B.C.’s economy is set for a flurry of investment spending as major projects in the province get underway and construction ramps up.
The latest Statistics Canada Capital and Repair Expenditures Survey shows growth in capital spending intentions of 12.9% this year to nearly $34 billion, marking a third straight year of significant growth. This was the strongest increase among provinces and compared with a national gain of 2.5%.
Capital investment intention growth for 2019 is driven by an 18% increase in construction intentions to $22.6 billion and a 4% increase in machinery and equipment investment to $11.4 billion. While capital intentions could be thrown off by changes in the economic landscape or other shocks, the latest figures point to strong investment plans in the province, which will boost economic growth and partly offset a housing-sector downturn. There is also upside risk as government project announcements were delayed into 2019.
Several projects underway or announced include LNG Canada’s liquefied natural gas plant and associated Coastal GasLink pipeline, the Site C dam, the Pattullo Bridge replacement and the St. Paul’s Hospital replacement. Industry growth is driven by utilities (up 21% from 2018 levels to $4.8 billion), transportation and warehousing (up 35.6% to $7.6 billion) and public administration (up 14% to $4.2 billion). These industries accounted for about 86% of the net gain.
The latest Survey of Employment, Payrolls and Hours (SEPH) results pointed to mild improvement in the labour market in December. Average weekly earnings edged up 0.1% from November to $982.21, which was in line with the national performance. A significant drop in average hours worked for hourly employees from 29.3 hours in November to 28.4 in December likely reflected some weakness in the holiday shopping season and labour availability. B.C. wage earnings growth exceeded that of most other regions with five provinces posting declines in wages over the period. Strong growth in Quebec and Newfoundland and Labrador propped up the national reading.
Still, year-over-year growth in B.C. was the fourth highest among provinces at a solid 2.6% in December. While growth in B.C. peaked in mid-2018, employers are still scrambling for workers, given an unemployment rate below 5% and high levels of job vacancies.
B.C. payroll counts rose 0.1% from November compared with a 0.1% national decline. Year-over-year growth remained strong at 2.6%. For 2018, SEPH payroll counts rose 3.6%, the highest increase in the country. This also far outpaced estimated employment growth of 1.1% from the more often watched Labour Force Survey. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.