Population Growth Boosts Atlantic Canadian Economy in 2023
HALIFAX — Strong gains in population and employment have given Atlantic Canada a good start to 2023, according to APEC’s latest economic update.
“Generally speaking, growth is positive,” says APEC senior policy analyst Fred Bergman.
The report found that the region’s year-over-year population growth outpaced the rest of Canada’s in January 2023, due mostly to international immigration and non-permanent residents. Newfoundland and Labrador’s population grew by 1.8 per cent, which is the fastest rate in 50 years, while P.E.I. led the country with a 4.2 per cent growth rate.
That increase in population is helping to ease the stresses the region was seeing in the labour market.
“It doesn’t matter if they’re getting full-time or part-time jobs,” Bergman says. “What we’re seeing is stronger employment growth in the region, in that three-and-a-half to 4 per cent range across the four Atlantic provinces.”
The region saw job vacancies fall by 16 per cent year over year in February, with 8,500 positions being filled mostly in the accommodation, food services, and manufacturing sectors. In fact, Atlantic Canada’s employment growth rate of 3.7 per cent was higher than the rest of Canada’s, but almost half of the job gains were in part time jobs.
Bergman says immigrants often take on less skilled and more part-time labour to make ends meet when they first come to Canada, as they get integrated into the workforce and as they wait or upgrade to get credential recognition.
While that provides some temporary relief on the job front for businesses that need help, ultimately immigrants are looking for upward mobility to encourage them to stay.
“When you look at five-year retention rates in the region for immigrants, it’s as low as 34 per cent in P.E.I. and as high as 65 per cent in Nova Scotia,” Bergman says. He adds that in Newfoundland and Labrador, immigrant retention rates are at about 50 per cent while in New Brunswick they are at 58 per cent.
“This has been an ongoing issue for many years,” Bergman says. “Our goal as an Atlantic region is to try to get those immigrant retention rates up, and this makes it much more challenging because there’s no housing, and they’re having difficulty finding full-time employment.”
Housing is an important economic factor not just for immigrants or newcomers to the region but for everyone living in Atlantic Canada.
On that front, APEC found that housing starts across the region fell year over year in the first quarter of 2023 due to the financial pressures of elevated interest rates and inflation, as well as labour shortages in the construction industry. Home sales also fell in Atlantic Canada for the first three months of this year.
Despite the increase in population, while demand for housing has increased with rental vacancies running near zero in many parts of the region, the numbers aren’t yet adding up for big moves on the supply side.
“There’s less home sales, there’s less housing starts and yet, we have more people,” Bergman notes.
In New Brunswick, forestry exports declined 20 per cent over the first two months of 2023, including in lumber, supporting the lower demand for house building materials thesis. With prices now at the US$350 per thousand board feet mark, down from highs of $1,400 during the pandemic, it makes sense that the industry is running through its inventory before committing to making more product.
Looking out towards the latter part of the year, Bergman says there will be headwinds.
“In terms of trajectory, we’re expecting a bit more sluggish growth in the Atlantic region this year,” Bergman says of the Atlantic Canadian economy in general.
“We know interest rates are going to remain elevated for a while to help cool inflation,” he says. “The high interest rates, they’re dampening demand for housing…and they’re cooling demand for big-ticket items like cars.”
But overall the numbers are showing increasing stability and adjustment to the new economic realities, with the report finding inflationary pressures easing at a faster rate in Atlantic Canada than the rest of the country, labour market resiliency, a continued post-Covid tourism rebound and increased investment in mineral exploration in New Brunswick.
Alex Graham is a Huddle reporter in Saint John. Send her your feedback and story ideas: [email protected].