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Site C filling gaps in subdued resource economy – Alaska Highway News

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The Site C dam is helping to pick up the slack in a subdued northeast B.C. economy, as weak resource market conditions will continue to hamper growth this year, says a new economic report released Monday.

Central 1 Credit Union’s Regional Economic Outlook expects employment and population growth in the region to remain flat as the oil, gas, forestry, and mining industries remain subdued from 2019. The $10.7-billion Site C buildout is bringing economic benefits to the region, says Central 1’s deputy chief economist Bryan Yu.

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“B.C.’s economic growth will be driven by investment in the burgeoning technology sector in Vancouver and the surrounding Southwest quadrant. It will also benefit from major infrastructure projects, including LNG Canada’s $40 billion natural gas liquefaction plant in Kitimat and the associated Coastal Gaslink Pipeline in the North Coast region and public-sector investments such as the Site C Dam in Fort St. John,” Yu said in a statement.

“Interior B.C. markets will face more challenging economic circumstances due to the combination of forestry sector job losses, challenging coal and energy markets and still subdued investment in mining,” he added.

The B.C. economy is forecast to grow by 2.8% this year.

Read Yu’s outlook for northeast B.C. below:

Regional economic conditions in B.C.’s northeast were soft in 2019 as subdued commodity market investment, weakening forestry and fl at employment weighed on labour and housing markets. Weak resource market conditions will continue to hamper growth in 2020 before prospects improve.

Employment

Headline employment data pointed to a reversal in employment growth following 2018 gains. Average employment declined 2.5 per cent in 2019 albeit with some upward momentum late in the year. The only positive story was relatively steady full-time employment levels as part-time employment pulled back sharply. Average unemployment rose to 6.3 per cent of the labour force, from 5.7 per cent in 2018. Caution is warranted in areas with relatively smaller populations and geographic reach like the Northeast. Indeed there are some signs that the labour market is stronger than headlines suggest. Labour force participation rates remain firm at 75 per cent, while there has been no discernible increase in the number of employment insurance recipients in the region which is encouraging, although forestry sector influences are still reverberating.

Site C

Economic drivers in the northeast are mixed. Currently, build out of the Site C dam continues to provide economic benefits for the region. According to BC Hydro, there were more than 3,900 construction and non-construction contractors working on the site in November, which was up by a third from same-month 2018. While only 20 per cent are from the Peace region and the remainder being filled by mobile workers from other parts of B.C. Many of these individuals are not captured in the Labour Force Survey estimates but do contribute to the local consumer demand.

Oil and gas

At the same time, key industries remain in subdued. Investment interest remained low in the oil and gas space with land right sales plunging in 2019. Only 20,000 hectares were disposed of by the government, with total tender bonus at a $14.7 million and down 77 per cent from an already weak year of $64.1 million in sales 2018. This was the lowest on record. Drilling rigs in B.C. continued to decline in 2019. There is little in the near-term to drive a sectoral improvement. Natural gas prices remain low, while an increase in B.C. natural gas demand will likely require a sectoral rebound in Alberta oil production and investment which is not forthcoming. Longer-term completion of LNG Canada’s export terminal will boost natural gas drilling in the region and investment, although this will lift the economy in 2021 and after. Work on the Coastal Gaslink Pipeline will modestly support employment.

Forestry

Like other regions, forestry has been hit by the broad market downturn. While less impacted by the mountain pine beetle epidemic than other regions in B.C., the Northeast has not been immune to the downturn. Louisiana-Pacific OSB mill in Fort St. John shut down its operation in June citing slumping demand and high wood costs. The firm reportedly employed 190 people and had capacity of 800 million square feet. Louisiana Pacifi c’s Dawson Creek plant is in better shape, with the plant receiving $4.5 million in funding in early 2019 to convert to SmartSide Lap Siding production, generating higher value production. Curtailments have also occurred at Canfor’s Chetwynd and Fort St. John operations, alongside similar decisions by other fi rms in the region. Timber harvest activity has declined sharply. Improved market conditions could lift the region given less MPB effects, but recent closures suggest lower manufacturing capacity in the future and fewer available jobs. Affected workers will likely transition into projects like Site C and possibly the buildout of LNG Canada’s liquefaction plant and pipelines, although skills are not entirely transferable.

Mining

Adding to the parade of negative news has been a weakening coal market which is curtailing exploration and hampering expansion plans for new mines. Conuma operations are stable but low prices will bite into operations. The U.S.-China Phase 1 trade deal will support global market conditions for steel which will stabilize the coal outlook.

Labour & Population

Not surprisingly, challenging conditions in key economic sectors will hamper labour market performance and be a deterrent in attracting potential newcomers. Average employment is forecast to be unchanged in 2020 following a 2020 contraction before rising thereafter as economic activity improves. The unemployment rate trends near six per cent and dips to near fi ve per cent in in 2021.

Population growth is forecast to remain flat, as net outflows to other parts of the province are offset by positive contribution for births and modest international immigration. Stronger economic prospects, job and education opportunities for younger residents outside the northeast have consistent driven net interprovincial and intraprovincial losses in recent years which will continue. Statistics Canada estimated net losses of more than 1,000 persons annually to other regions of B.C. and Canada. Population in the Northeast is forecast to remain unchanged this year, with mild uptick of 0.2 per cent in 2020 and 2021.

Housing

Sluggish sales conditions have generated downward pressure on home values in recent years. The median resale value in the Northeast came in at $301,000 during the first five months was essentially unchanged in 2019 at $268,000. Broadly, the housing market remains weak. Housing sales-to-listings conditions in the northeast, proxied by the Northern Lights real estate board region, and the B.C. Northern board area point to prevalence of a buyers’ market. The median value is forecast to hold near $270,000 through 2021 with upside later in the forecast as higher investment lifts the housing market.

Email Managing Editor Matt Preprost at editor@ahnfsj.ca.

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How Saskatchewan's economy is being boosted by summer events – CTV News Regina

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As summer events draw crowds of people together again, Saskatchewan’s economy is feeling the benefit.

This year’s Queen City Exhibition (QCX) broke all previous attendance records with 278,306 people walking through the gates.

The Regina Exhibition Association Limited (REAL) said the fair carried a $12.8 million economic impact.

“Any time you bring new dollars to our community such as the ride operators, the food operators and folks from rural Saskatchewan or western Canada that come to join, that drives hotel nights, restaurant nights and bar nights which has a significant impact on our visitor economy,” Tim Reid, the CEO and president of REAL, said.

Reid said organizers focused on a few things to make this year’s fair a bigger success, including investing in higher quality entertainment. The Jason Derulo concert drew the largest crowd ever for a Queen City Ex show.

“We saw airport numbers go up because people were flying in to watch Jason Derulo. We saw travel numbers go up because people were coming here for the rodeo,” Reid said.

“When we do events that draw a market beyond Regina, that means that it helps our economy.”

During the same weekend as the Queen City Ex, the Regina Folk Festival was taking place in Victoria Park.

Final attendance numbers aren’t calculated yet but Amber Goodwyn, the festival’s artistic director, said the turn out was “amazing.”

“People came out. People really missed this festival for three years,” Goodwyn said. “The festival this year was on par with previous festivals.”

Goodwyn said the festival provides a boost to a number of sectors of the local economy.

“We’ve got hundreds of volunteers, stage technicians, crews, suppliers, restaurants, all the companies that build the infrastructure,” she explained.

“It’s really important, especially for the entertainment industry aspect who were on pause for essentially three years. People are just so happy to get back to work.”

PROVINCIAL TOURISM RAMPING UP

According to Tourism Saskatchewan, the province is rebounding from the COVID-19 pandemic.

“We’re continuing to come back from 2020 especially, but last year we saw a small recovery and this year we’re seeing even stronger growth,” Jonathan Potts, the CEO of Tourism Saskatchewan, said.

“Some parts of the industry are seeing really strong numbers, even stronger than pre-pandemic. Others are still trying to catch up to where they were before.”

Hotel occupancy is one area where things are climbing.

“In 2019, our hotel occupancy in the summer was in the 60-65 per cent range. We’re actually, in many parts of the province, doing better than that right now,” Potts said.

Camping numbers are down slightly from last year, but remain strong, according to Potts.

Meanwhile, summer events have been hit or miss for drawing people in.

“It’s been quite uneven,” Potts said. He added that while Queen City Ex saw a record breaking year, not all events have had the same turn out.

“Some other events, they’ve seen a little softer numbers than they would historically but it’s the first full year back for them so they’re rebuilding and it’s great to see them back and generating revenue again.”

Tourism Saskatchewan said American hunters and anglers are starting to return again, providing a boost in cash flow.

“It’s such an important part of the economy, particularly in places like northern Saskatchewan, so it’s just beneficial for a lot of people to see those American visitors come back because they do spend a lot of money,” Potts said.

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Taiwan's Economy Could Take Serious Damage if China Trade Hit Persists – Bloomberg

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Taiwan’s Economy Could Take Serious Damage if China Trade Hit Persists  Bloomberg



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In an Unequal Economy, the Poor Face Inflation Now and Job Loss Later – The New York Times

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For Theresa Clarke, a retiree in New Canaan, Conn., the rising cost of living means not buying Goldfish crackers for her disabled daughter because a carton costs $11.99 at her local Stop & Shop. It means showering at the YMCA to save on her hot water bill. And it means watching her bank account dwindle to $50 because, as someone on a fixed income who never made much money to start with, there aren’t many other places she can trim her spending as prices rise.

“There is nothing to cut back on,” she said.

Jordan Trevino, 28, who recently took a better paying job in advertising in Los Angeles with a $100,000 salary, is economizing in little ways — ordering a cheaper entree when out to dinner, for example. But he is still planning a wedding next year and a honeymoon in Italy.

And David Schoenfeld, who made about $250,000 in retirement income and consulting fees last year and has about $5 million in savings, hasn’t pared back his spending. He has just returned from a vacation in Greece, with his daughter and two of his grandchildren.

“People in our group are not seeing this as a period of sacrifice,” said Mr. Schoenfeld, who lives in Sharon, Mass., and is a member of a group called Responsible Wealth, a network of rich people focused on inequality that pushes for higher taxes, among other stances. “We notice it’s expensive, but it’s kind of like: I don’t really care.”

Higher-income households built up savings and wealth during the early stages of the pandemic as they stayed at home and their stocks, houses and other assets rose in value. Between those stockpiles and solid wage growth, many have been able to keep spending even as costs climb. But data and anecdotes suggest that lower-income households, despite the resilient job market, are struggling more profoundly with inflation.

That divergence poses a challenge for the Federal Reserve, which is hoping that higher interest rates will slow consumer spending and ease pressure on prices across the economy. Already, there are signs that poorer families are cutting back. If richer families don’t pull back as much — if they keep going on vacations, dining out and buying new cars and second homes — many prices could keep rising. The Fed might need to raise interest rates even more to bring inflation under control, and that could cause a sharper slowdown.

In that case, poorer families will almost certainly bear the brunt again, because low-wage workers are often the first to lose hours and jobs. The bifurcated economy, and the policy decisions that stem from it, could become a double whammy for them, inflicting higher costs today and unemployment tomorrow.

“That’s the perfect storm, if unemployment increases,” said Mark Brown, chief executive of West Houston Assistance Ministries, which provides food, rental assistance and other forms of aid to people in need. “So many folks are so very close to the edge.”

America’s poor have spent part of the savings they amassed during coronavirus lockdowns, and their wages are increasingly struggling to keep up with — or falling behind — price increases. Because such a big chunk of their budgets is devoted to food and housing, lower-income families have less room to cut back before they have to stop buying necessities. Some are taking on credit card debt, cutting back on shopping and restaurant meals, putting off replacing their cars or even buying fewer groceries.

But while lower-income families spend more of each dollar they earn, the rich and middle classes have so much more money that they account for a much bigger share of spending in the overall economy: The top two-fifths of the income distribution account for about 60 percent of spending in the economy, the bottom two-fifths about 22 percent. That means the rich can continue to fuel the economy even as the poor pull back, a potential difficulty for policymakers.

The Federal Reserve has been lifting interest rates rapidly since March to try to slow consumer spending and raise the cost of borrowing for companies, which will in turn lead to fewer business expansions, less hiring and slower wage growth. The goal is to slow the economy enough to lower inflation but not so much that it causes a painful recession.

Cinemagraph
Officials at West Houston Assistance Ministries said its food bank served 200 households on Friday.Meridith Kohut for The New York Times

But job growth accelerated unexpectedly in July, with wages climbing rapidly. Consumer spending, adjusted for inflation, has cooled, but Americans continue to open their wallets for vacations, restaurant meals and other services. If solid demand and tight labor market conditions continue, they could help to keep inflation rapid and make it more difficult for the Fed to cool the economy without continuing its string of quick rate increases. That could make widespread layoffs more likely.

“The one, singular worry is the jobs market — if demand is constrained to the point that companies have to start laying off workers, that’s what hits Main Street,” said Nela Richardson, chief economist at the job market data provider ADP. “That’s what hits low-income workers.”

Lower-income people are already hurting. Mr. Brown’s organization has seen more requests for help in recent months, he said, as local families fall behind on their bills. The size of the typical request has gone up, too, from a few hundred dollars to a few thousand. And he has noticed financial pain creeping up the income spectrum.

Mr. Brown’s observations are backed up by government data: About 12 percent of households reported they were struggling to get enough to eat in early July, up from about 10 percent at the beginning of the year, according to the Census Bureau.

Families can’t easily cut back what they spend on rent, gas or electricity as those prices climb, said Brian Greene, chief executive of the Houston Food Bank, which provides food to Mr. Brown’s organization and other charities across the region. So they cut back on food.

“Food insecurity isn’t about food,” Mr. Greene said. “Food insecurity is about income.”

Many poorer families’ incomes held up relatively well early in the pandemic because government aid — expanded unemployment benefits, stimulus checks and other programs — helped offset lost wages when businesses shut down. Then, as the economy reopened, pay soared for restaurant workers, delivery drivers and other low-wage workers.

But pandemic aid programs have ended and wage growth is slowing in many sectors — average hourly earnings in leisure and hospitality, which rose rapidly last year, actually fell in July from a month earlier for rank-and-file workers. Prices have risen so fast that even unusually quick wage growth has failed to keep up.

Travelers at Kennedy International Airport in New York. If richer people keep going on vacations, dining out and buying new cars, many prices could keep rising.
Gus Powell for The New York Times

The gaping divide between the rich and the poor in this inflationary moment is clear in corporate earnings calls. At Boot Barn, a Western wear retailer, sales of men’s Western boots were down in the first quarter, but sales of higher-priced exotic skin boots picked up. At LVMH, which owns luxury brands like Louis Vuitton and Tiffany, American revenues have been growing strongly, while at Walmart, customers are pulling back as they struggle to afford basic necessities, particularly food, which has run up sharply in price.

“This is affecting customers’ ability to spend on general merchandise categories and requiring more markdowns to move through the inventory, particularly apparel,” Walmart said in its July 25 guidance.

It’s not just apparel: Consumers across the economy are buying less milk and fewer eggs, as prices for those products rise significantly, according to an analysis of government figures by Michelle Meyer, chief U.S. economist for Mastercard. Yet they are also going out to eat at restaurants more often.

The fissures are clear in the car market. Demand for new cars, which generally sell to higher-income buyers, has remained strong and prices continue to soar amid supply shortages — putting upward pressure on inflation. But used-car demand is ebbing and prices have begun to depreciate again.

“We see bifurcation in many parts of the economy and the auto market,” Jonathan Smoke, chief economist at Cox Automotive, said in an interview. “The new vehicle buyer has shown much less price sensitivity.”

Housing is another realm where fates have diverged. Home costs have run up sharply since the pandemic and mortgages are now more expensive, making buying unaffordable for many families. Because would-be buyers can’t afford homes, they are renting, keeping apartments for lease in short supply and pushing rents ever higher. Those soaring rents hit lower-income households especially hard: Roughly six in 10 people in the bottom quarter of earners rent their homes.

By contrast, homeowners have both seen their houses rise in value and often enjoy a built-in inflation hedge, since many refinanced their mortgages and locked in low monthly payments when rates were low in 2020 and 2021.

“The haves are really comfortable right now,” said Nicole Bachaud, an economist from Zillow, also noting that “we’re going to see this gap getting wider between people who are homeowners and people who are probably never going to be homeowners.”

Jamie Kelter Davis for The New York Times

Ms. Clarke, the New Canaan retiree, recently got off the wait list for an affordable apartment for herself and her 24-year-old daughter, who has autism and cannot work. Their new unit has just one bedroom, but it is clean and has new appliances, and at about $1,350 a month, she can squeeze it into her budget.

The lease lasts only a year, however, and Ms. Clarke is worried about finding somewhere to live if it isn’t renewed. Even now, she is barely making ends meet: She lost her car keys recently and had to spend nearly $500 replacing them, wiping out nearly all her small rainy-day fund and leaving her one crisis away from financial disaster.

“When you don’t have money, you’re on a fixed income, you’re constantly thinking, ‘Well, maybe I shouldn’t have bought that,’” she said. “There’s no cushion. There really never was.”

More financially secure families also face headwinds, of course, which could eventually prompt them to slow down spending. The cash savings they built up during the pandemic won’t last forever, and rising prices could prompt many households to pull back their spending.

And swooning stock markets could prompt richer families, who tend to have more money invested, to spend less than they otherwise would. Some economists think that the people in this demographic have mostly kept spending recently — despite their falling economic confidence — because they are eager to take vacations that they had put off earlier in the pandemic.

“Where I’m budgeting, it’s to make room for travel,” said Mr. Trevino of Los Angeles. “I feel like I’ve missed out on that a little bit.”

Economists have speculated that richer consumers’ resilience could fade as autumn approaches and they take stock of their finances amid a slowing economy. But for now, the reality that America’s wealthier consumers have yet to sharply pull back in the face of rising prices may be setting up a tough road ahead for the nation’s poorer ones.

“We really, in a way, haven’t noticed the inflation very much,” Mr. Schoenfeld said. “This economy is very unfair.”

Jason Karaian contributed reporting.

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