B.C. employment nudges up in January

B.C. employment rose for the third straight month in January and the sixth time in seven months. Total employment rose to a seasonally adjusted 2.54 million persons, up 0.3% or 8,700 persons from December. Year-over-year employment was up a solid 2.5% or 61,900 persons. In comparison, national employment rose 0.4% from December and 1.8% year-over-year.

While January’s provincial headline numbers marked a solid start to the year, details were on the soft side. Full-time employment fell for the third time in four months, falling 0.7% (13,900 persons) from December. Relatively lower-paying service positions were partly offset by losses in the higher-paying construction and resource sectors. B.C.’s unemployment rate edged higher to 4.7% from 4.4% as labour force participation climbed. Nevertheless, B.C.’s jobless rate stayed the lowest among provinces, underlining persistent labour shortages.

Hourly-wage growth accelerated from a 1.7% year-over-year pace in December to 2.3% in January but was well below peak growth of about 5% in the first half of 2018. Wage growth is somewhat disappointing given labour market tightness, but it could reflect job composition, increasing gig work and employers being unable to hike wages due to retail competition. That said, competition for talent is expected to drive wage acceleration.

Multiple Listing Service (MLS) sales in the combined Metro Vancouver and Abbotsford-Mission region fell by 38% year-over-year to 1,860 units, compared with a 45% drop in December. This marks the fewest January sales since 2009, when a paltry 1,132 units sold. On a seasonally adjusted basis, we estimate that sales fell from December by 2%.

After a brief respite during the fall months, sales fell again in late 2018. Mortgage stress tests, higher interest rates and provincial tax policies have undoubtedly curtailed demand over the past year. While the economy and population growth remain firm, falling confidence in the housing market will likely further entrench the downturn.

Sales-to-active-listings ratios are in the buyer’s-market territory. The weakest conditions are in the detached market with a sub-10% ratio, but the apartment and townhome markets have also cooled sharply.

Home values continue to melt with weak demand. The average MLS price fell 4% from December to $858,122 and 6.5% year-over-year. While sales composition is a factor with average values, the MLS constant-quality housing price index (HPI) is declining. The composite HPI fell 1.4% from December and was down about 7.5% from the mid-2018 peak. Year-over-year the HPI fell 3.3%.

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