– Ken Bessason is the Interim Executive Director of the Kelowna Chamber of Commerce. To find out more information about the organization please visit www.kelownachamber.org.
KELOWNA – The big news as March wrapped up was the Federal Budget – hard on the heels of the BC Provincial Budget. The Kelowna Chamber gave the provincial budget two thumbs up for its cuts in the right places for business, especially small businesses. Our Chamber continues to advocate for permanent relief for credit unions from the federal tax rate changes – alleviated for one more year in the BC budget.
The Federal budget was less easy to commend from the viewpoint of businesses. A few positive steps in terms of gender equality measures, but the increases in EI rates and parental leave also will impact local business operators. The Canadian Chamber of Commerce was disappointed at the lack of urgency in playing catch-up in trade and innovation, as Canada continues to fall behind international trading partners.
We took a moment mid-March for our Chamber AGM – a transition year for our Chamber as we complete our search for a new permanent Executive Director. To facilitate stability, the entire Executive, and nearly the entire Board pledged to remain in their 2016 positions, and were acclaimed prior to the March 15 Delta Grand meeting. Two new directors joined us: Ron Cannan (Interior Savings) and Dominic Rampone (West Manufacturing), both well-recognized names in Kelowna.
The Bank of Canadaleft its key interest rate unchanged on March 1st, citing “significant uncertainties” ahead for the Canadian economy. Many economists believe the bank will continue to keep rates low, or even cut them, in the near future.
The Federal Reserve in the US hiked its key interest rate to double Canada’s on March 15 (to between .75 and one per cent). Immediate impact in Canada is expected on fixed-rate mortgages, which have been rising in the past few weeks in anticipation of the Fed hike. Fixed mortgages rates are tied to bond rates.
GDP Data is now in for the full year 2016 from Statistics Canada. The Canadian economy registered a better-than-expected annualized rate of 2.6% in the fourth quarter, finishing the year ahead of the US’s 1.9%. Most of the growth was in household consumption and investment in housing. Unfortunately, business investment declined 2.1% in Q4 2016, the ninth quarterly contraction in a row.
The unemployment rate in Kelowna dropped in February to 7.4% down from 8.3 in January. BC’s rate also dropped, as did the rate in Canada, to its lowest level (6.6%) in two years. Corie Griffiths, Manager of the Central Okanagan Economic Development Commission highlighted good news in economic indicators for the region on March 18. “Everything we want to be up, is up and everything we want to be down, like consumer and business bankruptcy, is down,” said Griffiths.
She underlined key indicators: “Building permit values in the region have increased by 84% in the last five years. Housing starts are up 140% in the same period. Business licenses increased 13%; the tech sector grew 30%, and 634 tech communities employ 7,600 people, pumping $1.3 billion into the economy.”
Meanwhile, inflation in Canada rose to 2.1% in February, fueled by a surge in gasoline prices. New carbon pricing policies in Alberta and Ontario coincided with the 6.3% increase in transportation costs. (Ontario’s year-over-year gas prices soared a remarkable 20.4% in February.) In BC, the inflation rate in February was 2.3%, up from January’s 1.9%.
Generally, Canada’s big banks have been reporting profits in the first Quarter, but they are driven by potentially unstable trading revenues, as opposed to the more desirable loan growth. The continuing low interest rates are constraining net-interest income, and there is “no loan growth” according to Edward Jones analyst Jim Shanahan.
Closer to home, at the Kelowna International Airport, YLW, lots is happening. WestJet announced in early March that it will begin red-eye service from YLW to Toronto Pearson International Airport (YYZ), arriving in Toronto at 7:15 a.m., in time to connect to multiple international flights. Air Canada announced it was adding daily non-stops to Toronto, as well, meaning there will be three non-stops a day Kelowna-Toronto for much of the spring, summer and fall. Good for business, good for tourism.
Passenger numbers at the airport continue to grow: 1.7 million passengers went through YLW in 2016, an 8.7% increase over 2015. “This is great news not only for YLW, but also the entire region,” said Sam Samaddar, Airport Director. “The increase in passenger traffic means an increase in tourism, a boost to the regional economy and additional support for our local businesses.”
Speaking of tourism, Thompson Okanagan Tourism Association (TOTA) said in mid-February that hotels and restaurants are having trouble hiring enough people to meet demand. International visitors jumped 12.2% in 2016, said Daniel Bibby, Chair of Tourism Kelowna. “Hotels are filling up at an unheard-of rate,” said Bibby. “There’s such a demand right now that the industry is growing faster than we’re grooming talent,” according to Bibby.
At the same time, tourism was ranked the “most important sector to BC’s economy over the next decade,” according to 90% of respondents to a recent BC Chamber of Commerce member survey. 1,200 businesses from around the province, of all sizes and sectors, completed the survey, with 52% putting tourism at the top, followed by technology, health services and international trade.
Tourism Kelowna commissioned its own study of tourism in our region, releasing figures in early March showing more than a billion dollars is the annual economic output of the industry, just in Kelowna. In turn, the industry generates about $142 million in tax revenues. The last study was done in 2011. Five years later, current figures have ballooned by nearly 50%, with 12,000 jobs, with tourism the third largest employer in the region.
That’s enough numbers for this month. Next month, I’ll be thinking golf with no snow on the ground, and getting ready for the Chamber’s 32nd annual Golf Tournament at The Harvest, which promises to be a sold-out event again this year. I’ve already signed up to play in a foursome of Chamber Past Presidents. We look forward to seeing many of our members and guests on the course May 31st.