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Spending data firms up B.C.’s growth picture

Newly released data has confirmed another year of strong growth for the B.C. economy. Real gross domestic product expanded by 3.8%, which was second strongest among provinces behind Alberta and surpassed the national pace of 3%.
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Newly released data has confirmed another year of strong growth for the B.C. economy. Real gross domestic product expanded by 3.8%, which was second strongest among provinces behind Alberta and surpassed the national pace of 3%. This marked an acceleration from 2016’s 3.2% expansion.

Consumer expenditure was a highlight of 2017 with growth of 4.6%, up from 3.4% in 2016.  Strong job growth, elevated housing market activity and population growth were key contributors to new vehicle sales and broad demand for goods and services for the year.

Investment in non-residential structures jumped 30% and drove growth in economic output. This increase was attributed to the oil and gas industry’s construction of the Saturn compressor facility expansion and Towerbirch pipeline expansion projects in Dawson Creek. Government capital investment increased sharply by 24% from 2016. Inventory accumulation also added to growth, while residential investment was virtually unchanged.

Real export growth came in slightly higher than in 2016 at 3.4%. Gains were driven by a strong pickup in service exports to international markets (up 8.3%), reflecting tourism demand and other professional service activities. Real imports rose by 8%, owing mostly to goods inflows. The gains reflect the demand environment for consumer durable goods like vehicles and appliances, and equipment to facilitate business investment activity.

Sluggish home sales continued through October in the Lower Mainland, with buyers and sellers unable to find common ground. With buyers’ boots anchored by federal lending constraints, provincial government policy measures and rising interest rates, activity has been dormant. Home sales in the combined Metro Vancouver and Abbotsford-Mission areas fell 35% on a year-over-year basis to about 3,100 units. Detached-home sales have picked up in recent months but remain subdued, while apartment sales eased.

Low sales and increased listings have pushed inventory higher, albeit at the modest level witnessed in mid-2015. A rise in the apartment and townhome sector may reflect new multi-family units and investment properties entering the market, reflecting a softer pricing environment and restrictive rental market policies.

The sales-to-active-listings ratios continue to indicate a buyer’s market in the detached sector, with balanced conditions for apartments and townhomes. That said, declining momentum in the latter will erode prices.

The average home value for all units rose for a second straight month in October to $926,450, up 1.3%. •

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