In a sign that a tight labour market is lifting household incomes, average weekly earnings in B.C. jumped 0.4% from February to $962.44 in March, with year-over-year growth holding steady near 3%. Nationally, growth was comparable at 3.1%, year-over-year.
Growth was mixed among sectors. The goods-producing sector reversed February’s gains with a 0.9% decline from February despite a surge in forestry and logging pay. In contrast, weekly earnings in the services-producing sector rose 0.8%, led by wholesale trade (up 2.4%), arts, entertainment and recreation (up 10%), and the real estate, rental and leasing sector (up 3.6%).
The latest uptick in weekly earnings helped to maintain a moderately strong growth trend, which held near 3% year-over-year, despite monthly volatility. A firm housing market (at least until recently) and growth in service export sectors have contributed to gains in sectors like real estate/rental/leasing (up 13%), managerial services (up 16%), trade (up 7%) and utilities (up 11%).
Solid growth in the economy and a low unemployment rate will continue to support brisk wage growth in B.C. That said, wage earnings dependent on real estate will ease due to a downturn in home sales.
Aligning with rising earnings was strong growth in the non-farm payroll count, which surged 0.4% from February and 4.2% from a year ago to lead all provinces. Year-over-year growth has trended above 3.8% since late 2017. The strongest gains have been observed in utilities, wholesale trade, information and culture, management of companies, arts, entertainment and recreation and accommodations and food services.
Despite a sharp erosion in recent sales activity, housing’s contribution to growth was strong in the first quarter. B.C. residential construction investment jumped 16% on a year-over-year basis to a record-high $6.17 billion, up from a 10% gain during the fourth quarter. This was the third-highest gain among provinces and compared to a national increase of 8%. Seasonally adjusted, B.C. residential investment rose 3% from the fourth quarter.
Growth reflects strong housing starts in 2017 and early 2018, and record numbers of units already under construction. New dwelling units accelerated from a 6% year-over-year pace in the fourth quarter to 17% in the first quarter of 2018, with broad gains in single-detached and multi-family activity. Renovation spending growth was steady at 6%. New construction made up more than half of total investment activity, with renovations representing about a third.
Residential investment growth is expected to decelerate as starts ease and renovation spending growth cools.•
Bryan Yu is deputy chief economist at Central 1 Credit Union.