In an inauspicious start to 2018, B.C.’s labour market softened alongside the rest of the country in January with a drop in employment of 5,100 persons (or 0.2%) and a rise in the unemployment rate to 4.8% after touching a 10-year low of 4.6%.
But as has often been the case in recent years, B.C. still outperformed the nation, which suffered an employment slump of 0.5%, led by Ontario.
Below the surface, B.C. labour market data remained firm and arguably the strongest in the country. Losses were entirely in part-time positions (9,200 persons), reversing a prior-month gain and offseting a rebound in full-time employment tenure of 4,100 persons. Higher-paying goods-producing sectors, including utilities, construction and manufacturing, largely offset weakness in some lower-paying service sectors.
On a 12-month basis, employment in B.C. rose 2.4%, just below Prince Edward Island’s country-leading employment growth, while the unemployment rate has consistently been lowest among provinces. Average hourly earnings of combined full- and part-time workers have picked up since the fall, tracking more than 3% growth year-over-year.
Strong labour market conditions are expected to continue with average employment growth of 2% and a downward drift in the unemployment rate to 4.5%. Hiring will be driven by a 3% economic growth rate. Wage inflation will pick up with the scant unemployment rate.
Businesses also face significant minimum-wage hikes, including a $1.30 increase to $12.65 on June 1, the first phase in a move to $15 by 2021. Expect businesses to adjust through various measures, including wage pass-through to prices, limiting hours, automation and cost absorption.
Meanwhile, non-residential building permits ratcheted back in December but maintained a positive trend heading into 2018. December dollar-volume permits reached a seasonally adjusted $333 million, down 17% from November but up 41% from same-month 2016. On an annual basis, permit volume rose 24% from 2016 to $4.2 billion to eclipse the most recent high – at least in nominal terms – of $4 billion in 2012. Rising permits likely reflect a combination of factors, including a stronger business investment due to strong consumption and export growth, as well as investment by the government in areas such as education. Strong permit growth in 2017 points to a strong contribution to economic growth from building construction in 2018. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.