Labour market momentum slipped in September with estimated B.C. employment falling by 6,700 persons or 0.3% from August. Employment has eased over the last three months, pointing to weaker hiring. Nonetheless, year-over-year growth in B.C. was strongest in the country by far at 3.6% compared with a national reading of 1.8%.
September’s employment pullback reflected a decline in part-time positions that offset a rebound in full-time growth. Half of the 16 industry groups added jobs, but net losses were concentrated in construction and agriculture, as well as in the professional/tech and information and culture service sectors. September’s dip came outside the Vancouver census metropolis area.
With strong hiring patterns, labour supply is increasingly an issue. The unemployment rate, at 4.9%, was the lowest since September 2008 and was posted at a time of high labour force participation and employment-to-working-age population rates. This could be keeping employers from finding an appropriately skilled workforce, while also contributing to higher wages. A decline in net interprovincial migrants to B.C. due to strengthening economic conditions in other provinces is not helping matters. Short-term labour constraints could affect growth, and expedite a rotation to productivity-enhancing technology.
A softer employment picture is forecast for the rest of the year, holding growth to about 3.5%. Employment growth is expected to fall to 1.9% in 2018.
The Lower Mainland and Victoria housing markets, meanwhile, remained highly active in September. While a strong economy and tight market conditions underpinned sales, recent interest rate hikes and prospects of further tightening in residential mortgage policy later this year likely led some buyers to speed up their purchases to lock in pre-approved rates.
Multiple Listing Service sales in the Lower Mainland rose 25% year-over-year in September, up from 18% in August. While primarily reflecting a drop in sales a year ago after enactment of the foreign-buyer tax, seasonally adjusted sales climbed from August. The sales-to-active-listings ratio, already entrenched in a seller’s market, rose.
Divergence between a near-record sales pace and strong seller’s-market conditions in the multi-family market and a weaker detached market have reflected ongoing effects of the foreign-buyer tax on higher-priced homes. The benchmark home price index rose 24% year-over-year for apartments, 15.5% for townhomes and 6% for detached homes. Upward price momentum will likely continue into 2018.
Bryan Yu is deputy chief economist at Central 1 Credit Union.