data became available in 1976. In Ontario, unemployment remained largely unchanged at 5.5 per cent, while the Toronto Census Metropolitan Area (CMA) – which includes Vaughan – maintained a higher unemployment rate than both Canada and Ontario, decreasing from the previous month to 6 per cent.
Unemployment rose slightly in Ontario in May, with youth unemployment (aged 15 to 24) highest, rising to 11.4 per cent. Unemployment dropped 0.3 percent for adult women (25 years and over) in Ontario to 4.6 per cent, rising slightly for adult men from 4.1 per cent to 4.4 per cent.
Employment in service-producing sectors rose slightly by a half per cent in May, while dropping by one per cent in goods-producing sectors in the same period. Manufacturing employment across the country declined by 2.4 per cent, erasing the gains seen in this sector over the fall. Ontario saw a monthly decline of 2 per cent in May in manufacturing employment, although overall employment remained steady for the month.
The participation rate, which measures the total labour force relative to the size of the working-age population, rose slightly remaining at an all-time high for core-aged women (85 per cent) and sat 0.4 per cent below the record in March 2022 for core-aged men, sitting at 91.9 per cent in May. With a large number of Canadians approaching retirement, the labour force participation rate among older adults (aged 55 to 64 years old) will be an important indicator of labour supply, particularly in the context of high unmet demand. The participation was little changed for women in this older age cohort in May at 60.4 per cent, it fell a full percentage point to 71.9 per cent for men in the same age group.
Largely unchanged from April to May, nearly one in five employed Canadians (19.2 per cent) indicated that they usually work exclusively from home, and hybrid work arrangements continue to increase. In May, 27.9 per cent of employees said they were able to choose their work location at least some of the time, which includes 13.9 per cent who said they were able to choose all of the time.
Real Gross Domestic Product (GDP) slows in May, increasing 0.3 per cent in April
Real Gross Domestic Product (GDP), which measures the inflation-adjusted value of goods and services produced in the economy, expanded by 0.3 per cent in April. This represents the tenth consecutive month of growth as measured by economic output, although this represents a smaller expansion than March which saw a 0.7 per cent increase.
Manufacturing continued to rise in April for the seventh consecutive month, increasing by 0.3 per cent and surpassing pre-pandemic levels of activity. The construction sector remained unchanged from March, while transportation and warehousing rose 2.2 per cent for the third consecutive month. Retail trade expanded by 0.9 per cent in April, which offset the previous two months of declines.
Tourism-related industries saw continued increases in real GDP in April, with accommodations and food services expanding by a more modest 4.6 per cent following a 10.9 per cent increase in March. Despite the increase of 7 per cent in April in the arts, entertainment, and recreation industries, they remain 12 per cent below pre-pandemic levels.
LOCAL TRENDS, INVESTMENTS, AND SUCCESS STORIES
Small Business and Entrepreneurship sees demand for consultations driven by Professional, Scientific & Technical Services, Retail Trade, and Accommodation & Food Services in April
ED’s Small Business and Entrepreneurship top five industries seeking consultations in April were:
- Professional, Scientific & Technical Services (25%)
- Retail Trade (22%)
- Accommodation & Food Services (12%)
- Arts, Entertainment & Recreation (10%)
- Other (9%)
Vaughan-based Quality Cheese Inc. receives federal investment to increase production, resulting in the addition of 25 full-time jobs
Able Innovations secures a total of $7.5 million in funding Announced in June, Vaughan-headquartered Quality Cheese Inc. received an investment of up to $2,038,092 through the federal Dairy Processing Investment Fund, which will result in the addition of 25 full-time positions, bringing total employment to 108 for the company. Quality Cheese uses cow, goat and buffalo milk to make award-winning Italian specialty cheeses and cheese products for the North American market and has three facilities in Vaughan.
The investment allows Quality Cheese to meet the growing demand for its products via the introduction of new production lines, cheese cutting, conditioning, and ripening equipment, and packaging and storage hardware. The $100-million Dairy Processing Investment Fund was created to help Canadian dairy processors modernize their businesses and improve their productivity and competitiveness. The fund has supported dairy processors in adapting to market changes resulting from the implementation of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).
York Region is the fourth-largest food and beverage processing hub in Canada which sees more than $2.7 billion in annual GDP within its agriculture and agri-food sectors. with Vaughan home to more than half of the 270 food and beverage manufacturers and processors in the Region.
As part of its business advisory services, Economic Development can provide guidance on government funding opportunities you may be eligible for to help you expand or modernize your business. To take advantage of this complimentary service, businesses can connect with ed@vaughan.ca.
Vaughan-headquartered PSP Services Inc. partners with Gratify Pay to integrate Buy Now Pay Later service enhancing in-store and e-commerce solutions
Vaughan-headquartered PSP Services Inc. partnered with Gratify Pay to offer fully integrated solution for in-store and e-commerce shopping. This builds on their recent expansion in the acquisition of Payment Services Interactive Gateway Inc. (PSiGate) further deliver on mobile and ecommerce solutions for merchant through PSiGate’s proprietary gateway. PSP Services Inc. is one of the country’s largest bank-independent payment processors and a leader in payment systems, processing, and integrations, offering centralized, data-rich and multi-channel insights for businesses to optimize operations.
York Region is home to Ontario’s second-largest Finance and Professional Services Industry Cluster, with more than 6,500 businesses employing more than 75,000 workers – this included more than 50 fintech companies.
Vaughan’s Finance, Insurance and Real Estate accounted for $5 billion in local economic output as measured by real GDP and employed nearly 21,500 workers in 2021 and was home to 640 firms in the Finance and Insurance sector.