Earnings rise as job vacancy growth slows

Non-farm payroll data pointed to solid labour market conditions in July, albeit with soft patches within various sectors.

Average weekly earnings edged higher on a month-to-month basis by 0.1% to $993.67 with year-over-year growth a modest 2.2%.

Year-over-year gains are in line with inflation but have eased in recent months. This is partly due to job-market composition. Goods-sector earnings growth fell to 1% in July to $1,257.21, reflecting declines in resources and utilities, partly owing to the forestry industry downturn. In contrast, service-oriented weekly wages rose 2.8% year-over-year, but average wage earnings are lower at $941.67.

Among service sectors, growth has been mixed, with stronger growth in education (up 9.1%) and professional/scientific/technical services (up 3.9%) and solid growth in trade (up 2.3%) and transportation (up 2.9%). Fixed weighted average earnings, which adjust for industry composition and full-time/part-time composition, firmed to 2.6% year-over-year.

Hiring also picked up with non-farm payrolls rising a significant 0.7% from June to 2.35 million persons, and 3% above year-ago levels. Similar patterns to weekly earnings include weaker growth in goods-producing sectors at 1.9% year-over-year, due to contraction in forestry employment. Services-sector growth of 3.5% was led by gains in education of 11% year-over-year in July, a near 5% gain in professional/scientific/technical services and in health care/social services and a 6% gain in accommodations and food services.

While lagging behind the payroll data, job vacancy pressures in B.C. abated during the second quarter. Statistics Canada’s Job Vacancy and Wage Survey estimated 108,115 vacant positions, marking a 2.2% gain from the same quarter in 2018. This slowed from a 10% increase the previous quarter. Outside the Thompson-Okanagan, which posted a 2.7% year-over-year decline, job vacancies rose across B.C. from a year ago. Specifically, vacancies were up 9% in the Cariboo and 14% in the North Coast and Nechako, which may reflect hiring for major projects such as LNG Canada’s Kitimat plant and related pipeline. Vacancies in the Lower Mainland-   Southwest were up 2.3%.

Health services, natural and applied sciences and technical services posted some of the strongest gains while vacancies among trades and resource-oriented occupations declined.

Nevertheless, B.C.’s job vacancy rate remained highest among provinces, pointing to deeper labour shortages relative to provincial peers.  

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