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Housing will drag on the B.C. economy in 2022: report – BCBusiness

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Housing

Credit: Tierra Mallorca // Unsplash

In its latest economic outlook, Central 1 also forecasts a shift toward services spending by consumers and tourists, along with more business investment

B.C.’s red-hot housing market may be about to cool, but there’s good reason for optimism about the provincial economy. Central 1 Economics makes that case in its new economic outlook for 2022-24.

“Heading into year three of the pandemic, British Columbia remains in a relatively solid economic position, having weathered much of the challenges better than its provincial peers,” the report states. “We project that the economy expanded by 5 percent in 2021 after contracting 3.8 percent in 2020, while employment growth averaged 6.6 percent. Momentum carries into 2022 with forecast growth of 3.9 percent with ongoing rotation toward services-oriented demand from domestic consumers and tourists, and higher business investment. Housing is forecast to drag on growth following last year’s surge.”

The highlights of Central 1’s latest outlook: 

• After expanding 3.9 percent this year, the provincial economy will slow in 2023 and 2024

• Higher commodity prices and inflation continue to boost nominal gross domestic product, but the trend slows

• Economic growth rotates toward services spending while capital investment remains supportive in 2022-24

• The housing market’s contribution to the B.C. economy turns negative after a blockbuster 2021

• The unemployment rate will slide below 5 percent, with population growth providing some cushion

• Risks persist, given COVID-19 variants and central bank rate hikes

Central 1

One sign of the province’s economic momentum is a sixth straight monthly rise in employment for January, which contrasts with job losses elsewhere in the country, Central 1 notes.

“Although part-time employment has led growth, broadly, B.C. employment has climbed 2.4 percent above pre-pandemic levels and is tops for the recovery phase. This has intensified labour market shortages, and indeed the province may have already reached full employment with an unemployment rate at 5.1 percent, and near full recoveries in both the employment rate and participation rate.”

As the forecast points out, sectors connected to the knowledge economy and the housing market are thriving. For example, employment in the tech sector and professional services has grown 10 percent during the pandemic.

READ MORE: Want to break B.C.’s boom-and-bust cycle? Focus on people, tech leader argues

“Labour market indicators are well aligned with other key economic indicators, although the recovery continues to be uneven,” Central 1 says. “Some sectors have emerged unscathed or thrived over the past two years, while others remain demand constrained, ebbing and flowing with provincial and federal health restrictions and global tourism activity.”

Since the pandemic started, B.C. home values have surged almost 40 percent, Central 1 observes. New construction, renovations and transaction fees have boosted the economy as housing demand rises in smaller urban areas.

However, Central 1 forecasts that residential property will lose steam later this year. “While housing construction remains elevated, new construction falls back. Affordability erosion and higher interest rates are expected to drag housing transactions lower by 10 to 15 percent. Prices will likely track higher into the spring, but the rapid gains and frothiness increases the likelihood of a climbdown of up to 10 percent as rates rise and inventory moves up.”

B.C. real estate

Central 1 also expects some key themes from last year to persist in 2022 and 2023. “Consumer demand decelerates but remains elevated at 4.0 percent this year and 3.0 percent next year, buoyed by a rotation toward services while population growth accelerates sharply,” it says. “Inflationary pressures are a dampening factor. This will contribute to stronger recoveries in hospitality and other hard-hit sectors. This rotation is also evident in exports as tourism sectors will continue to recover from pandemic declines, although full recoveries could take until partway through 2023.”

READ MORE: The corporate travel sector is ready to fly. Is it time?

Non-residential investment will grow through next year as business investment firms and major projects build out, Central 1 projects. “Commodity markets also buoy private investment,” the report says. “The provincial government is likely to experience a rosier revenue outlook given broad strength in the economy, incomes and royalties. A solid fiscal picture suggests room for the government to remain vested in elevated capital spending on health care, education and climate-proofing B.C.’s public infrastructure. A bigger question mark for the economy comes partway through 2024 and in the second half of the decade when major capital energy projects roll off without any clear investments to take their place.”

Of course, such forecasts have their limits, Central 1 stresses. “Undoubtedly as was the case through the pandemic, outlooks are fraught with risk,” the report concludes. “We are assuming no new variants upend the economy or are generally mild. Other risk factors include central banks that may be too enthusiastic in hiking rates as transitory factors roll off, slowing an economy more than required.”

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A timeline of events in the bread price-fixing scandal

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Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.

Here’s a timeline of key events in the bread price-fixing case.

Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.

Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.

Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.

Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).

Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.

June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.

Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”

Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.

July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.

Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 250 points, U.S. stock markets also higher

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TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

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VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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