4-minute read
Written by Jamil Ahmed, Policy & Research Analyst
We have put together two articles that provide an overview of two closely intertwined economic indicators: inflation and unemployment in Manitoba and the federal government’s proposal to introduce anti-replacement worker legislation.
Read our analysis and hear our position on these two important issues impacting your business below. ⬇️
Overview of Inflation & Labour Force in Manitoba
The economy faces new challenges as inflation rates rise, leading the central bank to raise interest rates to control the increase. Despite these efforts, inflation remains a concern for Manitoba. On a positive note, decreasing unemployment is boosting consumer confidence and improving job prospects. However, balancing the effects of rising inflation and interest rates will be a delicate task for the economy, and its impact on businesses and households is being closely watched.
Inflation
- The consumer price index (CPI) for all products in Manitoba increased by 8.0% in December 2022. Following a 6.8% increase in November 2022, consumer prices nationwide rose 6.3% year over year in December. At 8.0%, Manitoba had the highest inflation, while Newfoundland and Labrador had the lowest (+5.7%) among the provinces.
- Inflation was 5.1% at the start of January 2022 in Manitoba. Manitoba’s inflation rate has fluctuated throughout the year, reaching a peak of 9.4% in June 2022. The inflation rate in Manitoba has been at or above 8.0% throughout the last five months of 2022.
- In 2022, all eight major components had price rises on an annual average basis, a widespread nationwide trend. In addition, prices for both products and services increased more quickly than they had the previous year.
- The average yearly increase in prices for goods was 8.7%, with non-durable commodities like food from shops (+9.8%) and fuel (+28.5%) leading to the increase. Prices for services climbed 5.0% in 2022, driven mostly by costs associated with other owned lodging (+10.0%) and homeowners’ replacement costs (+9.5%).
- The highest among the provinces, Manitoba’s CPI for food rose to 12.1%. On a national level, food prices increased (+10.1%) in December 2022. As a result, food costs in Manitoba rose 8.9% over the previous year in 2022.
- In Manitoba, the cost of housing climbed 8.1% over the previous year in December 2022. In Canada, the cost of housing rose 7.0% in December compared to the previous year. Also, mortgage interest payments jumped 18.0% year over year in December due to rising interest rates. In 2022, Manitoba’s housing costs increased by 7.6%.
- In December, the CPI for energy in Manitoba was 13.0%, more than the national average of 7.3%. Headline inflation in 2022 was driven mainly by higher energy costs (+24.6%). Gasoline and natural gas prices in Manitoba are high, with increases of 15.2% and 15.2%, respectively. With a 7.6% increase, Manitoba’s CPI, excluding gasoline, outpaced Canada’s 6.3% growth rate to rank second among the provinces.
Source: Statistics Canada
Labour Force
- As of December 2022, Manitoba’s working-age population is 1,071,500. By December 2022, the Manitoba labour force had 707,500 persons.
- In 2022, the average annual unemployment rate in Manitoba is 4.6%. The unemployment rate in Manitoba was 4.4% in December 2022, the same as the previous month and lower than the 5.1% rate in January 2022. In addition, Manitoba’s average hourly wages grew by 4.2% to $28.54 on a year-over-year basis.
- Manitoba’s employment rate, which was 63.1% in December 2022, remains 0.4 percentage points below the pre-pandemic levels in February 2020 at 63.5%. In December 2022, Manitoba’s labour force participation rate is 66.0%, and Manitoba’s labour force participation rate decreased by 0.5% from December 2021.
- The number of people working in Manitoba increased by 11,500 over the previous year, primarily due to creating of 6,600 new jobs in the public sector. However, before the pandemic, employment declined mostly in the following industries: agriculture (-12,700), healthcare (7,500), business building and other supports (-3,000), and accommodation and food services (-2,600).
- In Manitoba, there were 32,290 vacant positions as of the third quarter of 2022, which is more than twice as many as there were in 2019 before the epidemic. Businesses are having trouble filling open positions.
Our Takeaways
Although decreasing unemployment is a sign that the labour market is improving, more is happening than what first appears. Statistics Canada predicts that the proportion of the population over the age of 65 will rise from 19.0% in 2022 to 22.50% in 2030. The difficulties facing Canada’s labour market will only worsen as the country’s population ages. Low unemployment creates a competitive labour market that requires businesses to adapt to attract and retain workers. In a tight labour market, businesses have trouble finding workers with the specific skills or experience they need. This leads to increased turnover and additional recruitment and training costs.
On January 25, 2023, the Bank of Canada raised its benchmark interest rate to 4.5%, the highest level in 15 years. In general, factors that drive low unemployment and high inflation are caused by strong demand for goods and services, a competitive job market, and rising wages. Admittedly, high inflation severely impacts businesses, causing higher costs for businesses and consumers and potential instability caused by higher prices. At the start of 2022, when the pandemic restrictions were lifted, demand for goods and services skyrocketed, but the supply couldn’t keep pace. As a result, we undoubtedly experienced supply challenges, often caused by supply chain slowdowns that obstruct the movement of goods and services through the economy. The war in Ukraine, which is disrupting the supply chain and driving up the price of food and oil, is another current event element that the majority of analysts blame.
