B.C.’s payroll counts dip slightly in August

B.C. non-farm payroll counts in August gave back a portion of the increase recorded in July.

Total payroll counts fell 0.3% to 2.35 million persons following the prior month’s 0.8% gain. Despite the dip, the underlying growth trend remained positive. Year-over-year growth at 2.5% exceeded the national increase of 2.1% and was second only to Quebec’s 3.1% increase. Despite signs of slowdown in the export economy and consumer demand, employment growth generally remains firm.

Growth in year-over-year payroll counts has been led by a 3% increase in service industries, specifically a 9% gain in educational services, a 4.3% gain in professional, scientific and technical services and a 5% increase in health services. Broad weakness in goods-producing sectors, which rose 1.3%, was largely driven by a 9.5% drop in forestry and logging employment.

It is noteworthy to juxtapose these payroll counts estimated via the Survey of Employment, Payrolls and Hours with employment from the timelier Labour Force Survey. The latter has deteriorated since May. Year-over-year gains were a disappointing 1.3% in September.

B.C. sawmill production showed no improvement in July as mills continued to slash production as the sectoral recession deepened. Aligning with negative manufacturing data, softwood lumber production declined to 1.8 million dry cubic metres, marking a 26% year-over-year decline from same-month 2018. Year-over-year production has declined for 11 straight months.

There is little evidence to suggest a turnaround in the second half of the year. Lumber prices have continued to trend 30% below year-ago peaks; pulp prices are also lower. U.S. housing starts have failed to generate meaningful traction despite low mortgage rates. Meanwhile, B.C. mills have faced rising costs and an insufficient supply of timber due to the long-term effects of the mountain pine beetle infestation. Multiple mills have closed while others have scaled back shifts to maintain employment.

Year-to-date mill production is down 19% through 2019’s first seven months and at the current rate is forecast to be down 20% on the year – a touch above the previous low in 2009, when the broader economy was grappling with the global financial crisis.

Sector capacity lost through mill closures this year is unlikely to return when market conditions improve, given long-term timber supply constraints. Year-over-year employment in forestry, logging and support and wood product and paper manufacturing has declined more than 5% or by nearly 3,000 persons.

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