June is typically a month when business figures attract declining attention. Office staffs thin out, and vacation time distracts readers from their daily following of the TSE, and the Dow.
Having said that, May figures and early June figures continue to be encouraging. Here’s a summary of what matters to us right now.
The labour market took a strong uptick in May, according to StatsCan on June 9; May figures showed 77,000 new full-time positions. After declines in other categories, the net gain was still a robust 54,000 jobs.
BC, Ontario and Quebec enjoyed the largest job gains in May. Kelowna’s unemployment rate was 4%, down from 4.8% in April. The national unemployment rate was 6.6%, and the BC unemployment rate was 5.6% in June.
These numbers are good news for Kelowna, and could result in new in-migration of workers looking for employment. Summer and youth employment boosted the numbers: 38,200 young people began full-time work in May, leaving the youth unemployment rate at 12%. By sector, the gains were highest in services, factories and manufacturing.
The Central Okanagan Economic Development Commission tells us that in the first quarter 2017 the labour force increased 4.5% over Q1 2016; and the unemployment rate decreased by 15% over the same period in Kelowna.
Some other Kelowna numbers from the COEDC for Q1: housing starts up 27%; building permit values up 6.1%; business licenses up 15.4%; airport passengers up 8.7%; household income up 2.1%; median home price up 15%; and average rent, up 6%.
June’s annual inflation rate index announcement came out June 23. Weaker gasoline price growth slowed the annual inflation rate to 1.3% for May according to StatsCan, down from April’s 1.6%. Pump prices and natural gas both rose in April (15%-16% range), but rises are half that as summer arrives.
While fresh food prices are tipped to drop in the summer, a new report Dalhousie Universityreleased June 19, runs counter to StatsCan’s forecast, saying food prices will rise, especially meat, in the 7%-10% range. Lower Hydro rates in Ontario are depressing inflation rates across the country.
Amid all the provincial governmental changes, it’s interesting to enlarge our perspective and look across the pond to Europe. The June election in the UK shattered some long-held expectations of how BREXIT would unfold.
And, as Hendrik Brakel, Senior Director, Economic, Financial & Tax Policy of the Canadian Chamber of Commerce said last week, “Poor Europe!” Years of economic stagnation. Austerity. Costly government bailouts. Banking crisis after banking crisis. And yet: moderate leaders were elected in the face of surface unrest in Austria and Holland, and in France, the Moderate Macron won by 30%.
It’s notable that all 28 members of the EU saw growth last year, and predictions are for a continuation of growth through 2018.
Meanwhile, still overseas, consumer confidence levels peaked at the highest level since 2007. And who is investing in Europe? Well, Hudson’s Bay for one: $570 million in Europe this year, targeting sales growth of 20%. Some of Canada’s fastest growing export markets are now in Europe, as opposed to the US and Asia. Canadian businesses are also investing more in Europe. Total sales by Canadian owned companies in Europe – so far in 2017 – exceeds $100 billion. Wow.
On the interest rate front, the US rate went up again June 14th, for the third time this year. The Fed voted to raise US interest rates to a range of 1% to 1.25%. That’s a quarter-point move, and exactly what Wall Street expected. The Fed also stuck to its forecast of one more interest rate rise in 2017.
The Canadian rate will be announced on July 13, and currently is forecast to be unchanged again, at .5%, where it has sat since July 2015. BOC has not raised rates in nearly seven years. Analysts are split on hike forecasts: some see it happening later in 2017, given that bond interest rates were raised in June; prior to that, forecasters were still seeing 2018 as a target. Crystal ball required.
In the June 8 Financial System Review from the Bank of Canada, Stephen Poloz called the financial system “resilient”, even though household vulnerabilities continue to move higher, with more uninsured mortgages on properties over one million dollars value, and increasing home equity lines of credit especially in Toronto and Vancouver.
Senior BOC Deputy Carolyn Wilkins said on June 12, in an address to the Asper School of Business in Winnipeg, that “There are encouraging signs that growth is broadening across regions and sectors, with the adjustment to lower oil prices largely behind us. While broad-based growth is desirable,” said Wilkins, “it’s not under the direct control of monetary policy, and it’s not our objective. We target a 2 per cent inflation rate.” And the loonie immediately gained $.75 on the news.
‘What is encouraging is that… data show that more than 70 per cent of industries have been expanding and the labour market continues to improve,” concluded Wilkins.
Meanwhile, I am delighted to be firmly in place at the Kelowna Chamber as of June 5th. I’m going to be spending the summer getting to know our Kelowna business members on a face-to-face basis, and exchanging information with board members and staff so we’re all working to execute our strategic plans over the next while.
Business Examiner monthly article contribution by Dan Rogers, Kelowna Chamber of Commerce Executive Director