Province’s energy export volumes up as prices fall

B.C. international merchandise exports steadied after a sharp April pullback. Unadjusted exports fell 0.7% year-over-year to $3.86 billion in May, but improved from April’s 2.2% decline.

Adjusting for seasonal factors, we calculate a 5% month-to-month increase in April following a 10% drop the prior month. Year-to-date exports were virtually unchanged.

Weaker sales of energy, which in B.C. primarily includes coal, natural gas and electricity, were the main drag. Year-over-year energy sales fell 31% in May and 14% year-to-date. However, this owed entirely to export prices, with shipments of natural gas rising about 6% and coal shipments increasing by 10%.

Excluding energy, year-over-year growth was 12%, with year-to-date sales up 5.6% through May.

Growth in the U.S. and other markets and a competitive exchange rate are supporting underlying export demand. Metal and mineral demand has been robust, potentially reflecting inventory accumulation during the period in which Canada was exempt from U.S. steel and aluminum tariffs. Forestry exports were also solid. Trade uncertainty will remain a hot topic. The latest data has yet to incorporate the impact of metals tariffs, but the effect is expected to be minimal for B.C. A related concern is the trade dispute between U.S and China, which may further intensify and slow broader economic growth – and, by extension, demand for B.C. exports.

Total Multiple Listing Service (MLS) sales in the Metro Vancouver and Abbotsford-Mission region fell 40% year-over-year to 3,850 units in June, compared with a 35% decline in May. This was the lowest June sales count since 2012.

June’s pullback was led by a sharp 10% decline in the region south of the Fraser River.

Credit constraints continue to weigh. Mortgage lending stress tests and rate hikes have cut borrowing capacity and priced some prospective buyers out of the market.

As a result, inventory is increasing, with month-end listings rising 38% from a year ago to the highest level, seasonally adjusted, since mid-2015. Sellers are finding more competition in the market as more buyers are sitting on the sidelines.

The detached market is firmly favouring buyers; conditions are also cooling in the multi-family market. While lack of inventory is keeping the sales-to-listings ratios at levels favouring sellers, downward momentum signals the approach of a flatter price trend.

The average MLS price fell 1.7% from May to $955,620, with year-over-year growth at 2.2%. •

Bryan Yu is deputy chief economist at Central 1 Credit Union.