As with the national performance, B.C. employment fell in July.
Employment declined by 4,800 persons, or 0.2% from June, to just under 2.57 million persons owing to a sharp decline in full-time employment as part-time hiring increased. Private sector hiring retrenched, marking a third consecutive decline after strong early-year gains. Public sector employment rose, while self-employment dipped. Metro Vancouver accounted for the entirety of the pullback employment, slumping by 5,600 persons or 0.4%.
Goods-producing sectors led July’s pull back, including utilities (down 12% or 1,600 persons), natural resources (down 5.6% or 2,500 persons) and manufacturing (down 2.5% or 4,200 persons).
While July’s numbers were a mild disappointment, it is hard to be too critical of B.C.’s labour market. Twelve-month employment growth came in at 3.8%, with hiring up sharply in both the private and public sectors. The unemployment rate edged down further to 4.4% as fewer people looked for work, but B.C.’s rate has consistently been the lowest in the country as employers are short of skilled workers. Metro Vancouver unemployment came in at 4%. Average hourly wages rates in the province also accelerated to a 3.5% year-over-year rate. A slowdown in the broader economy and resource sector is forecast to pare annual employment to a still solid 2.5%.
The deep freeze in the Lower Mainland housing market may finally have thawed with the summer heat. Sales picked up in July as mortgage rate cuts, declining prices and strong labour market likely spurred sales. However, federal mortgage stress tests continue to constrain sales.
In a month when sales typically decline, July sales surged 18% from June and 15% year-over-year. The latter was the first year-over-year gain since January 2018. While the sales cycle bottom has passed, levels remain soft with seasonally adjusted sales at a level last seen in 2014.
Higher sales and easing new listings have lowered inventory. New listings have declined in recent quarters as sellers have held off in listing properties given weakness in demand. Outside of speculators, and those going through various life changes, households generally do not need to sell given strength in the labour market and growth in the economy.
The sales-to-active listings ratio – a measure of relative supply and demand conditions – rose to the highest level in more than a year, becoming more consistent with a balanced market. Nevertheless, home prices declined further in July. The unadjusted average value fell 1.3% from June to $880,400 and 5.4% year-over-year. The benchmark value posted a drop of 0.4% from June and 8.4% year-over-year. In both cases, the rate of decline has slowed.
While further price declines are expected, low borrowing costs, decent growth in the economy and a rising population will provide support to homeownership demand despite persistent market headwinds.
Bryan Yu is deputy chief economist at Central 1 Credit Union.