Economic Update 2018 Prince edward island - Government of Prince Edward Island

 
Economic Update 2018 Prince edward island - Government of Prince Edward Island
Prince Edward Island
Economic Update        2018
Economic Update 2018 Prince edward island - Government of Prince Edward Island
As of July 1, 2018, Prince Edward Is-
land’s population is estimated to be
153,244, an increase of 1.8 per cent
over 2017, and tied for the fastest
growth amongst provinces.

                                                Highlights of the Prince
                                                Edward Island Economy
Total labour income on the Island,
through the second quarter of 2018,
grew by 4.1 per cent on a year-to-
date basis, tied with New Brunswick
for the fastest growth in the region.

Employment on Prince Edward
Island averaged 75,900 on a year-to-
date basis through October, an in-
crease of 3.1 per cent from the same
period in 2017, and the strongest
performance amongst provinces.

On a year-to-date basis through
September, consumer prices have
increased by 2.5 per cent.

                                                                    On a year-to-date basis through September, the value of
                                                                       manufacturing shipments has increased 6.6 per cent.
On a seasonally adjusted basis
through July retail sales have ad-
vanced 4.5 per cent, the fastest
growth amongst provinces.                       Through the first three quarters of    Information from the department of
                                                2018, housing starts have increased    Economic Development and Tourism
                                                3.6 per cent compared to the same      indicates that total overnight stays
                                                period last year.                      on the Island will likely exceed the
The volume of new motor vehicle
                                                                                       one million mark for the second year
sales has decreased 8.8 per cent on a
                                                                                       in a row.
year-to-date basis through Septem-
ber, while the value of new motor               On a year-to-date basis through
vehicles sold has declined by 6.8 per           September, international exports are
cent.                                           up 1.1 per cent.                       The average of private sector fore-
                                                                                       casts for real GDP for the Island in
                                                                                       2018 is 2.1 per cent.

2 | Prince Edward Island Economic Update 2018
Economic Update 2018 Prince edward island - Government of Prince Edward Island
Introduction
              The Island economy has expanded
              every year since 2008, the only
              jurisdiction in Canada to do so

                                                                                             Notable increases over this
                                                                                             time period were recorded in
                                                                                             construction, up 19.2 per cent,
                                                                                             manufacturing, up 5.6 per cent, and
                                                                                             real estate, rental and leasing, up 2.9
                                                                                             per cent.

The following document is an up-        a detailed discussion of the Island’s
date to the economic situation of       economic indicators, including the
the Province of Prince Edward Island    labour force, exports, consumer pric-
since the release of the 2018 Budget.   es, primary industries, population
This release begins with a discussion   and construction. All information in
of the international and national       this document is current to Novem-
economic context, and follows with      ber 19, 2018.

                                                                                Highlights of the Prince Edward Island Economy | 3
Economic Update 2018 Prince edward island - Government of Prince Edward Island
International and National
Economic Context
Growth is steady amongst the emerging market and developing economies,
though risks have risen in some economies due to a variety of factors including
tightening financial conditions, higher oil prices and geopolitical uncertainty.
                                         The international economy is steadily expanding. Accord-
                                         ing to the International Monetary Fund (IMF), global real
                                         gross domestic product (GDP) is projected to expand by
                                         3.7 per cent in 2018, with growth in advanced economies
                                         expanding by 2.4 per cent and growth in emerging market
                                         economies expanding by 4.7 per cent. The slight acceler-
                                         ation in growth in advanced economies is being driven by
                                         the United States, whose economy is projected to expand
                                         by 2.9 per cent in 2018; growth in the other advanced
                                         economies is projected to be either slower, or on par with
                                         2017. Growth is steady amongst the emerging market and
                                         developing economies, though risks have risen in some
                                         economies due to a variety of factors including tightening
                                         financial conditions, higher oil prices and geopolitical un-
                                         certainty. Trade tensions, particularly the fallout between
                                         China and the United States is weighing on global growth,
                                         contributing to lower prices for some commodities, while
    On a year-to-date basis, GDP         slowing trade and investment growth.
    by industry is up 2.7 per cent
    through August, the seventh          The United States economy is benefitting from a strong
   consecutive month of growth.          economic environment. Real GDP expanded at an annual-
               (in Canada)               ized rate of 2.2 per cent in the first quarter, accelerating to
                                         an annualized rate of growth of 4.2 per cent in the second
                                         quarter, before slowing slightly to 3.5 per cent in the third
                                         quarter. Economic growth is being driven by personal
                                         consumption expenditures, private inventory investment,
                                         state and local government spending, federal govern-
                                         ment spending and nonresidential fixed investment. This
                                         was partially offset by a decline in exports and residential
                                         fixed investment. Imports increased over this period. The
Economic Update 2018 Prince edward island - Government of Prince Edward Island
the second quarter of 2014, while household final consumption expenditures expanded 0.6 per
                                            cent in the second quarter, after increasing 0.3 per cent in the first quarter. Imports and
                                            inventories detracted from GDP growth in the second quarter of 2018.

number of employed people has
                                                                 Figure 1: Quarterly Real GDP Growth Canada
increased by 1.6 per cent on a year-
                                              1.4%
to-date basis through October, while          1.2%
                                              1.0%
the unemployment rate averaged                0.8%
3.9 per cent over this time period,           0.6%
                                              0.4%
a decline of 0.5 percentage points            0.2%
from the same period in 2017.                 0.0%
                                             -0.2%
                                             -0.4%
                                                      Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
In December of 2015, the Unit-                       2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018
ed States Federal Reserve began                                                                                          Source: Statistics Canada

increasing the federal funds rate,
                                            On an industry basis, the Canadian economy is performing well. On a year-to-date basis, GDP by
which previously had not been             sumption       expenditures
                                            industry is up                    expanded
                                                             2.7 per cent through                    At its consecutive
                                                                                     August, the seventh      latest ratemonth
                                                                                                                            announcement
                                                                                                                                   of growth. Goods
                                            producing industries have advanced 3.7 per cent over this time period, while services producing
changed since December 2008.              0.6  per cent
                                            industries  haveingrown
                                                                the second
                                                                      by 2.2 perquarter,
                                                                                                     on October 24, 2018, the Bank of
                                                                                  cent. Notable gains over this period occurred in mining, up 5.7
Since that time, the Federal Reserve      after   increasing
                                            per cent,             0.3 up
                                                       construction,   per4.3cent   in the
                                                                              per cent,   wholesale Canada       increased
                                                                                                     trade, up 4.5             its target forupthe
                                                                                                                    per cent, manufacturing,      2.5
                                            per cent, and professional, scientific and technical services, up 4.1 per cent. Declines occurred
has increased the federal funds rate      first quarter. Imports
                                            in information               andindustries,
                                                              and cultural     inventories down 0.4overnight        rate by 0.25
                                                                                                       per cent, management          percentage
                                                                                                                                 of companies    and
on eight occasions so that it present-      enterprises,   down   1.4  per
                                          detracted from GDP growth in the cent,  agriculture,  down    0.1  per cent,  and administrative
                                                                                                     points to 1.75 per cent. The Bank       support,
                                            waste management and remediation services.
ly sits between 2 and 2.25 per cent.      second quarter of 2018.                                    cites the broader growth in the
There have been three increases so          At its latest rate announcement on October 24, 2018,           the Bankeconomy,
                                                                                                     Canadian        of Canada increased
                                                                                                                                  and an its   target
                                                                                                                                            interest
                                            for the overnight rate by 0.25 percentage points to 1.75 per cent. The Bank cites the broader
far in 2018, and it is expected that      On   an industry
                                            growth               basis,economy,
                                                     in the Canadian                and an interestrate
                                                                         the Canadian                  rate environment
                                                                                                             environment thatthat    is projected
                                                                                                                                is projected  to stay
due to the economic environment             close to the 2 per cent target as factors for the ratetoincrease.
                                                                                                         stay close to the 2 per centraising
                                                                                                                  The Bank  of Canada   began  target
                                          economy is performing well. On a
                                            interest rates in the second half of 2017. Since that time, the target for the overnight rate has
present in the United States, addi-       year-to-date
                                            increased by 1.25basis,    GDP by
                                                                 percentage       industry
                                                                              points.                as factors for the rate increase. The
tional increases in the federal funds     isProvincial
                                             up 2.7 per      cent through August,                    Bank of Canada began raising inter-
                                                        Economic Context
rate will come before the end of the      the
                                            Theseventh      consecutive
                                                 Prince Edward                 month
                                                                   Island Economy          seen solidest
                                                                                      has of               rates in
                                                                                                       economic      the second
                                                                                                                   growth             halfnumber
                                                                                                                           over the last    of 2017.
                                                                                                                                                   of
                                            years. The Island economy has expanded every year since 2008, the only jurisdiction in Canada
year. The balance sheet normaliza-        growth.
                                            to do so.Goods
                                                       In 2017, producing        indus-
                                                                 the Prince Edward     Island economySincegrewthat  time,
                                                                                                                by 3.5      the target
                                                                                                                       per cent,           forpace
                                                                                                                                 the fastest   theof
tion program that began in October        tries  havesince
                                            expansion    advanced       3.7 per
                                                               2005. Business      cent
                                                                                gross   fixed capitalovernight
                                                                                                      formation was rate
                                                                                                                       thehas
                                                                                                                           mainincreased      by 1.25
                                                                                                                                 driver of growth  in
                                            2017, due largely to increased residential construction, and the completion of the power cables
of 2017 continues as planned. As of       over this time period, while services                      percentage points.
October 2018, the Federal Reserve         producing industries have grown                                                                           3

is shedding $50 billion in assets a       by 2.2 per cent. Notable gains over
month from its balance sheet.             this period occurred in mining, up
                                          5.7 per cent, construction, up 4.3
As can be seen in Figure 1, Canadian      per cent, wholesale trade, up 4.5
quarterly real GDP growth has been        per cent, manufacturing, up 2.5 per
positive during the first half of 2018.   cent, and professional, scientific and
Real GDP increased by 0.4 per cent        technical services, up 4.1 per cent.
in the first quarter, before strength-    Declines occurred in information
ening by 0.7 per cent in the second       and cultural industries, down 0.4 per
quarter. Exports and household final      cent, management of companies
consumption expenditures contrib-         and enterprises, down 1.4 per cent,
uted the most to growth in the sec-       agriculture, down 0.1 per cent, and
ond quarter. The gain in exports was      administrative support, waste man-
the largest since the second quarter      agement and remediation services.
of 2014, while household final con-

                                                                                                    Highlights of the Prince Edward Island Economy | 5
Economic Update 2018 Prince edward island - Government of Prince Edward Island
Provincial Economic
Context

The Prince Edward Island Economy has seen solid economic
growth over the last number of years.
                                                The Island economy has expanded          On an industry basis, economic
                                                every year since 2008, the only juris-   strength was widespread on the
                                                diction in Canada to do so. In 2017,     Island in 2017, with the goods pro-
                                                the Prince Edward Island economy         ducing industries increasing by 7.3
                                                grew by 3.5 per cent, the fastest pace   per cent, and the service producing
                                                of expansion since 2005. Business        industries increasing by 2.2 per cent.
                                                gross fixed capital formation was        Economic growth was recorded in
                                                the main driver of growth in 2017,       19 of 20 industries in 2017, admin-
                                                due largely to increased residential     istrative and support, waste man-
                                                construction, and the completion of      agement and remediation services
                                                the power cables running from New        showing declines. Notable increases
                                                Brunswick to Prince Edward Island.       over this time period were recorded
                                                Imports, which detract from growth,      in construction, up 19.2 per cent,
On an industry basis, economic                  increased 5.3 per cent, while exports    manufacturing, up 5.6 per cent, and
strength was widespread on the
Island in 2017, with the goods                  increased 1.8 per cent. Household        real estate, rental and leasing, up 2.9
producing industries increasing                 spending was also higher, increasing     per cent.
by 7.3 per cent, and the service
producing industries increasing                 by 2.4 per cent. Prince Edward Island
by 2.2 per cent.                                was the third fastest growing prov-
                                                ince in the country, behind Alberta
                                                and British Columbia, and grew at
                                                a faster pace than the 3.0 per cent
                                                growth seen nationally.

6 | Prince Edward Island Economic Update 2018
Economic Update 2018 Prince edward island - Government of Prince Edward Island
Fiscal Policy
The fiscal situation of the province      the small business tax rate of 0.5                On October 23, 2018 it was an-
has also been improving. With             percentage points will take effect                nounced that the Province has se-
the release of its 2017/18 public         January 1, 2019. Taken together                   cured an agreement with the Federal
accounts, the province posted a           these   measures    will  result  in an  ad-      Government concerning implement-
surplus of $75.2 million, consider-       ditional  $5.3 million    in tax  savings   to    ing a price on carbon. The province
ably stronger than the $1.2 million       businesses    and  individuals.     Previous-     will administer a fuel charge for
                                          ly, the government had announced
surplus projected at budget. Stron-                                                         purchasers of carbon-based fuels
                                          that it intends to lower the provincial
ger own-source revenues contribut-                                                          at the prescribed federal rates, with
                                          tax on gasoline and diesel, effective
ed to this result, particularly stronger                                                    the exception of heating fuel and
                                          January 1, 2019.
corporate income tax and sales tax                                                          propane. Farmers, fishers and aqua-
revenue. This better than antici-                                                           culturists will be exempted, while
                                          On October 17, 2018 the legal
pated result has resulted in the net                                                        other parties currently subject to tax
                                          regime for cannabis began in Prince
debt declining by $37.2 million in
                                          Edward Island and across Canada.                  exemptions will only pay carbon tax
2017/18, while the net-debt-to-GDP
                                          In order to facilitate this market,               on the incremental amount in excess
ratio
   Onhas   fallen to 32
        November        per2018
                      16,   cent. the Province released its 2019-2020 Capital Budget Estimates outlining
                                          the province is operating four retail             of the current provincial tax on gaso-
   the government’s priorities for capital           and   infrastructure
                                          locations across the Island, three of  investment       fordiesel.
                                                                                            line and   the next
                                                                                                             Princefive years.
                                                                                                                     Edward Island
OnGovernment
     November 6, 2018,    partly as a
                    is committed to spending        $156.6    million     in   2019-2020,      an  increase   of 44   per cent
                                          which are open, and one of which                  will have the Government of Canada
result of the better than anticipated
   from the $108.8 million budgeted            in the  2018-2019         capital
                                          remains under construction, as well       budget.     A positive fiscal situation,
                                                                                            implement Part 2 of the Greenhouse
fiscal situation of the province, the
   and increasing needs arising from             a growing
                                          as facilitating      population
                                                           mail-order             are driving
                                                                          delivery.                the increase in capital
                                                                                            Gas Pollution Pricing Act on the
Minister of Finance announced tax
   expenditures. As can be seen in Figure          2, though
                                          In the initial year of the     trajectory of capital
                                                                   legalization,                     spending remains the
                                                                                            Island, beginning January 1, 2019,
relief measures targeted to individ-
   same, the level of spending has the     increased
                                                provincein   everytoyear.
                                                          expects        collectHealth,
                                                                                  tax      education and highways and
uals and small businesses. Effective                                                        as was previously announced in the
   bridges continue to be the focus             of  government          capital     spending,     with notable initiatives
                                          revenue of $623,000 from the sale of Climate Change Action Plan released
January 1, 2018, the basic person-
   including $100 million for investments
al exemption will rise by $500 to
                                                    in mental health and addictions, $38 million for a new
                                          legal cannabis.                                   in Spring of 2018.
   secondary     school  in  Stratford,
$9,160. An additional reduction in      and  new    electric  vehicle      charging     stations   across the Island.

                         Figure 2: Capital Spending Prince Edward Island
   180
   160
   140
   120
   100
    80
    60
    40
    20
     0
               2018-19           2019-20           2020-21            2021-22           2022-23               2023-24
                              2018-2019 Capital Estimates           2019-2020 Capital Estimates

                                                                                     Source: PEI Department of Finance

                                                                                          Highlights of the Prince Edward Island Economy | 7
  Population and Immigration
  On September 27, 2018 Statistics Canada published its preliminary provincial population
Economic Update 2018 Prince edward island - Government of Prince Edward Island
Fiscal Policy continued

                                                Population and
On November 16, 2018 the Province
released its 2019-2020 Capital Bud-

                                                Immigration
get Estimates outlining the govern-
ment’s priorities for capital and in-
frastructure investment for the next
five years. Government is committed
to spending $156.6 million in 2019-
                                                Prince Edward Island once again recorded
2020, an increase of 44 per cent from
the $108.8 million budgeted in the
                                                the fastest population growth in the
2018-2019 capital budget. A positive            Atlantic region in 2018
fiscal situation, and increasing needs
arising from a growing population               On September 27, 2018 Statistics                  Prince Edward Island once again
are driving the increase in capital             Canada published its preliminary                  recorded the fastest population
expenditures. As can be seen in                 provincial population estimates for               growth in the Atlantic region in
Figure 2, though the trajectory of              July 1, 2018 as well as revisions to              2018, with Nova Scotia’s popula-
capital spending remains the same,              the 2001 to 2017 population es-                   tion growing at 1.0 per cent, and
the level of spending has increased             timates. As of July 1, 2018, Prince               New Brunswick growing at 0.5 per
in every year. Health, education and            Edward Island’s population is esti-               cent; Newfoundland and Labrador’s
highways and bridges continue to                mated to be 153,244. This represents              population declined by 0.6 per cent
be the focus of government capital              a yearly increase of 2,678 persons or             in 2018. The latest population esti-
spending, with notable initiatives in-          a 1.8 per cent annual growth rate.                mates are now based on the 2016
cluding $100 million for investments            This compares to a national growth                Census counts adjusted for census
in mental health and addictions, $38            rate of 1.2 per cent, and the second              net undercoverage and incomplete-
million for a new secondary school              consecutive year the province has                 ly enumerated Indian reserves.
in Stratford, and new electric vehicle          exceeded the national population
charging stations across the Island.            growth rate. Over the last two years
                                                the Island’s population has grown
                                                by 4.3 per cent, the fastest growth
                                                amongst provinces. Figure 3 shows
                                                the population growth rates of Cana-
                                                da and the provinces from 2016-18.

                                                                      Figure 3: Population Growth 2016-2018 Canada and the
                                                                                             Provinces
                                                           5.0
                                                           4.0
                                                           3.0
                                                           2.0
                                                 percent

                                                           1.0
                                                           0.0
                                                       -1.0
                                                       -2.0
                                                                 PE      ON    MB    BC    AB    CN     SK     QC     NS         NB          NL
                                                                                                                           Source: Statistics Canada

                                                 Net international migration was estimated to be 2,876 in 2017/18. This consisted of 2,102
8 | Prince Edward Island Economic Update 2018    international immigrants, 879 non-permanent residents and 34 returning Canadians entering
                                                 the province, while 108 international emigrants and 40 temporarily abroad Canadians left the
                                                 province. The number of international immigrants coming to the province declined by 7.1 per
Economic Update 2018 Prince edward island - Government of Prince Edward Island
Net international migration                                     Figure 4: Prince Edward Island Components of Growth
was estimated to be 2,876                                                            July 1, 2017 - June 30, 2018
in 2017/18. This consist-     158,000

ed of 2,102 international
                              157,000
immigrants, 879 non-per-
manent residents and 34       156,000

                                                                                                                                                                       3,941
returning Canadians en-

                                                                                                                                                   3,495
                              155,000
tering the province, while
108 international emi-        154,000
grants and 40 temporarily

                                                                                                                              765
                              153,000                                                                                                                               153,244
abroad Canadians left the
province. The number of       152,000

                                                                                                          2,102
                                                                                      1,183
international immigrants
                              151,000                            1,440
coming to the province
declined by 7.1 per cent      150,000           150,566
compared to the previous                            Births                Deaths                Immigrants                  Other            Interprovincial In   Interprovincial
                                                                                                                       International*                                  Out
12 months. This follows        *Other International = 879 Net Non-Permanant Residents - 108 Emigrants + 35 Returning Canadians - 40 Temporary Abroad
a 12.3 per cent increase
in immigrants in 2016/17. Though
                                                 There were 1,440 births and 1,183
the number of immigrants coming
                                                 deaths on Prince Edward Island from
to the province declined slightly in
                                                 July 1, 2017 to June 30, 2018, result-
2017/18, Prince Edward Island still
                                                 ing in natural growth (births minus
had the highest immigration rate in
                                                 deaths) of 257. Figure 4 shows the
the country at 13.8 per thousand.
                                                 population flows that contributed to
The immigration rate for Canada as a
                                                 PEI’s population.
whole was 8.2 per thousand.

Between July 1, 1017 and June
30, 2018 Prince Edward Island had
an estimated net inter-provincial
out-migration of 446 people (3,495
in-migrants less 3,941 out-migrants).
Revisions to the 2016/17 estimates
now show that net inter-provincial
migration for the Island over that
period was 440, marking positive
inter-provincial migration for two
consecutive years (2015/16 and                                                                                                   Over the last two years the Island’s po-
2016/17). This is the first time that                                                                                            pulation has grown by 4.3 per cent, the
                                                                                                                                 fastest growth amongst provinces.
has happened since 2002/03 and
2003/04.

                                                                                                                               Highlights of the Prince Edward Island Economy | 9
Economic Update 2018 Prince edward island - Government of Prince Edward Island
On an industry basis on the Island,
                                                                                                 employment in the goods sector

 Employment                                                                                      increased 10.8 per cent through
                                                                                                 October. Gains were recorded in
                                                                                                 agriculture, construction, manufac-
                                                                                                 turing, and other primary industries.
 Prince Edward Island continued to have the fourth                                               Through September, manufacturing
 highest
Though          participation
        the labour force is expanding,rate   amongstrate
                                        the unemployment    provinces          behind
                                                                is continuing to fall, averaging has been the largest employer in
9.5 per cent year-to-date, down 0.5 percentage points from the same period one year ago. the goods producing sector, with
 Alberta,
Nationally,      Saskatchewan
            the unemployment              and
                               rate averaged 5.9Manitoba
                                                per cent over thisover    this period.
                                                                   time period
                                                                                                 employment averaging 6,800 to
                                                                                                 date. Nationally, the goods sector
             Figure 5: Employment Growth Canada and the Provinces
                                                                                                 has expanded 1.6 per cent over this
                                         YTD 2018
      3.5
                                                                                                 time period.
             3.0
             2.5
                                                                                                             Employment in the service sector
             2.0                                                                                             has increased 0.7 per cent through
   percent

             1.5                                                                                             October. Notable gains to date have
             1.0                                                                                             occurred in accommodation and
             0.5                                                                                             food services, finance insurance and
             0.0                                                                                             real estate and educational services,
                   PE   AB   ON      NS      CND     QC      BC     MB       NB       NF         SK          while notable declines occurred in
                                                                             Source: Statistics Canada
                                                                                                             public administration, transporta-
OnThrough    October,
     an industry basis onemployment      indi- had
                          the Island, employment         peaked
                                                     in the goods in 2013,
                                                                   sector    and saw
                                                                          increased   year-
                                                                                    10.8 per cent            tion and warehousing and other
through   October. Gains  were  recorded
  cators on the Island have been pos-     in agriculture,
                                                   over-year declines until this trend other
                                                          construction, manufacturing,  and                  services. On a year-to-date basis
primary industries. Through September, manufacturing has been the largest employer in the
  itive. According to the Labour Force             began to reverse in 2017. If the pace
goods producing sector, with employment averaging 6,800 to date. Nationally, the goods sector                through September, retail/wholesale
  Survey
has        (LFS),
     expanded  1.6employment       ontime
                   per cent over this  Prince
                                           period. of labour force expansion continues                       trade continues to be the largest
 Edward Island averaged 75,900 on a                 through the final quarter of the year,                   employer on the Island, averaging
Employment in the service sector has increased 0.7 per cent through October. Notable gains to
  year-to-date basis through October,             PEI will exceed its previous labour
date have occurred in accommodation and food services, finance insurance and real estate and                 11,200, followed by health and social
  an  increase  of 3.1 per cent   from   the      force in
educational services, while notable declines occurred    high recorded
                                                           public         in 2013.
                                                                  administration,    The
                                                                                  transportation             assistance, averaging 10,600 people.
and
  same warehousing   and other
         period in 2017,   and the services.
                                      stron- On participation
                                                  a year-to-date rate
                                                                    basis
                                                                        hasthrough
                                                                            averaged  September,
                                                                                         66.8                Nationally, the service sector has
retail/wholesale trade continues to be the largest employer on the Island, averaging 11,200,
  gest growth amongst provinces.                  per cent, up 1.1 percentage points                         grown by 1.2 per cent over this time
followed by health and social assistance, averaging 10,600 people. Nationally, the service sector
has grown by 1.2 per cent over this time period.  fromSee
                                                        theTable
                                                             same    period
                                                                  1 for moreindetails
                                                                                2017.concerning
                                                                                        Prince               period. See Table 1 for more details
employment   by industrythere
  Through October,       on thehas
                                Island.
                                    been an Edward Island continued to have                                  concerning employment by industry
 expansion in full-time employment,                 the fourth highest participation rate                    on the Island.
According to the Survey of Employment, Payroll and Hours (SEPH), the number of jobs on the
  up 3.2
Island    per
        have   cent, while
             increased         part-time
                         1.1 per                     amongst
                                  cent on a year-to-date          provinces
                                                          basis through        behind
                                                                         August.        Alberta,
                                                                                  The number   of jobs
has  increased in  both  the  goods
  employment has increased by 2.8    producing  industries, up 3.8 per cent, and in
                                                     Saskatchewan and Manitoba over service producing        According to the Survey of Employ-
industries,
  per cent.upAs0.6canperbe
                         cent. Growth
                            seen        ranged from a high of 3.8 per cent in British Columbia, to a
                                   in Figure         this period.                                            ment, Payroll and Hours (SEPH), the
decline of 2.2 per cent in Newfoundland and Labrador. Nationally, SEPH employment advanced
  5, employment
2.2  per cent over thisgrowth
                            time to  date Employment
                                  period.  has           measures from the two major workforce               number of jobs on the Island have
  been (SEPH
surveys  strongest
                and thein LFS)
                          Prince
                               haveEdward    Is-
                                     been following aThough     theover
                                                      similar trend  labour   force
                                                                         the last    is expand-
                                                                                  number   of months,        increased 1.1 per cent on a year-to-
asland,
   can be  seen in  Figure 6  below.
         Alberta and Ontario. Nationally, ing, the unemployment rate is con-                                 date basis through August. The num-
 employment has grown by 1.3 per                    tinuing to fall, averaging 9.5 per cent                  ber of jobs has increased in both the
 cent through October.                              year-to-date, down 0.5 percentage                    8   goods producing industries, up 3.8
                                                    points from the same period one                          per cent, and in service producing
 The labour force on the Island has                 year ago. Nationally, the unemploy-                      industries, up 0.6 per cent. Growth
 expanded by 2.6 per cent to average                ment rate averaged 5.9 per cent over                     ranged from a high of 3.8 per cent
 83,800 people through October.                     this time period.                                        in British Columbia, to a decline of
 Prince Edward Island’s labour force                                                                         2.2 per cent in Newfoundland and

 10 | Prince Edward Island Economic Update 2018
Total weekly earnings have grown in all provinces through
                                                        Average                                                            73.5        75.8
                                                                                                                              July, with              2.9% from
                                                                                                                                           growth ranging             2.3a
                                                                                                   Utilities were suppressed to meet the requirement of the Statistics Act
                                                        high of 3.7 per cent in Quebec, to a low of 0.7 per cent in Saskatchewan.Source:           Average
                                                                                                                                                        Statisticsweekly
                                                                                                                                                                   Canada
                                                        earnings on the Island have grown by 2.0 per cent in the service sector, led by gains in
Labrador. Nationally, SEPH employ-                      administrative support, retail/wholesale trade and arts, entertainment and recreation. Average
                                                        weekly earnings in theFigure
                                                                                goods 6:  SEPH and
                                                                                        producing  sectorLFShaveEmployment
                                                                                                                     increased 1.7PEI  per cent through August.
ment advanced 2.2 per cent over this                    Over this time period wages in (index     Jan 2016 =sector
                                                                                          the manufacturing          100)have increased 1.4 per cent while
time period. Employment measures                        wages
                                                         110 in the construction sector have increased 1.2 per cent.
from the two major workforce sur-                        108
                                                          106
                                                        Though    Prince Edward Island has recorded growth in average weekly earnings so far in 2018,
veys (SEPH and the LFS) have been                         104
                                                        the
                                                          102Island, at an average weekly wage rate of $834.21, had the lowest average weekly earnings
following a similar trend over the last                 in100
                                                           the country through August, an average of $31.76 lower than the next lowest province. For
                                                           98
                                                        Canada    as a whole, average weekly earnings have increased 3.0 per cent on a year-to-date basis
number of months, as can be seen in                        96
                                                        through   August.
                                                           94
Figure 6.                                                 92
                                                        As can be seen in Figure 7, total labour income on the Island, through the second quarter of
                                                        2017, grew by 4.1 per cent on a year-to-date basis, tied with New Brunswick for the fastest
Average weekly earnings have                            growth in the region. Nationally, the compensation of employees grew by 4.8 per cent over this
                                                                                       SEPH Employment        LFS Employment
increased 2.1 per cent on a year-to-                    time period.                                                          Source: Statistics Canada

date basis through August. Average
weekly earnings have grown in all                                     Figure 7: Growth in the Compensation of Employees Canada
provinces through August, with                                                         and Provinces YTD 2018
                                                          7.0%                                                                                                           9
growth ranging from a high of 3.7                         6.0%
per cent in Quebec, to a low of 0.7                       5.0%
per cent in Saskatchewan. Average                         4.0%
                                                          3.0%
weekly earnings on the Island have
                                                          2.0%
grown by 2.0 per cent in the service                      1.0%
sector, led by gains in administra-                       0.0%
                                                         -1.0%
tive support, retail/wholesale trade
                                                         -2.0%
and arts, entertainment and recre-                                    NL        SK        NS        MB         AB    PE     NB      CAN      ON        BC        QC
ation. Average weekly earnings in                                                                                                            Source: Statistics Canada

the goods producing sector have                        Consumer Prices
increased 1.7 per cent through                                                                           $834.21, had the lowest average
                                                       On a year-to-date basis through September, consumer prices have increased by 2.5 per cent.
August. Over this time period wages                  Though     Prince
                                                       Food inflation hasEdward
                                                                           increasedIsland   hascent on aweekly
                                                                                      by 0.3 per                   earnings
                                                                                                          year-to-date         in the
                                                                                                                       basis, while    country
                                                                                                                                    shelter inflation and
                                                       energy inflation have   increased
                                                     recorded growth in average weekly   3.5 per cent andthrough August, an averagefor
                                                                                                          12.1 per cent respectively. Prices   ofgasoline
in the manufacturing sector have                       and household heating fuel continue to increase, and are 14.9 per cent and 21.9 per cent higher
increased 1.4 per cent while wag-                    earnings    so far inbasis
                                                       on a year-to-date     2018,   the September
                                                                                 through                 $31.76 to
                                                                                          Island, as compared     lower   thanperiod
                                                                                                                    the same     the next
                                                                                                                                      in 2017.lowest
                                                                                                                                                As Prince
es in the construction sector have                   atEdward  Island isweekly
                                                        an average       relativelywage
                                                                                    more rate
                                                                                          dependent
                                                                                                of on oilprovince.
                                                                                                           for heatingFor Canada
                                                                                                                       than          as aofwhole,
                                                                                                                             other parts     the country,
                                                       energy commodities have a larger weight in the province’s CPI basket, with the result being the
increased 1.2 per cent.                                                                                              average weekly earnings have
Table 1:                                                                                                             increased 3.0 per cent on a year-to-10
                     Employment by Industry Prince Edward Island YTD October
                                                         2017       2018     percentage total
                                                                                                                     date basis through August.
                                                         YTD        YTD      change     change
                                                                     thousands of persons unless specified
                                                                                                                     As can be seen in Figure 7, total la-
 Goods Producing Sectors                                           17.4        19.2           10.8%           1.9
 Agriculture                                                        3.0         3.8           26.4%           0.8
                                                                                                                     bour income on the Island, through
 Other Primary Industries                                           2.5         2.7            8.6%           0.2    the second quarter of 2017, grew by
 Manufacturing                                                      6.5         6.8            4.9%           0.3    4.1 per cent on a year-to-date basis,
 Construction                                                       5.2         5.8           10.1%           0.5
 Service Producing Sector                                          56.2        56.6            0.7%           0.4
                                                                                                                     tied with New Brunswick for the
 Trade                                                             11.1        11.2            0.7%           0.1    fastest growth in the region. Nation-
 Transportation and Warehousing                                     2.8         2.5          -11.1%          -0.3    ally, the compensation of employees
 Finance, Insurance and Real Estate                                 2.6         2.9           11.1%           0.3
 Professional, Scientific and Technical Services                    3.5         3.5            2.0%           0.1    grew by 4.8 per cent over this time
 Management, Administrative and Other Support Services              1.9         1.9           -1.5%           0.0    period.
 Educational Services                                               5.3         5.5            3.6%           0.2
 Health Care and Social Assistance                                 10.5        10.6            0.9%           0.1
 Public Administration                                              6.9         6.6           -4.1%          -0.3
 Information, Culture and Recreation                                2.8         2.7           -1.4%           0.0
 Accommodation and Food Services                                    5.6         6.2            9.6%           0.5
 Other Services                                                     3.3         3.1           -4.9%          -0.2
 Total                                                             73.5        75.8            2.9%           2.3
                                           Utilities were suppressed to meet the requirement of the Statistics Act
                                                                                        Source: Statistics Canada

                      Figure 6: SEPH and LFS Employment PEI                                                          Highlights of the Prince Edward Island Economy | 11
                               (index Jan 2016 = 100)
 110
Construction and Housing
The supply and demand of housing has been a major focus through 2018 so
far, with demand for housing outstripping supply, and mismatches between
the type of housing sought and what is on offer. New home construction
and investment in the residential construction sector continue to grow,
though perhaps not at a fast enough pace to alleviate pressure. In the resale
market, supply has trended sharply lower over the last number of years as
strong demand has eroded the supply of homes. Inventory levels are per-
sistently around half of their long run average.

Building Permits                                 Housing Starts                                       Resale Housing
On a year-to-date basis through Sep-             Through the first three quarters of                  According to the PEI Real Estate
tember, total building permits have              2017, housing starts have increased                  Association, on a year-to-date basis
increased by 11.8 per cent. Non-res-             3.6 per cent, compared to the same                   through October home sales totaled
idential permits have increased 14.4             period last year. At 698 starts, the                 1,798 units, a decrease of 4.8 per
per cent as increases in industrial              Island would need in excess of 213                   cent from the same period in 2017.
and commercial permits of 62.2                   starts to surpass last year’s total of               The year-to-date average price was
and 12.5 per cent respectively were              911 starts1. Growth has been dom-                    $209,246, an increase of 3.0 per cent
enough to offset a 29.7 per cent                 inated by the multi-unit segment,                    from 2017.
decline in the value of government               up 10.9 per cent, particularly apart-
and institutional permits. Residential           ments, up 46.0 per cent. Single-fami-
permits have increased 10.3 per cent             ly home starts are down 1.2 per cent
over this timeframe, with growth in              through three quarters. Nationally,
both single and multiple permits.                housing starts have declined 2.5 per
Nationally, building permits through             cent over this time period. Growth
September have increased 3.2 per                 ranged from a high of 19.1 per cent
cent, with growth occurring in both              in Nova Scotia to a decline of 28.6
residential and non-residential com-             per cent in Saskatchewan, as can be
ponents.                                         seen in Figure 9.

                                                 Through October, in centers on the
                                                 Island with more than 10,000 peo-
                                                 ple, housing starts have declined 9.9
                                                 per cent. Multi-unit starts were flat
                                                 over this period, while single family
                                                 starts declined 20 per cent.
                                                 1          For reference, there were 237 starts in
                                                 the fourth quarter of 217. Other years with strong
                                                 housing growth (i.e. 2011 and 2012) has starts of
                                                 303 and 251 units in their respective fourth quar-
                                                 ters.

12 | Prince Edward Island Economic Update 2018
Saskatchewan. It is expected that the value of residential investment should continue to grow
through the latter part of 2018, following the rising trend in building permits and housing starts.

             Figure 9: Growth in New Housing Starts Canada and the
                              Provinces YTD 2018
   20%

   10%

    0%

  -10%

  -20%

  -30%
            SK     NL      MB      AB      ON     CAN      BC       QC       NB       PE       NS
                                                     Source: Canada Mortgage and Housing Corporation

Prince Edward Island has been leading the country in growth in new housing investment, with
 Residential Investment
growth up 42 per cent on a year to date basis through August. The Island has seen strong            Non-residential
growth   across
  The total     all housing
             value           types, invest-
                    of residential   with single detached  starts up
                                                 Prince Edward        25.9has
                                                                  Island   perbeen
                                                                               cent, lead-
                                                                                      semi-detached
starts up 34.4 per cent and row houses up 9.9 per cent, though apartment starts on the Island
  ment
have    has increased
      increased          24.9
                 204.4 per     perover
                            cent     cent
                                        this timeing the country
                                                  period. Nationallyinnew
                                                                       growth  in new
                                                                           housing construction has
                                                                                                    Investment
  through6.4
increased   theper
                second    quarter
                   cent over            period. housing investment, with growth up Through the first three quarters of
                                    of 2018,
                              this time
 as compared to the same period in        42 per cent on a year to date basis   2018, non-residential investment
 2017, the fastest growth amongst         through August. The Island has seen has declined by 5.3 per cent com-
 provinces for the second year in a       strong growth across all housing      pared to the same period in 2017. A
 row. Investment is up across most        types, with single detached starts up 51.7 per cent increase in industrial
 components, notably in apartment         25.9 per cent, semi-detached starts   construction was not enough to off-
                                                                                    13
 housing where investment has             up 34.4 per cent and row houses       set declines in the commercial and
 grown 220.4 per cent year-to-date.       up 9.9 per cent, though apartment     government and institutional sector
 However renovation, formerly the         starts on the Island have increased   of 15.3 and 27.8 per cent respective-
 largest component of residential         204.4 per cent over this time period. ly. Nationally, non-residential invest-
 investment, is down 0.6 per cent         Nationally new housing construction ment has increased 7.3 per cent over
 through the second quarter. Nation- has increased 6.4 per cent over this       this time period. Growth ranged
 ally, residential investment increased time period.                            from a high of 44.4 per cent in New-
 7.6 per cent over this time period.                                            foundland and Labrador, to a decline
 Figure 10 shows year-to-date growth                                            of 8.7 per cent in Saskatchewan.
 in residential investment. Growth
 ranged from an increase
 of 24.9 per cent in Prince           Figure 10: Growth in Residential Investment Canada and the
 Edward Island to a                                            Provinces 2018 YTD
                               30.0%
 decrease of 9.1 per cent
                               25.0%
 in Saskatchewan. It is
                               20.0%
 expected that the value       15.0%
 of residential investment 10.0%
 should continue to grow        5.0%
                                0.0%
 through the latter part
                               -5.0%
 of 2018, following the       -10.0%
 rising trend in building     -15.0%
 permits and housing                   PE      QC      BC      NB    CAN     NS   ON     MB       NL       AB          SK
                                                                                                  Source: Statistics Canada
 starts.
                                Non-residential Investment                           Highlights of the Prince Edward Island Economy | 13
                                Through the first three quarters of 2018, non-residential investment has declined by 5.3 per
                                cent compared to the same period in 2017. A 51.7 per cent increase in industrial construction
Primary
Industries
Farming                                          Livestock prices for most commod-                   cent, 22.4 per cent, and 23.1 per cent
Farm cash receipts through the                   ities have also been weak, particu-                 respectively. However, prices for
first quarter of 2018 totaled $127.5             larly for cattle. Prices for slaughter              soybeans, the Island’s second-largest
million, a decrease of 1.5 per cent              cattle and feeder cattle are down                   crop by value have declined 7.8 per
compared to the first quarter of                 8.3 per cent, and 10.9 per cent                     cent through September. Planted
2017. Crop receipts are down 3.5 per             respectively. However, prices for                   potato acreage was down by 200
cent due to decreases in both pota-              both slaughter calves and feeder                    acres in 2018 to 84,000 acres, the
toes (down 3.8 per cent), and other              calves are up 6.3 and 6.4 per cent                  second smallest planted area since
crops (down 1.7 per cent). Livestock             respectively. Hog prices are down                   the early 1990s. As can be seen in
receipts are up 6.1 per cent, while              11.7 per cent, while slaughter lambs                Figure 11, planted acreage followed
direct payments to farmers are down              are down 1.4 per cent. For the                      a largely upward trend from the
13.9 per cent. Absent direct pay-                supply-managed commodities, the                     early 1970s and peaked in 1999 at
ments, farm cash receipts are down               price for chickens has increased 0.8                113,000 planted acres, before begin-
0.4 per cent over this time period.              per cent while the price for eggs is                ning to decline. Harvesting of the
                                                 up 1.9 per cent through September.                  potato crop was delayed due to wet
                                                 Milk prices are down 3.6 per cent                   weather. This has resulted in farmers
                                                 through September.                                  not being able to harvest a signifi-
                                                                                                     cant portion of the potato crop in
                                                 Crop prices, through September,                     2018.
                                                 have largely been higher than those
                                                   acres, the in
                                                 recorded      second
                                                                 2017,smallest planted for
                                                                        with prices    area since the early 1990s. As can be seen in Figure 11,
                                                   planted acreage followed a largely upward trend from the early 1970s and peaked in 1999 at
                                                 wheat,
                                                   113,000oats   and
                                                            planted   barley
                                                                    acres,     upbeginning
                                                                           before  9.9 perto decline. Harvesting of the potato crop was delayed
                                                   due to wet weather. This has resulted in farmers net being able to harvest a significant portion
                                                   of the potato crop in 2018.

                                                                       Figure 11: Fifty Years of Potato Planting PEI
                                                              110000
                                                              100000
                                                               90000
                                                               80000
                                                      acres

                                                               70000
                                                               60000
                                                               50000
                                                               40000
                                                               30000
                                                               20000
                                                                       2012
                                                                       1968
                                                                       1970
                                                                       1972
                                                                       1974
                                                                       1976
                                                                       1978
                                                                       1980
                                                                       1982
                                                                       1984
                                                                       1986
                                                                       1988
                                                                       1990
                                                                       1992
                                                                       1994
                                                                       1996
                                                                       1998
                                                                       2000
                                                                       2002
                                                                       2004
                                                                       2006
                                                                       2008
                                                                       2010

                                                                       2014
                                                                       2016
                                                                       2018

                                                                                                                           Source: Statistics Canada

                                                   Fishing
14 | Prince Edward Island Economic Update 2018     The fishery continues to be an important sector on Prince Edward Island, and demand for Island
                                                   seafood products remains strong. The top four seafood species fished and harvested on the
                                                   Island are lobster, mussels, snow crab and oysters. According to the department of Agriculture
Fishing                                 room nights sold at both fixed-roof       Visits to the Prince Edward Island
                                        accommodations and campgrounds            National Park have increased by 17.9
The fishery continues to be an
                                        have decreased by 1.1 per cent            per cent through August, while visits
important sector on Prince Edward
                                        respectively. Though tourism figures      to Green Gables have decreased
Island, and demand for Island sea-
                                        are slightly below those recorded         by 22.8 per cent. Visits to provincial
food products remains strong. The
                                        in 2017, Canada’s sesquicentenni-         heritage sites are down, with total
top four seafood species fished and
                                        al, they are trending above those         visitors down 6.2 per cent year-to-
harvested on the Island are lobster,
                                        recorded in 2016.                         date.
mussels, snow crab and oysters.
According to the department of Ag-
                                        Traffic to the Island via the Confed-     On a seasonally adjusted basis
riculture and Fisheries, the volume
                                        eration Bridge has increased 0.7 per      through August, sales at food ser-
of lobster landed in 2018 increased
                                        cent year-to-date, while air traffic is   vices and drinking places have ad-
from 2017 levels, while mussels and
                                        down 1.0 per cent. Ferry traffic has      vanced 6.1 per cent. Growth in food
oysters also had a good year, and are
                                        increased by 2.6 per cent year-to-        services and drinking places ranged
seeing solid demand. Disturbances
                                        date, this increase after having both     from a high of 7.4 per cent in British
from the new measures intended to
                                        Island ferries returning to normal op-    Columbia, to a decline of 0.2 per
protect right whales had a minimal
                                        erations for all of 2017. The number      cent in Newfoundland and Labrador.
impact on the fishery, though the
                                        of motorcoach visits has decreased        Nationally, sales at food services and
snow crab fishery was impacted
                                        by 4.0 per cent over this time period.    drinking places have grown by 5.1
forcing fishermen from Quebec, New
                                                                                  per cent over this time period.
Brunswick and Prince Edward Island
                                        The cruise ship season is ongoing in
to fish closer together.
                                        2018, with ships scheduled to visit
                                        into November. Over 100,000 pas-
Tourism                                 sengers and 45,000 crew are sched-
Information from the department of      uled to visit the Island this cruise
Economic Development and Tourism        season on 91 ships. The number of
indicates that total overnight stays    cruise ship visits through August is
on the Island have decreased by         down 0.5 per cent.
1.8 per cent on a year-to-date basis
through August. The number of

                                                                                                 Over 100,000 passengers and
                                                                                                 45,000 crew are scheduled to
                                                                                                 visit the Island this cruise sea-
                                                                                                 son on 91 ships.

                                                                                  Highlights of the Prince Edward Island Economy | 15
The cruise ship season is ongoing in 2018, with ships scheduled to visit into November. Over
                                                 100,000 passengers and 45,000 crew are scheduled to visit the Island this cruise season on 91
                                                 ships. The number of cruise ship visits through August is down 0.5 per cent.

        Manufacturing
                                                 Visits to the Prince Edward Island National Park have increased by 17.9 per cent through
                                                 August, while visits to Green Gables have decreased by 22.8 per cent. Visits to provincial
                                                 heritage sites are down, with total visitors down 6.2 per cent year-to-date.

        Shipments and Exports
                                                 On a seasonally adjusted basis through August, sales at food services and drinking places have
                                                 advanced 6.1 per cent. Growth in food services and drinking places ranged from a high of 7.4
                                                 per cent in British Columbia, to a decline of 0.2 per cent in Newfoundland and Labrador.
                                                 Nationally, sales at food services and drinking places have grown by 5.1 per cent over this time
                                                 period.

                                                 Manufacturing Shipments and Exports
            On a year-to-date basis   through
                                On a year-to-date basis September,
                                                        through September, thethe
                                                                               value value      ofadjusted
                                                                                     of seasonally   seasonally
                                                                                                           manufacturing
                                shipments has increased 6.6 per cent. Growth was recorded in both the durable and non-
            adjusted manufacturing      shipments
                                durable goods  sectors at 13.9has    increased
                                                               and 3.5                  6.6 Non-durable
                                                                        per cent respectively. per cent.   goods, largely
                                                 composed of food and seafood shipments, represent approximately 70 per cent of the Island’s
                                                 manufacturing shipments, while durable goods are responsible for the remaining 30 per cent.
                                                 As can be seen in Figure 12, through September, all provinces have recorded positive growth
                                                 ranging from 3.5 per cent in Ontario, to 18.3 per cent in Newfoundland and Labrador.
                                                 Nationally, manufacturing shipments grew 6.1 per cent over this time period.

Growth was recorded in both the du-                              Figure 12: Growth in Manufacturing Shipments YTD
rable and non-durable goods sectors                                                  September
at 13.9 and 3.5 per cent respectively.             20%
                                                   18%
Non-durable goods, largely com-                    16%
                                                   14%
posed of food and seafood ship-                    12%
                                                   10%
ments, represent approximately 70                   8%
                                                    6%
per cent of the Island’s manufactur-                4%
ing shipments, while durable goods                  2%
                                                    0%
are responsible for the remaining 30                        ON      MB       PE      QC      AB       BC      NB       SK          NS          NL

per cent. As can be seen in Figure                                                                                          Source: Statistics Canada

12, through September, all provinces             On a year-to-date basis through September, international exports have increased 1.1 per cent.
                                                 Over this time period, Newfoundland and Labrador has seen the fastest growth in international
have recorded positive growth rang-
                                                 exports amongst provinces, up 29.9 per cent, followed by Alberta at 16.9 per cent, and then
ing from 3.5 per cent in Ontario, to
18.3 per cent in Newfoundland and                                                                                                                       16
Labrador. Nationally, manufacturing
shipments grew 6.1 per cent over
this time period.

                                                   Aerospace exports have been positive on a year-to-date basis
                                                   through September, with engine, turbine and power transmis-
                                                   sion equipment manufacturing up 6.5 per cent and aerospace
                                                         product and parts manufacturing up 12.1 per cent.

16 | Prince Edward Island Economic Update 2018
chemical manufacturing have increased 2.4 per cent on a year-to-date basis through
 September. Other industrial machinery manufacturing continues to expand on the Island, and is
 now the Island’s 8th largest export industry, and has grown 23.2 per cent year-to-date.

                                                                                                                  The United States continues to be
                       Figure 13: Growth in Exports Canada and the Provinces YTD
                                               September                                                          the destination of the majority of
                  35
                                                                                                                  the Island’s exports, with 73.7 per
                  30                                                                                              cent of the Islands exports heading
                  25                                                                                              there through September. This is
    percent (%)

                  20                                                                                              an increase of 3.1 per cent over the
                  15                                                                                              same period in 2017. As can be seen
                  10
                                                                                                                  in Figure 14, since 2008 there had
                   5
                                                                                                                  been a general decline in the share
                   0
                        ON    PE   CAN   NS    BC    QC        SK     MB      NB      AB       NL                 of the Island’s exports going to the
                                                                               Source: Industry Canada
                                                                                                                  United States, a trend which has
OnThea United
       year-to-date      basis through
              States continues  to be the destinationAerospace        exports
                                                        of the majority           have been
                                                                         of the Island’s  exports,posi-
                                                                                                   with           since reversed with the decline of
  73.7 per cent of the Islands exports heading there through September. This is an increase of 3.1                the Canadian dollar against the US
September,      international exports                 tive on a year-to-date basis through
  per cent over the same period in 2017. As can be seen in Figure 14, since 2008 there had been a
have    increased
  general            1.1share
          decline in the  per cent.    Over exportsSeptember,
                               of the Island’s                          withStates,
                                                       going to the United     engine,     turbine
                                                                                     a trend which has            dollar. Germany, France, the Nether-
  since reversed with the decline of the Canadian dollar against the US dollar. Germany, France,                  lands, and China round out the rest
this  time period, Newfoundland and
  the Netherlands, and China round out the rest ofand        power
                                                       the top         transmission
                                                                five destinations         equipment
                                                                                   for Island goods in
Labrador     hastogether
  2018, though    seen thethey fastest   growth
                               only account  for 8.1 per cent of the Island’sup
                                                      manufacturing           trade.
                                                                                 6.5 per cent                     of the top five destinations for Island
in international exports amongst                      and aerospace product and parts                             goods in 2018, though together they
provinces, up 29.9 per cent, followed manufacturing up 12.1 per cent.                                             only account for 8.1 per cent of the
by Alberta at 16.9 per cent, and                      Bioscience exports have been mixed             17           Island’s trade.
then New Brunswick. This perfor-                      with pharmaceutical and medicine
mance is partially reflective of strong manufacturing down 10.6 per cent,
energy prices seen in 2018 to date.                   while other basic organic chemical
Nationally, international exports                     manufacturing have increased 2.4
have increased 6.9 per cent through                   per cent on a year-to-date basis
September.                                            through September. Other industrial
                                                     machinery manufacturing continues
The Island’s food industries have                    to expand on the Island, and is now
seen some softening in exports so                    the Island’s 8th largest export in-
far this year. Frozen food manufac-                  dustry, and has grown 23.2 per cent
turing – the Island’s largest export                 year-to-date.
industry - has seen exports decline
by 0.9 per cent year-to-date, while
seafood product preparation and
packaging is down 6.4 per cent.
Aquaculture is down 3.4 per cent,
                                                                     Figure 14: Percentage of Island Exports to the United States
while fishing is down 20.6 per cent
                                                           80.0%
on a year-to-date basis through                            78.0%
September. Vegetable and melon                             76.0%
                                                           74.0%
farming (potatoes) is up 40.2 per                          72.0%
                                                           70.0%
cent year to date.
                                                           68.0%
                                                           66.0%
                                                           64.0%
                                                           62.0%
                                                           60.0%
                                                                    2008   2009    2010      2011        2012   2013   2014   2015   2016    2017 2018YTD
                                                                                                                                       Source: Industry Canada

                                                          Private Sector Forecasts
                                                          Below, in Table 2, are the forecasts for real GDP Highlights
                                                                                                             growth forof the IslandEdward
                                                                                                                          the Prince from Canada’s   major | 17
                                                                                                                                           Island Economy
                                                          banks and two think tanks. Forecasts for 2018 fall in a range of 1.4 per cent growth to 2.8 per
                                                          cent growth, averaging 2.1 per cent, while forecasts for 2019 range from 0.8 per cent growth to
Retail Trade, Motor Vehicle Sales
and Wholesale Trade                                                                                            Consumer Prices
Continued strong population                              Wholesale trade on the Island has                     On a year-to-date basis through
growth, higher income growth and                         increased 23.4 per cent on a year                     September, consumer prices have
a positive tourism season are con-                       to date basis through August, the                     increased by 2.5 per cent. Food
tributing to another strong year for                                                                           inflation has increased by 0.3 per
                                                         fastest growth amongst provinc-
                                                                                                               cent on a year-to-date basis, while
retail sales in 2018. On a seasonally                    es. Nationally, wholesale trade has                   shelter inflation and energy infla-
adjusted basis through August, retail                    advanced 4.5 per cent over this time                  tion have increased 3.5 per cent
sales have advanced a healthy 4.6                        period.                                               and 12.1 per cent respectively.
per cent, the fastest growth amongst                                                                           Prices for gasoline and household
                                                                                                               heating fuel continue to increase,
provinces. Through August, retail                        The value of new motor vehicle sales                  and are 14.9 per cent and 21.9 per
sales in the other Maritime prov-                        has decreased 6.8 per cent on a year-                 cent higher on a year-to-date basis
inces grew by 2.9 per cent in Nova                       to-date basis through September,                      through September as compared
Scotia and by 1.9 per cent in New                        while the volume of new motor ve-                     to the same period in 2017. As Prin-
Brunswick. Nationally, retail sales                                                                            ce Edward Island is relatively more
                                                         hicles sold has decreased by 8.8 per
                                                                                                               dependent on oil for heating than
increased 3.3 per cent over this time                    cent. Declines have occurred across                   other parts of the country, energy
period.                                                  all components with sales of both                     commodities have a larger weight
                                                         passenger cars, and trucks down                       in the province’s CPI basket, with
On an unadjusted basis through                                                                                 the result being the large impact
                                                         16.6 and 4.8 per cent respectively.
                                                                                                               on inflation seen so far this year.
August, retail sales on the Island                       Nationally, the volume of new motor                   Absent energy, consumer prices
have seen strong growth across all                       vehicles sold has decreased 1.1 per                   have increased 1.3 per cent over
components. Notable contributions                        cent, while their value has increased                 this time period.
to growth have come from motor                           3.0 per cent over this time period.
                                    , up                                                                       Core inflation on the Island (the
vehicle    and onparts  dealers       far 4.3  per Absent energy, consumer prices have increased
                                   1
  large impact     inflation  seen so     this year.
  1.3 per cent over this time period.                                                                          measure of inflation excluding vo-
cent, food and beverage stores, up                                                                             latile components such as food and
4.4  perinflation
  Core    cent, and
                  on thebuilding
                          Island (thematerial
                                       measure of inflation excluding volatile components such as              energy) has increased 1.6 per cent
  food and energy) has increased 1.6 per cent through September. Nationally, inflation has
and   garden equipment and supplies                                                                            through September. Nationally, in-
  increased 2.3 per cent over this time period.
dealers, up 8.9 per cent.                                                                                      flation has increased 2.3 per cent
   Retail Trade, Motor Vehicle Sales and Wholesale Trade                                                       over this time period.
   Continued strong population growth, higher income growth and a positive tourism season are
   contributing to another strong year for retail sales in 2018. On a seasonally adjusted basis
1 through Motor
             August, retailand
                   vehicle   sales have
                                 parts   advanced
                                       dealers       a healthy 4.6 per cent, the fastest growth amongst
                                               include
new   and usedThrough
   provinces.   car dealers, otherretail
                        August,     motorsales
                                           vehicle
                                                in the other Maritime provinces grew by 2.9 per cent in
dealers
   Nova and   automotive
         Scotia and by 1.9parts
                             perand
                                  centaccessories  and
                                       in New Brunswick.    Nationally, retail sales increased 3.3 per cent
tire stores.
   over this time period.

                Figure 8: Growth in Retail Sales Canada and the Provinces
                                      YTD August
     5.0%
     4.0%
     3.0%
     2.0%
     1.0%
     0.0%
    -1.0%
    -2.0%
              NL      MB       SK      NB      AB       NS      BC      CAN      ON      QC         PE
                                                                                   Source: Statistics Canada

  On an unadjusted basis through August, retail sales on the Island have seen strong growth
18 | Prince Edward Island Economic Update 2018
  across all components. Notable contributions to growth have come from motor vehicle and
  parts dealers1, up 4.3 per cent, food and beverage stores, up 4.4 per cent, and building material
72.0%
   70.0%
   68.0%

Private Sector Forecasts
   66.0%
   64.0%
   62.0%
   60.0%
Below, in2008Table2009
                    2, are2010
                            the forecasts
                                   2011    2012for real
                                                   2013 GDP 2014 growth
                                                                    2015 for2016the2017Island     from
                                                                                             2018YTD
Canada’s major banks and two think tanks. Forecasts for 2018 fall in a range  Source: Industry Canada

ofPrivate
   1.4 per    cent
          Sector    growth to 2.8 per cent growth, averaging 2.1 per cent, while
                 Forecasts
  Below,  in Table
forecasts for 2019 2, arerange
                          the forecasts for real
                                 from 0.8    perGDP
                                                  centgrowth
                                                         growth for the
                                                                     to Island
                                                                        2.5 perfromcentCanada’s
                                                                                            growth,major
  banks and two think tanks. Forecasts for 2018 fall in a range of 1.4 per cent growth to 2.8 per
averaging
  cent growth,1.7  per cent.
               averaging  2.1 per cent, while forecasts for 2019 range from 0.8 per cent growth to
  2.5 per cent growth, averaging 1.7 per cent.

  Table 2:
                                         Private Sector Forecasts

                                                       Real GDP (% growth)
   Organization                                    2017          2018f       2019f   Date Issued
   Conference Board of Canada                                    2.8%        2.5%      Summer 2018
   TD Bank                                                       2.2%        1.7%             18-Sept
   RBC                                                           1.4%        1.6%             12-Sept
   CIBC                                                          1.7%        0.8%               4-Oct
   BMO                                                           1.8%        1.1%               9-Nov
   Scotiabank                                                    2.0%        1.6%              15-Oct
   National Bank                                                 2.5%        2.0%     November 2018
   Atlantic Provinces Economic Council                           2.2%        2.0%              5- Nov
   Average                                         3.5%          2.1%        1.7%

  Forecasts have been revised up since the 2018 Budget, where growth was forecast at 1.7 per
  cent for 2018 and 1.2 per cent for 2019. Driving the upward revisions in the forecast for the
Forecasts
  Island is thehave
                strongbeen  revisedseen
                       performance    upacross
                                           sinceathe
                                                   wide2018
                                                        varietyBudget,     where
                                                                 of economic         growth
                                                                                indicators.    was
                                                                                            However,
  some forecasters still view the population increases on the Island as a temporary phenomenon.
forecast at 1.7 per cent for 2018 and 1.2 per cent for 2019. Driving the up-
  Beginning at the end of 2016, increased immigration began to have a positive impact on the
ward    revisions
  Island’s           in theand
           labour market,    forecast  for theindicators.
                               other economic    Island isThis
                                                            thetrend
                                                                  strong    performance
                                                                      is likely                seen
                                                                                 to continue through
  the medium term, and consequently, there is likely upside to the average of the private sector
across    a wide variety of economic indicators. However, some forecasters still
  forecasts.
view the population increases on the Island as a temporary phenomenon.  18
Beginning at the end of 2016, increased immigration began to have a pos-
itive impact on the Island’s labour market, and other economic indicators.
This trend is likely to continue through the medium term, and consequently,
there is likely upside to the average of the private sector forecasts.

                                                                                                           Highlights of the Prince Edward Island Economy | 19
Outlook 2019
           Prince Edward Island has benefitted over the last number of years
           from modest, stable growth in real GDP

                                                    The construction sector should continue
                                                    to see gains through 2019 due to strong
                                                    demand on both the residential and non
                                                    residential front.

20 | Prince Edward Island Economic Update 2018
According to the IMF, the outlook        bination of immigration, positive        this is a trend that should continue
for the global economy in 2019 is for    inter-provincial migration and           into the future. The minimum wage
the global economy to expand at a        increased retention of international     will increase by 70 cents in 2019,
pace of 3.7 per cent, the same pace      students. Continued strong immigra-      to $12.25 an hour, maintaining
as in 2017 and 2018, and a down-         tion through the provincial nominee      the highest minimum wage in the
ward revision of 0.2 percentage          streams should result in an addition-    region, continuing to support wage
points from its April Outlook. The       al 2,360 immigrants coming to the        growth on the Island.
Bank of Canada revised its forecast      Island in 2019, increasing to 2,600
down marginally for the Canadian         by 2021. This will continue to help      The construction sector should
economy in 2019 from 2.1 per cent        boost domestic demand through            continue to see gains through 2019
in July to 2.0 per cent in October due   2019 and beyond.                         due to strong demand on both the
to slightly weaker consumption, net                                               residential and non residential front.
exports and inventories.                 In September of 2018, Prince Edward      On the residential side, new housing
                                         Island closed its immigrant investor     construction will continue to acceler-
Recently, Prince Edward Island has       stream of provincial nominees to         ate through the medium term due to
seen a solid expansion in real GDP.      the province to new applicants. The      continued levels of immigration and
Due to the mix of industries found       impact of this closure will begin to     changes to household composition
on the Island, the Island economy        be felt in 18 to 24 months, as cur-      on the Island. The Canada Housing
has been more stable than other          rent applicants are processed. The       and Mortgage Corporation (CMHC)
parts of the country over the last       province has recently indicated that     forecasts starts in the range of 675
number of years. Though the eco-         it intends to nominate additional        to 875 units in 2019 and 650 to 850
nomic fundamentals of the Island         immigrants through its other provin-     units in 202, significantly below
economy remain in place, Prince          cial nominee streams, so that there      projected demand. Demographic
Edward Island has of late been ben-      will be no decline in the number of      factors and immigration point to the
efitting from the increase in popu-      international immigrants moving to       need for an additional 1,300 units
lation that has largely been driven      the province. This has the potential     per year to meet demand, from both
by immigration, increasing demand        to increase retention rates, as labour   household formation and immigra-
for goods and services on the Island.    market immigrants are viewed as          tion, a much higher level of housing
This is expected to continue into        more likely to stay, which should        completions than has occurred on
2019. Due to the above factors the       help the Island’s population to con-     the Island in recent memory (1986
Province is projecting real growth in    tinue to grow, at a faster pace.         was the last time there were more
the order of 2.5 per cent, owing ap-                                              than 1,000 completions on the
proximately 1.5 percentage points to     Employment should continue to            Island). This indicates significant
factors driven by population growth,     grow through the medium term as          capacity for future expansion in
and 1 percentage point to other          the labour force continues to expand     residential construction sector (see
economic factors.                        due largely to increased immigra-        Figure 15).
                                         tion, especially as more immigrants
Prince Edward Island should con-         are being brought into the province      The supply of resale housing at
tinue to benefit from strong inter-      through the skilled labour stream.       the end of October is at its lowest
national in-migration in 2019. The       The economy has been able to             level in sixteen years due to several
provincial Population Action Plan        absorb the new entrants into the         years of very strong demand. CMHC
released in the spring of 2017 has       labour market with little difficulty,    forecasts home sales on the Island to
plans to grow the population to          and with many sectors of the econ-       be in the range of 1,950 to 2,200 per
160,000 by 2022 through a com-           omy looking for additional labour,       year through to 2020, with average

                                                                                  Highlights of the Prince Edward Island Economy | 21
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