Economic growth – Canada’s economic growth remains strong, with the Bank of Canada forecasting economic growth at 3.5% for 2022. This is partly because our economy is benefiting from higher international prices for fossil fuels and other commodities. In contrast, economic growth in the United States slowed in the first two quarters of 2022. Slowing growth is a common indicator of a recession. Ordinarily, this might cause concern about US economic weakness spreading to Canada. However, other indicators, like employment and consumer spending numbers, suggest that the American economy remains in a good position.
Jobs – Unemployment reached an historic low of 4.9% in June. In July, the unemployment rate for students returning to school in the fall was the lowest since 1989, at 11%. But the picture is not all rosy. The number of people working in the health care and social assistance sector fell by 22,000 in July, despite the ongoing health care crisis and the sector’s desperate need for workers. When it comes to working conditions, data indicates that, despite waning pandemic restrictions, nearly 25% of workers are still working most of their hours from home.
Wage trends – This summer, the average hourly wage increased by 5.2%. This is far less than the average Consumer Price Index increase of 8.1%. Wage growth is varying significantly by sector. Average weekly wages for workers in professional, scientific, and technical services grew by 8% in May 2022 compared to a year earlier. In contrast, the average weekly wage for workers in educational services increased by only 1%. Non-union wages are rising faster than union wages, as unionized workers must wait for bargaining to address unexpected inflation.
Uneven impacts of inflation – Inflation impacts lower-income households more severely than higher-income households. While middle- and higher-income workers are also affected by higher costs, research shows that these households tend to be able to reduce their spending by cutting discretionary expenses, buying no-name brands, or using coupons. Workers with lower incomes are more likely to be economizing already and so are unable to reduce their budgets without cutting out necessities. This means that wage growth for lower-income workers needs to increase faster than the Consumer Price Index to protect their purchasing power.
Interest rates – The Bank of Canada increased interest rates to 2.5% in mid-July. They also announced that they will likely increase interest rates several more times by the end of 2022. How much interest rates increase will depend on whether inflation continues to be higher than expected, or if it starts to slow down. Other indicators that the Bank of Canada will be watching include employment and wage growth. Increasing interest rates is supposed to reduce prices by reducing consumer demand. If employment and wage growth are strong, the Bank of Canada will be concerned that consumer demand will be strong as well – and they will respond by increasing rates even higher.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
