The arrival of the holiday season and approach of a new calendar year provides an opportunity to look back and evaluate economic conditions and developments over the past 12 months.
For B.C., 2017 was another year of strong economic growth, with the durability and strength of the expansion surprising most pundits. Below we touch upon a few of the most salient economic developments of the past year.
Perhaps most notable is the degree to which B.C.’s economic momentum surprised on the upside. At the beginning of the year, the consensus outlook from the province’s Economic Forecast Council was for the B.C. economy to grow by a respectable 2.3%. But as the year unfolded it became evident the economy continued to hum along at an above-average pace. A few weeks ago, the forecast council met again in advance of the 2018 provincial budget: the updated assessment from this group of 15 forecasters now suggests B.C.’s economy is on course to expand by a much healthier 3.4% this year. Assuming this estimate is close to the final official number, which Statistics Canada will release next year, 2017 will mark the fourth consecutive year economic growth has exceeded 3% and the third year B.C. has topped the provincial growth rankings.
Looking back over the past year, the strength of the provincial job market is even more notable.
When the final numbers for 2017 are released in early January, they will confirm 2017 saw one of the strongest employment gains in recent history, with the number of people working in the province jumping 3.6%. This pace is twice the national average and well ahead of all other provinces. Growth of this magnitude translates into a net increase of 85,000 jobs in B.C. in 2017. Remarkably, this rise follows a similar-sized gain in 2016, when the number of people working in the province rose by 73,000. These are very significant advances considering that in the decade prior to this two-year upswing, annual job gains averaged around 20,000, with a few of the largest annual net increases being between 30,000 and 35,000.
The corollary of the strong job growth is a significant tightening of the labour market. A year ago, B.C.’s unemployment rate stood at 5.8%. Over the past year, the proliferation of new jobs pushed the jobless rate steadily lower to just 4.8% as of November. This is among the lowest rates of unemployment recorded in the province. The last time B.C.’s jobless rate was this low was a decade ago during the boom period in the run-up to the 2010 Winter Olympics. But apart from this brief period, historically unemployment rates below 5% are unusual.
Around Metro Vancouver, the growing number of help-wanted signs displayed in storefront windows reflects the emergence of tighter labour market conditions. This anecdotal evidence is supported by Statistics Canada’s Job Vacancy Survey. Most recently, B.C.’s overall job vacancy rate reached 4%, up from 3.5% the previous year. This proportion of unfilled jobs is the highest of any province. Nationally, the comparable vacancy rate is 2.9%. The fact that job vacancy rates have risen in all regions of the province and, with just a couple of exceptions, vacancy rates are higher across all industry sectors is further confirmation of the strength of B.C.’s job market and that hiring challenges are set to become a greater challenge for employers across the province.
The retail sector also points to robust economic conditions that prevailed in 2017, as it enjoyed some of the strongest sales gains on record.
The total value of retail spending in 2017’s third quarter surged by 11% compared with the same period last year. Increases of this magnitude have not been recorded in B.C. since 1994. Here the strength of the residential real estate sector has helped underpin the impressive surge, as sales at building supply stores have been particularly strong. An unprecedented 25% increase in sales at motor vehicle dealers was also recorded in the third quarter of this year.
In short, a quick review of a few of the most important economic indicators confirms 2017 was a good year for B.C.’s economy and workers in the province.
Looking to next year, however, considering B.C.’s economy has grown well above potential for a number of years and outsized job gains have pushed the unemployment rate down to the point where skill shortages will become more widespread, the economy is poised to moderate in 2018. Although B.C.’s economy will remain on a solid growth path, businesses and policy-makers should be alive to the fact that economic conditions in 2017, and the past few years more generally, are as good as it gets.•
Jock Finlayson is the Business Council of British Columbia’s executive vice-president and chief policy officer; Ken Peacock is the council’s chief economist.