Mixed economic bag for N.B. as inflation continues

It's a mixed bag when it comes to New Brunswick's economy according to a new report from the Atlantic Provinces Economic Council.

The report said while New Brunswick is seeing low unemployment and high immigration, the positives are being tempered by a growing housing and cost of living crisis.

The overall picture appears to be one of positives and negatives.

For example, the unemployment rate is at a 46-year low of 7.4 per cent.

But an aging population may account for the low unemployment rate, because retirees and people not actively looking for a job are not included in the rate.

The aging population — about one in four New Brunswickers are aged 55 to 64 — means a labour shortage is going to get worse before it gets better.

"These labour shortages … can impact the ability for the economy to continue to recover at a rapid pace," said Fred Bergman, a senior policy analyst with the Atlantic Provinces Economic Council.

"We're seeing job vacancies in sectors like manufacturing, retail, trade, the health and social services sector, health care, nurses, doctors and so on and home care workers."

Housing numbers

During the early days of the pandemic, the province went through a housing sale boom, with out-of-province home buyers spending lots of money on housing.

But that's been limited recently for two reasons: the rising cost of housing, which makes buying a home unaffordable, and a shortage of housing, meaning many looking to purchase a home can't find one regardless of price or ability to pay.

"I think in Fredericton in particular, up to April … existing home sales were down almost 20 per cent. Some of this is obviously the fact that [if] you have less homes to sell, you're going to have less sales as well," said Bergman.

"The home price index for existing homes was up over 30 per cent in Fredericton. So certainly, you know, there's different dynamics between the existing home market and new housing. "

Inflation woes

Nationwide inflation is about 5 per cent for the year.

For Atlantic Canadians this means about $1600 more in annual spending will be needed to get the same amount of goods and services as the previous year.

That's lower than in the rest of Canada, but only because Atlantic Canadians have smaller salaries on average than other Canadians, and therefore have less to spend.

Bergman said inflation will likely get worse before it gets better and while some governments have implemented some targeted help, it's a drop in the bucket compared to the financial pain felt by Atlantic Canadians.

"In New Brunswick, I think it was 40 million allocated in the budget towards increasing the basic personal amount on personal income tax as well as increasing the low income tax reduction, which will save New Brunswickers … about $85," said Bergman. 

"When you compare that to $1600, there's a wide difference there."