Another week, another solid showing for B.C.’s economy.
Average weekly earnings in B.C. edged higher from January by 0.1%, holding steady near $958 in February, according to Statistics Canada’s survey of payroll employment, earnings and hours. Driving the gain was a solid 0.8% increase in the goods-producing sector, as the higher-paying mining and energy, utilities and manufacturing sectors gained. Offsetting this were flat services-sector earnings, which were dragged down by lower real estate, rental and leasing earnings (down 4.5%).
Year-over-year growth remained near 3%, but the trend has lost momentum in recent months. This is in contrast with recent acceleration in hourly wage rates observed in the Labour Force Survey.
Given a persistently tight labour market and a sub-5% unemployment rate, upward wage momentum is forecast. Central 1 Credit Union expects wage growth of more than 3.5% this year and next, and a 4% increase in 2020.
Meanwhile, non-farm payroll counts rebounded 0.4% in February following a January decline. The strongest growth was observed in the information and culture industries (up 1.5%), which includes a subset of the fast-growing tech sector, management of companies (up 3.3%) and arts, entertainment and recreation (up 1.3%).
Declines were observed in forestry and health care. With February’s gain, year-over-year growth remained exceptionally strong at 3.8%. B.C. continues to outpace the rest of the country, with national growth considerably slower at 2.2%.
In the construction space, non-residential investment is gaining traction and looks to be a nice counterweight to an expected slowdown in housing later this year. Investment in non-residential building rose 3.2% (seasonally adjusted) in the first quarter for a fourth straight quarterly advance. Last year’s 25% surge in related building permit volume is translating into bricks-and-mortar construction.
Demand for new construction reflects strong economic growth and high levels of capacity use, which has curtailed office vacancy rates and boosted demand for warehouses and other types of properties. Fiscal stimulus and government spending are also providing a boost.
Quarterly investment rose a modest 5.5% from a year ago, led by a surge in industrial investment (30%) and government projects. While still within the broad range observed in 2005, strong building permit volume points to further growth through 2018.
Annual growth of 10% is forecast after last year’s 7% decline. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
