In this edition:
Consumer short-term inflationary concerns at record high levels
Government of Ontario lists regulatory changes for July 1
Businesses expect strong sales growth but doubt it will last
Canadian inflation expectations bolster case for supersize rate hike
Consumer short-term inflationary concerns at record high levels
Consumers’ expectations for inflation have risen, the Bank of Canada reports, alongside concerns about prices for food, gas and rent. Short-term expectations are at record-high levels. Long-term inflation expectations increased significantly in the second quarter of 2022, returning to the levels they were at before the COVID‑19 pandemic.
Most people believe the Bank of Canada can achieve its inflation target. However, some think the process of bringing inflation down will be difficult for the Bank of Canada.
Expectations for higher inflation and rising interest rates are affecting consumer confidence. In response to such factors, Canadians plan to cut spending. They are seeking out more-affordable options when shopping.
People anticipate that wage gains will remain modest. However, workers in the private sector have higher expectations for wage growth than those in the public sector. Flexible work arrangements could attract more people into the labour force. Some consumers reported that working from home helps offset the costs of higher inflation.
Government of Ontario lists regulatory changes for July 1
Fourteen Ontario ministries have incoming legislative and regulatory changes taking effect on July 1. Click here to view a summary.
Businesses expect strong sales growth but doubt it will last
The Bank of Canada’s Business Outlook Survey indicates that many businesses continue to expect strong sales growth, but an increasing number of these firms expect the pace of growth to return to normal following a fast recovery from the pandemic. Some firms also anticipate that labour shortages will limit growth in their sales.
The number of businesses reporting labour-related constraints and supply chain bottlenecks remains at a record high, suggesting that supply is not keeping up with demand. About half of firms with supply chain challenges expect them to persist until the end of 2023 or beyond.
Supported by strong demand, many firms intend to increase their investment spending and add staff over the next year. A few businesses mentioned that the prices of capital goods along with rising interest rates may potentially affect the viability of their capital expenditure plans, but such factors are not yet holding them back.
As in recent surveys, many businesses anticipate significant wage and price increases. Pressures on input and output prices continue to be linked to supply chain issues.
Businesses’ expectations for near-term inflation have increased, and firms expect inflation to be high for longer than they did in the previous survey. Still, most see inflation returning to 2% over time. They noted various factors needed for inflation to return to target, including higher interest rates, improved supply chains, lower oil prices and a resolution of the war in Ukraine.
Canadian inflation expectations bolster case for supersize rate hike
Consumer inflation expectations surged in Canada, hitting fresh highs in the short-term and up “significantly” over the long-term, a Bank of Canada survey showed Monday, bolstering calls for a very rare 75-basis point rate increase.
“Consumers’ expectations for inflation have risen, alongside concerns about prices for food, gas and rent,” the central bank said in its second quarter Survey of Consumer Expectations. “Generally, people see inflation as being more pervasive now.”
In a separate survey, the bank found businesses expect high inflation for longer, with firms eyeing survey-record wage increases over the next 12 months and many planning to pass rising costs onto customers.
Reading Recommendations
Bitcoin hints at a bottom, but it may be different this time
BNN Bloomberg
It’s a perennial exercise whenever an asset is mired in a prolonged and deep drawdown: People look at the charts, they go over this or that indicator and they get their checklists out to try to figure out when it might find a floor. For Bitcoin, there’s plenty of such action happening right now, with technical signals that in the past have suggested just such a formation.
Analysts at Glassnode track a number of gauges — from instances when Bitcoin dips below a moving average to when it closes below the so-called balance price measure, which reflects a market price that matches the value paid for coins minus the value ultimately realized. What they’re seeing now is that many of these measures are all flashing in similar fashion, something that rarely happens.
Over the last five years, the analysts say, there have only been six other similar stretches, some of which have coincided with bear-market bottoms, such as in November 2018 and March 2020. But might this time prove otherwise?
U.S./Canada travel is not bouncing back. And officials on both sides of the border are worried
Buffalo News
Crossing the Peace Bridge on Canada Day or Fourth of July, a decadeslong tradition for people on both sides of the border, remains a complicated challenge this holiday weekend.
The Canadian government last week extended until Sept. 30 a requirement for visitors to complete its confusing ArriveCan app for Covid-19 concerns, and as a result, the summer tourism season appears doomed for the third year in a row. Reluctant travelers, it seems, just don’t want to deal with ArriveCan.
Now, officials and stakeholders in Buffalo, Fort Erie, Ontario, Niagara Falls, N.Y., and Niagara Falls, Ontario, as well as across the 3,000-mile boundary, are voicing concerns that approach outrage. Local economies depending on cross-border traffic, they say, continue to suffer because of restrictions that long ago became unnecessary as Covid-19 levels ease.
Niagara Falls, one of the world’s most popular tourist attractions, still marks anemic cross-border visits because of requirements that include entering vaccination status and exact travel destinations into the app. The Peace Bridge Authority and Niagara Falls Bridge Commission report plummeting revenues from traffic levels that are about half of pre-pandemic 2019. Ditto for duty free stores. And many travelers eager to renew normal visits across the border simply look at other alternatives, put off by Ottawa’s continuing requirements.
Through the Daily Updates, the GNCC aims to deliver important business news in a timely manner. We disseminate all news and information we feel will be important to businesses. Inclusion in the Daily Update is not an endorsement by the GNCC.
