The Canadian dollar
The spring issue of the Atlantic Provinces Economic Council's Atlantic Currents indicates that Atlantic Canada's provincial economies were off to a soft start in 2014.
Weak labour markets weighed on consumer spending while limited population growth constrained housing activity. The main source of strength was found in international exports, which were strong in the first quarter. All four provinces are working to eliminate their continued deficits but unfunded pension liabilities are pushing up debt levels.
"Employment in Atlantic Canada fell 0.6 per cent year-to-date to April," said APEC senior policy analyst Fred Bergman. "Although the unemployment rate declined across the region, this was due to workers withdrawing from the labour force."
Consistent with a lack of job growth and weekly earnings that are barely keeping pace with inflation, Atlantic retail sales in the first two months of 2014 were unchanged from the second half of 2013.
The combination of soft labour markets and a shrinking population (down 0.2 per cent over the last year) is putting downward pressure on Atlantic housing markets with sharp declines in housing starts across the region in the first quarter.
Although the weather contributed to weak first quarter growth in the U.S., Atlantic exports to the U.S. grew by a solid 11 per cent.
"All four Atlantic provinces are projecting at least one more year of deficits," said Bergman.
In Prince Edward Island, the provincial deficit is forecast to decline to $40 million in 2014/15 and be eliminated by 2015/16 due to spending restraint.