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Economic overview
A comprehensive Economic Overview was prepared as part of the 2024-2027 MYB. The below information focuses on what has changed since fall 2023, based on the most current information available at the time of writing.
Macroeconomic outlook update
In Canada, inflation is nearing its target of 2 per cent overall. This is a significant change from 2023. Although now within the Bank of Canada’s target range of 1–3 per cent, inflation is still strongly driven by the housing sector, which continues to have a fundamental imbalance of supply and demand. The Bank of Canada has lowered its key policy interest rate three times in 2024, by a total of 0.75 per cent. Despite inflation returning to within the target range overall, continued interest rate reductions are expected as non-housing related inflation has fallen below the target range.
Employment growth
According to Statistics Canada, Canadian unemployment was at 6.5 per cent in September 2024 (compared to 5.5 per cent in September 2023) with a labour force participation rate of 62.4 per cent (compared to 65.6 per cent in September 2023).
Guelph’s unemployment rate has historically outperformed the broader Canadian rate, and this trend has continued in the past year. As of September 2024, Statistics Canada reported a 4.7 per cent unemployment rate for the Guelph Census Metropolitan Area (compared to 4.9 per cent in September 2023), which was below the national level.
Interest rate environment
The Bank of Canada’s overnight interest rate (policy rate) forms the basis for what the market will pay for debt and investments. As of October 2024, the current overnight rate is 4.25 per cent, a decrease of 0.75 per cent from September 2023. The general consensus among economists is that interest rate decreases are expected to continue in the next two years.
Inflationary outlook
The Bank of Canada has a target of 2 per cent inflation, the mid-point of its target range of 1–3 per cent. The City tracks two key inflationary indicators: Consumer Price Index (CPI), and Non-Residential Building Construction Price Index (NRBCPI).
Consumer Price Index (CPI)
The latest inflationary data at time of writing was released in September 2024. At that time, inflation was 2 per cent for August 2024, which is a substantial reduction from 4 per cent in August 2023. The Bank of Canada forecasts inflation to remain around 2 per cent in 2025 and 2026.
Non-Residential Building Construction Price Index (NRBCPI)
NRBCPI is reported quarterly, and the latest published data was 6.5 per cent, which reflected the increase from second quarter of 2023 to second quarter of 2024 (down from 8.1 per cent from second quarter of 2022 to the second quarter of 2023).