B.C.’s labour market cools off in December

B.C.’s labour market capped off 2018 with a flat December.

Employment edged up from November by a statistically insignificant 0.2% or 4,400 persons to 2,535,000 persons. The unemployment rate was unchanged at a scant 4.4% and lowest among provinces by a full percentage point.

The Vancouver census metropolitan area lagged behind the rest of the province in December, with employment down 0.6%, while the unemployment rate rose to 4.8% from 4.3%.

Despite little in the way of headline change, trends remained firm. Employment surged through the second half of 2018 by more than 70,000 persons following a first-half contraction and lifted year-over-year growth to a moderate 1.8% in December. Full-time employment has accounted for most of the gains in 2018.

Recent employment gains have been buoyed by expansion in the labour force with rising population and a higher participation rate. With the unemployment rate near record lows and high job vacancy rates, hiring has been constrained by the pool of available labour.  Wage growth has slowed from a breakneck speed of more than 5% year-over-year during the summer months to 1.7% in December, but this slowdown may be temporary given clear signs of labour shortages.

With December in the books, average annual B.C. employment came in at 1.1%, slowing from the 3.7% increase in 2017. After leading the country in 2017 by a strong margin, employment growth fell to mid-pack; however, with an average unemployment rate of 4.7%, the labour market remained the tightest in the country.

According to the latest Canadian Federation of Independent Business Business Barometer, Canadian small and medium-sized business optimism cratered in December. The index sank 7.6 points to 53.6 points, marking the lowest level since March 2016 and the sharpest one-month decline since the height of the global financial crisis in October 2008. The latest setback to confidence largely reflects a sharp deterioration in Alberta that was likely triggered by a crash in the export price of Canadian oil. The steep decline caused another crisis in the oilpatch and reverberated through the supply chain and across provincial borders.

B.C. sentiment retreated three points to 60.1 points but remained above the recent low of 56 points in August and well above the national reading. Despite the shallow index level, conditions remain solid. Full-time hiring plans are still firm with 23% of respondents looking to hire and only 12% looking to cut jobs. B.C. businesses continued to cite labour availability as a key constraint to production growth. •

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