High interest rates are weighing on housing markets and global demand for Atlantic exports, but labour demand is still holding firm.

FOR IMMEDIATE RELEASE 

HALIFAX (September 8, 2023) - Economic activity in most of the Atlantic region is slowing compared to last year. Less exports and housing starts offset some benefits from population and employment gains in the first half of 2023, according to the latest Economic Update from the Atlantic Economic Council.

High interest rates are cooling housing activity. The Bank of Canada’s policy rate sits at 5%, the highest rate since 2001.

“There’s no surprise housing starts are either growing slowly or are in decline as mortgage interest costs rose a record 31% year-over-year in July.” says report author, Fred Bergman, Senior Policy Analyst.

Existing home sales are down across the region. Elevated mortgage rates are more than offsetting the effects of population growth. Housing is also in short supply as active listings in July were below their 10-year averages in all four provinces.

Atlantic employment was up 3% in the first seven months of 2023, much higher the national rate of 2.4%. Wages are also rising, but they are not keeping pace with inflation. Canadian businesses anticipate above-average wage increases next year, though annual wage growth expectations have been declining since peaking at 5.8% in 2022Q2.

Inflation has been trending down in Atlantic Canada after reaching a high of 9.4% in June 2022. Inflation ticked up in July to 2.7%, partially due to federal clean energy policies leading to an increase in energy prices. The central bank expects national inflation will not fall back to 2% until mid-2025.

Surveys show that Atlantic Canadians are worried about the cost of living and their debt levels. “More than half of households are finding it difficult to feed their families.” says Bergman. Atlantic consumer insolvencies grew year-over-year in the 12 months to August but were below levels for the same period in 2019.

Provincial Highlights

Newfoundland & Labrador

·       Economic growth is slowing in the province as exports and housing are weakening.

·       Exports are the main drag on growth due to several commodities experiencing lower production and weaker prices.

·       Population continues to grow strongly led by rising immigration.

·       The province shortlisted four projects in August for potential hydrogen development that could lead to $66 billion of capital investment.  

Prince Edward Island

·       Prince Edward Island’s economy is showing strength   with increasing retail volumes, exports and tourism activity.

·       Tourism activity has improved since 2022. Port Charlottetown anticipates a record year of over 150,000 cruise visitors in 2023.

·       New housing construction is declining while population growth accelerates, adding pressure to the already scarce availability of housing.

Nova Scotia

·       The Nova Scotian economy is steadily moving along with increasing employment, retail volumes and residential starts. 

·       Employment is growing above the national rate but the monthly unemployment rate is slowly moving upward. Inflation is slightly outpacing wage gains.

·       Exports have fallen due to lower frozen crab and forestry exports. The provinces largest exports, lobster and tires, are still rising.

New Brunswick

·       New Brunswick’s economic growth is slowing down, mainly due to declining exports and housing activity.

·       New Brunswick led Canada in employment growth in the first seven months of 2023.

·       New Brunswickers have the lowest debt to disposable income ratio in Canada.

·       Tourism activity is on the rise with room nights sold up 20% in the first half of 2023.

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