Economic Scan - Prince Edward Island: 2023
- In 2022, 170,688 people lived in Prince Edward Island, an increase of 3.6% from 2022 - record growth for the province. Prince Edward Island represents 0.4% of Canada's total population.
- Average age of the non-Indigenous population in Prince Edward Island is 42.8 versus 34.8 in the Indigenous population (Census 2021).
- The proportion of seniors aged 65+ is projected to increase from 21% in 2022 to 23.7% in 2032.
- In 2022, individuals aged 55 and over accounted for 40.2% of the working-age population. By 2032, that proportion could reach 41.3%.
- The proportion of youth (15-24) is projected to decline from 13.1% in 2022 to 12.3% in 2032. Youth employment fell sharply during the pandemic as a greater proportion of this age group worked in industries hardest hit by COVID-19 restrictions. Recovery has been relatively uneven for this age group since the pandemic. For example, labour force participation of youth males reached pre-pandemic levels by 2021, while participation by youth females has yet to fully recover.
The Indigenous population comprises 2.2% of the Prince Edward Island population (2021 Census) and remains under-represented in the Island's labour market. There are 1,730 Indigenous people in the labour force, 1,490 of which are employed. The unemployment rate is notably higher amongst Indigenous people compared to the non-indigenous working-age population.
In Prince Edward Island, approximately 96% of the population identified English as their first official language (2021 Census) or the language spoken most often at home, while 3% of the population spoke French most often at home. Just under 1% identified a first language that was neither English nor French. (2021 Census)
Recent immigrants (those arriving between 2016 and 2021) accounted for 41% of the Island's immigrant population in 2021. The pace of new arrivals has increased significantly in recent years, particularly as the province has relied on immigration to fill labour market gaps.
According to the 2017 Canadian Survey on Disability, there were 12,570 persons with disabilities participating in the P.E.I. labour force.
In 2020, about 7.6% of Island residents experienced low income. This is on par with the other Atlantic provinces, on average. The share of persons in this low-income class declined considerably (by -4.7 percentage points) from the previous year when 12.3% of the province of P.E.I. experienced low income. Tighter labour market conditions and labour shortages coupled with record employment levels helped contribute to this reduced incidence of low income.
Labour Market Conditions
Employment grew sharply (3.5%)
Unemployment declined significantly (-10.1%)
Participation rate increased (64.7% to 65.1%)
Employment rate rebounded (57.9% to 59.1%)
Province's Unemployment Rate
Show data table: Unemployment Rate
|Unemployment Rate (%)|
- The Island's labour force and employment bases reached record levels in 2022 and both well surpassing their pre-pandemic 2019 levels. At 5.4%, the Island led the country in employment growth, having outpaced that national average by 1.4 percentage points.
- The number of persons unemployed on the Island declined for the second consecutive year, having contracted by nearly 20% in 2022 which helped to correct for the surge in unemployment caused by the pandemic in 2020. The Island's unemployment rate fell to its lowest annual rate on record, at 7.6% in 2022.
Province 's Economic Drivers in 2022
Show data table: GDP Growth Rate
|GDP growth rate (%)|
- The Island's population base in 2022 rose by an annual record growth rate of 3.6%, driven by international immigration and to a lessor degree net positive inter-provincial migration. The Island led the country in population growth in 2022.
- International demand for Island-based products so far this year was strongest for frozen food products; followed by durable goods products associated with pharmaceutical and aerospace-related manufacturing.
- P.E.I. investment in residential and non-residential building construction declined in 2022, by 15% from a record high in 2021. The decline was largely concentrated in single dwelling investment but was partially offset by a 21% increase in multiple dwelling investment. Elevated inflation and rising mortgage rates have impacted housing affordability in the province.
- With respect to PEI's economic prospects moving forward, the Conference Board of Canada projects that the Island economy will expand by just 0.9% in 2023, following an estimated 2.7% performance in 2022. The Island economy in 2023 will continue to benefit from recognizable drivers such as population growth and construction activity, and a rebounding tourism sector.
Risks to the province Economy in 2023
- Elevated inflation and further rises in interest rates will erode disposable incomes and increase household debt burdens. The tightening of consumer budgets will likely cause retail sales volumes to decline among other services. However, continued population growth will create some new consumer demand which should help moderate the impact of high inflation and interest rates on retailers. Further to this, the degree and longevity of higher interest rates will discourage business investment and thus soften economic growth prospects.
- Geopolitical unrest and ongoing supply chain disruptions may impact trade, particularly export markets. For P.E.I., the Conference Board suggest that if countries like the U.S. look to strengthen their local supply chains and markets, demand for Island exports could be affected as a result.
Labour shortage remains a chronic issue across the broad spectrum of skilled and unskilled occupations in the province from health care professionals and construction workers to lower skilled fish plant workers and housekeepers. In an effort to address shortages and unfilled vacancies, the provincial Occupations in Demand immigration stream was introduced and designed to help employers fill vacant positions that they are unable to fill locally.
The province continues to contend with considerable health care pressures due to the lack of staff and overcapacity issues, resulting in closures to emergency room services, clinics, etc. Growing health care needs driven by the aging population and strong immigration is expected to keep pressure on the Island's health care system. Initiatives aimed at alleviating pressures include offering targeted recruitment incentives like free tuition for the Resident Care Worker support program and recruitment efforts through the Healthcare Priorities Pilot Program. Financial incentives to recruit and stabilise the healthcare workforce have also been implemented.
Lack of affordable housing is another major issue in the province perpetuated by strong immigration growth which makes attracting and retaining workers difficult. Construction of single dwellings in the province peaked in 2021, but has since slowed in part due to rising mortgage rates and inflationary pressures, which has made owning a home less affordable. By contrast, construction of multi-unit complexes increased due to the strong market demand for rentals which has put downward pressure on the rental vacancies, which has resulted in rent increases. Developers have indicated that obtaining land zoned for multi-unit construction has also become more challenging. An initiative to address the affordable housing issue, the province, in partnership with Holland College and the Construction Association, are working to construct tiny homes for those on the social housing registry.
Show data table
|Industry (NAICS)||Employment Change ('000s)|
|Professional, scientific and technical...||0.7|
|Health care and social assistance||0.7|
|Information, culture and recreation||0.5|
|Other services (except public administration)||0.4|
|Accommodation and food services||0.4|
|Business, building and other support...||0.0|
|Finance, insurance, real estate, rental...||-0.1|
|Wholesale and retail trade||-0.4|
|Forestry, fishing, mining, quarrying, oil and gas||-0.7|
|Transportation and warehousing||-0.7|
- The construction industry proved resilient throughout the pandemic and 2022 was no exception. The industry continues to be supported by strong residential and non-residential construction activity. Total housing starts in the province rose by nearly 5% in 2002 - reaching the second highest level on record - driven entirely by construction of multi-unit complexes. Indeed, the level of employment in the industry reached a record high in the province in 2022. All indications point toward robust construction activity in 2023, driven by continued housing development to support population growth. Construction repair activity will also be a strong point following the aftermath of Hurricane Fiona. A limiting factor, however, continues to be labour shortages and unfilled vacancies across the industry.
- The Island's tourism sector in 2022 made considerable headway in its recovery from the pandemic. In the absence of health restrictions that limited recovery in the previous two years, tourism traffic (via air, bridge and ferry) and the number of overnight stays surged in 2022. This in turn benefitted the accommodations and food industry which experienced employment growth of over 9% in 2022. Recovery should escalate in 2023 given an early injection to winter tourism from hosting the 2023 Canada Games in February; and expectations for another robust tourist season. A limiting growth factor will be the ability for employers to find enough workers in light of chronically tight labour market conditions since the pandemic.
- Manufacturing activity has been robust throughout 2022, supported by surging shipments of both durable and non-durable products - both of which were at all-time highs, by value. Furthermore, this builds on record-level shipments experienced in 2021. Manufacturing employment increased by nearly 20% in 2022 to reach a record level. Looking ahead to 2023, current indications suggest manufacturing and export activity should continue to support economic growth in the province, however, ongoing labour challenges and the possibility of a recession are limiting factors.
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