Economic and Investment Update – March 2022
Key Highlights
- The Consumer Price Index (CPI) continues to rise at record levels, remaining above 5. on a year-over-year basis, seeing largest gain since August 1991
- Unemployment rate falls below pre-pandemic level for the first time; 5.5% in Canada and Ontario
- Job vacancies increase across all sectors compared to pre-pandemic levels
- Real Gross Domestic Product (GDP) rebounds in 2021 by 4.9%
- Tourism spending in Canada increases 4.4% in 2021, sector still struggling from crippling declines seen in 2020
- Small Business and Entrepreneurship sees demand for consultations driven by Healthcare & Social Assistance, Arts, Entertainment & Recreation, and Retail Trade in January and February
- Vaughan Starter Company Plus recipient receives $4.1 million in funding support through Protein Industries Canada
- Vaughan-headquartered Kontrol Technologies Corporation expands further with new projects for residential and commercial leaders
- Vaughan-headquartered Danavation Technologies wins contract for custom software for Sobey’s Inc. wholesale operations
- Toronto Raptors forward partners with Vaughan-headquartered Skilled Trades College of Canada to develop talent with scholarships for black and indigenous students
SELECT ECONOMIC INDICATORS
Pace of inflation continues to rise at record levels; remains above 5% year-over-year
The Consumer Price Index (CPI) rose 5.7% on a year-over-year basis in February, the largest rise since August 1991 when it rose by 6%. This is the second straight month with an increase of more than 5%, following a 5.1% rise in January. In Ontario, there was a 6.1% increase over the same month in 2021, above the national increase.
Prices rose in all major components, with shelter prices rising at the fastest pace since August 1983, growing 6.6% year-over-year. Food purchased from stores continued to climb over the previous month, rising at a faster pace in February than in January, up 7.4% compared to the 6.5% in the previous month. Drivers also paid more year-over-year for gasoline, with prices up 32.3% over the same period in 2021. From the previous month, gasoline prices increased 6.9%, influenced by the geopolitical conflict and global oil supply concerns. Other fuels increased 8.5% from January, trending with higher international energy prices.
Wage data from the Labour Force Survey found Canadian wages rose 3.1% on a year-over-year basis in February. Average hourly wages have been increasing since the fall of 2021, however, these increases remain well below the growth seen in the Consumer Price Index.
Unemployment rate falls below pre-pandemic levels for the first time
Unemployment fell to 5.5% in February, just above a record low of 5.4% last observed in May 2019. In Ontario, the unemployment rate in February dropped to 5.5% from 7.3%. Toronto Census Metropolitan Area (CMA), which includes Vaughan, maintained a higher unemployment rate than both Canada and Ontario, sitting at 6.5% in January.
While unemployment across all categories fell in February in Ontario, youth unemployment (aged 15 to 24) still had the highest unemployment rate at 12.2%. The unemployment rate for adult women (aged 25 and over) was 4.7% in January, and 4.2% for adult men, closing the gap below 1% between core-aged women and men.
Ontario reported strong employment growth in February, increasing 2.6%, led by the accommodation and food services and the information, culture and recreation industries. The Toronto CMA accounted for 60% of all gains in employment and increased 3.3% from the previous month.
In February, the Labour Force Survey asked respondents about their physical locations for work, where the number of respondents working exclusively from home dropped slightly to 22.5%, down from 25% in December. Tightening labour market conditions due to low unemployment and high job vacancies; concerns about consumer prices and affordability; and the desire of some workers to retain the flexibility and quality of employment associated with working from home may be factors affecting attracting and retaining quality talent for employers. However, the job-changing rate (those who remain employed from one month to the next but have switched employment between months) was 0.7% in February, in line with the average of 0.7% seen from 2016 to 2019.
Job vacancies up in all sectors compared with pre-pandemic levels
The job vacancy rate was 5.3% in the fourth quarter of 2021, up from 3% in the fourth quarter of 2019 and 3.5% in the fourth quarter of 2020. The job vacancy rate measures the number of vacant positions as a proportion of the total labour demand (filled and vacant positions). Canadian employers sought to fill nearly one million jobs in the last quarter of 2021, 80% more than in 2019 and 63.4% more than in 2020.
Job vacancies were up in all 20 sectors in Canada over the same period pre-pandemic in February 2020. Five sectors were responsible for 65% of the overall increase:
- accommodation and food services (up 20%),
- health care and social assistance (up 15.2%),
- retail trade (up 11.2%),
- manufacturing (up 9.6%), and
- construction (up 8.9%).
In Vaughan, these industries accounted for 40% of all businesses in 2021, and 55% of all employment in 2020.
In healthcare and social assistance and in construction, payroll employment was higher in the fourth quarter of 2021 than its pre-pandemic level, which suggests that employment in these two industries has recovered and the increase in vacancies is due to increased labour demand because of growth in these sectors.
Real Gross Domestic Product (GDP) rebounds in 2021 by 4.9%
Real Gross Domestic Product (GDP), which measures the inflation-adjusted value of goods and services produced in the economy, rebounded in 2021 with an increase of 4.9% in 2021. This comes after a contraction of 5.4% in 2020, the sharpest annual decline since the introduction of annual data in 1961, which was largely impacted by strict public health measures and uncertainty from COVID-19.
The largest ever recorded annual decline in services-producing industries observed in 2020 was offset in 2021 by a 5.1% gain. In 2021, the retail sector posted a 7.1% increase over the previous year, and accommodation and food services increased by 14.2%, driven mainly by gains in food services and drinking places. Despite these advances, last year’s output in the accommodation and food services sector was more than 24% less than in 2019. In Vaughan, service industries accounted for 65% of all output in 2020. Accommodations and food services were particularly affected in 2020, dropping 28.7%.
Goods-producing industries increased 4.3%, offsetting most of the loss recorded in 2020. Manufacturing saw a 4.5% gain in 2021, following declines in both 2019 and 2020. In Vaughan, manufacturing decreased by 13.5% in 2020 after a slight 1% decrease in 2020.
Economic Development expects to receive datasets for Vaughan’s 2021 real GDP in April, after which a breakdown will be provided.
Tourism spending in Canada increases in 2021, sector still struggling from crippling declines seen in 2020
Increased vaccination rates and loosening of public health restrictions resulted in higher tourism spending in Canada in 2021. By the beginning of fall, fully vaccinated travellers were permitted entry into Canada for non-essential. Tourism spending rose 4.4% in 2021, following a 49% decline in 2020. Tourism gross domestic product (GDP) rose 11.9% in the fourth quarter of 2021, increasing 5% overall from the previous year. This is a similar rate to the economy at large, which rose 4.6%.
In Ontario, hotel occupancy was 45.4% in 2021, up 20.2% from the previous year. The Greater Toronto Area East/North had an occupancy percentage of 55.8% in 2021, above the provincial percentage, which represents a 16.6% increase over the previous year.
LOCAL TRENDS, INVESTMENTS AND SUCCESS STORIES
Small Business and Entrepreneurship sees demand for consultations driven by Healthcare & Social Assistance, Arts, Entertainment & Recreation, and Retail Trade
ED’s Small Business and Entrepreneurship top five industries seeking consultations in January and February were:
- Healthcare & Social Assistance (18%)
- Arts, Entertainment & Recreation (15%)
- Retail Trade (15%)
- Accommodation & Food Services (10%)
- Education Services (8%)
Vaughan Starter Company Plus participant receives $4.1 million in funding support through Protein Industries Canada
Oat Canada, recipient of Vaughan’s business advisory support and participant in Starter Company Plus in 2020, was awarded $4.1 million in funding in partnership with Roquette, a global leader in plant-based ingredients, a pioneer of plant proteins and a leading provider of pharmaceutical excipients, to innovate in the development of oat products. This funding is provided through Protein Industries Canada, an industry-led, not-for-profit organization committed to positioning Canada as a global source of high-quality plant-based food and ingredients. This investment will see the development of novel oat ingredients and nutritionally superior oat-based food and beverage products.
Oat Canada is an oat protein-based food and beverage company, and following support received from Vaughan Business and Entrepreneurship Centre is now in over 1,300 stores across Canada, including major retailers such as Loblaws, Costco East, Longo’s and Whole Foods.
Vaughan is home to a robust agri-food ecosystem from farm to fork, with 125 companies in food manufacturing, processing and packaging employing more than 4,700 workers in 2020.
Vaughan-headquartered Kontrol Technologies Corporation expands further with new projects residential and commercial leaders
Vaughan-headquartered Kontrol Technologies Corporation, a leader in smart buildings and cities through IoT, Cloud and SaaS technology, has received two contracts for services in both residential and commercial projects. Kontrol Technologies will deliver an HVAC and Automation project with a leading multi-family high rise developer worth $9.7 million and will deliver advanced building performance monitoring and control for a leading Canadian REIT for 11 new buildings totaling approximately 2,750,000 square feet of commercial real estate.
Vaughan’s professional, scientific and technical services industry accounted for $1.4 billion in economic output, with nearly 3,000 companies employing more than 18,300 workers in 2020.
Vaughan-headquartered Danavation Technologies partners with LCBO flagship store in Downtown Toronto
Danavation Technologies Corp., a Vaughan-headquartered Internet of Things (IoT) technology and provider of micro e-paper display company, was awarded a contract to provide end-to-end IoT operations management solution to automate and streamline Sobeys Inc.’s Wholesale operations. This contract is expected to roll-out to approximately 300 wholesale customers of Sobey’s.
Danavation is one of Vaughan’s more than 220 corporate or regional headquarters, which include representation across many sectors such as professional and business services, construction, transportation, warehousing, wholesale trade, retail services, and advanced manufacturing.
Toronto Raptors forward partners with Vaughan-headquartered Skilled Trades College of Canada to develop talent with scholarships for black and indigenous students
Vaughan-headquartered Skilled Trades College of Canada has partnered with Scottie Barnes, a forward with the Toronto Raptors, to establish the Scottie Barnes Scholarship which will offer annual awards to four black and indigenous students funding to start in the skilled trades. Skilled Trades College provides individuals with the hands-on skills and knowledge required to begin a career in the skilled trades industry, which has seen more than 1,000 graduate through the three established campuses in the Greater Toronto Area.
The City of Vaughan recognizes the importance that local talent serves in making Vaughan a destination of choice for employers and employee alike. Through programs like Vaughan’s Summer Company, a training and mentorship program for youth aged 15 to 29 to start a business over the summer; or through the new Talent City Vaughan program, which offers financial support to external organizations that provide opportunities for Vaughan residents to enhance their skillsets, the City supports workforce development to serve the needs of Vaughan’s diverse economy.