Wage-earning momentum picked up in December, adding to a firming trend over the past year. Average weekly earnings in B.C. rose 0.6% from November to a seasonally adjusted $956.91, with year-over-year growth at 2.6%, to outperform most other provinces.
Wage earnings in the goods sector led the provincial pickup with a 4.4% increase from November, reflecting strong growth in higher-paying sectors such as resource extraction, utilities and manufacturing.
While reflecting various factors, including hours worked and compositional factors, December gains were largely led by wage growth, particularly among salaried workers. The fixed-weighted index of hourly earnings jumped 3% on both a year-over-year and monthly basis. Reversion in wage growth is likely in January, but the trend is positive. A three-month average of wage levels showed a gain of about 3% from one year prior. Underlying wage inflation is on the rise, aligning with an unemployment rate below 5% and a high job vacancy rate.
Boding well for 2018 economic growth, B.C. private and public organizations reported a surge in non-residential capital expenditures (capex) in 2017 with mild growth intentions this year. Robust growth in B.C.’s economy, driven by export and consumer demand, improved energy market conditions and government spending, factored into a rebound in construction investment and a rising trend for machinery and equipment investment.
Total capex accelerated to $31.87 billion in 2017, up 20.9% from 2016. This was the strongest gain since 2006, and the highest in dollar-volume terms, not accounting for inflation. Two-thirds of expenditures were on construction (building and engineering), with the remainder being machinery and equipment (M&E).
Construction drove 2017 gains with a 32% increase to $21.4 billion after two years of declines, aligning with a surge in non-residential building permits during the year; the resulting projects will continue to build out through 2018. Drivers of growth included a 51% increase in the oil and gas extraction sector, contributing to a third of the net construction increase. Transportation and warehousing capital expenditures more than doubled to over $4 billion, and public sector construction also surged. M&E rose 2.8% last year to $10.4 billion, with the most significant gains occurring in the mining and quarrying sectors, wood product manufacturing and paper manufacturing. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
