Employment and unemployment rates were largely unchanged in B.C.’s labour market during February, extending a recent stall.
Seasonally adjusted employment slipped 3,400 persons in February from January, which was statistically insignificant. However, full-time employment fell 28,500 persons while part-time rose 25,200 persons. Both changes were significant. Full-time employment in February fell to its lowest level in more than one year, while part-time employment reached a new high, though not as a share of total employment.
The unemployment rate edged lower to 4.7% and represented no material change.
Flat employment could be due to labour supply issues rather than labour demand. The labour force participation rate hit a high at 65.7% of the population 15 years and over in June 2017, and it has since declined to 65%. Accordingly, labour force growth has stalled, and with it, employment. Demographics could be overriding cyclical forces attracting workers into the labour market. A lack of demand is unlikely the cause, given positive readings among other economic indicators.
Our forecast calls for a 2% employment gain for the whole year, following a 3.7% increase in 2017, with an unemployment rate of 4.5%.
Meanwhile, Multiple Listing Service sales in the Abbotsford-Mission and Vancouver regions sank like a stone in February as the full effects of the federal mortgage rule tightening materialized and pre-provincial budget policy uncertainty made some buyers skittish. Year-over-year sales fell 6% to 3,530 units compared with a 22% gain in January. Seasonally adjusted sales fell 15% from January.
Offsetting strong economic fundamentals, stress tests on conventional mortgages in effect since January 1 constrained financing capacity for first-time and low-equity buyers. Buyers previously able to afford higher prices have been forced to scale back their expectations, with others delaying purchases.
A further headwind was uncertainty about provincial budget housing policies, which ultimately included a speculation tax, hikes to the foreign-buyer tax and tax increases for homes above $3 million. These measures will further cool sales in the months to come. New listings bounced higher but remained below historical norms for February, while active listings or month-end inventory continued to hover near historical lows to maintain seller’s-market conditions, though momentum waned. The constant-quality benchmark home value rose 0.7% from January to a seasonally adjusted $995,700, and 19% from same-month 2017. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
