B.C. adds 70,200 jobs in July as retail, food services make gains

Photo: Rob Kruyt

What happened: Job numbers surge on West Coast, unemployment falls in July

Why it matters: Gains come as B.C. retail and tourism-related sectors thaw following spring lockdown 

B.C. added 70,200 jobs in July as Phase 3 of the economic restart plan continued to stoke business activity across the West Coast.

Significant recoveries in retail/wholesale and the food services/accommodation sectors helped bring the unemployment rate down 1.9 percentage points to 11.1%, according to data released Friday (August 7) from Statistics Canada.

The vast majority of the jobs added across the province were part-time positions, which accounted for 48,500 of the jobs gained compared with 21,7000 full-time jobs added.

“It’s not surprising if you think about how many companies laid people off,” Ken Peacock, chief economist at the Business Council of B.C., told BIV.

He said it’s unlikely companies can bring back workers on a full-time basis amid the previous months’ lockdowns and lingering uncertainties.

“The way that companies are rehiring people — presumably on a part-time basis — is more of a cautious way to go about hiring rather than immediately jumping to 37 hours a week,” Peacock said.

“Businesses are going to face ongoing challenges in terms of costs. Bringing back employees is going to be difficult if sales are slow.”

Businesses face a circular problem, according to the economist: They need to drive more sales and require staff to do so, however, the cost of adding staff is likely more than what they can bear at the moment.

The country as a whole added 418,500 jobs last month while the national unemployment rate declined 1.4 percentage points to 10.9%.

Prior to the pandemic, the B.C. unemployment rate was consistently the lowest among all provinces.

It now exceeds unemployment rates in Saskatchewan, Manitoba, Quebec, New Brunswick and Nova Scotia.

BMO chief economist Douglas Porter said in a note to investors that most of the above-mentioned provinces were not as hard hit by the pandemic and were able to reopen their economies earlier.

Metro Vancouver’s unemployment rate continued to lag the rest of the province at 11.6% —down from 14.6% a month earlier — while the region added 48,200 jobs.

But Peacock said his biggest concern remains the 24.1% unemployment rate among B.C.’s young people between 15 and 24 years old.

By industry, retail/wholesale witnessed the largest surge in B.C., adding 24,200 positions last month.

Food services and accommodation followed closely behind with 24,100 jobs added.

Another tourism-related category — the information, culture and recreation sector — added 9,000 jobs, while the manufacturing sector added 7,300 jobs and construction added 5,000 jobs.

Educational services, meanwhile, shed 7,300 jobs.

And while frontline workers have been top of mind for many British Columbians, the health care and social assistance category saw 2,400 jobs evaporate last month.

Professional, scientific and technical services experienced a decline of 2,300 jobs and the agriculture sector shed 1,800 jobs.

Last week the Business Council of B.C. released two-dozen recommendations aimed at spurring economic growth in the wake of the pandemic.

Recommendations include reducing the provincial sales tax to help households and small retailers, ramping up infrastructure spending for ready-to-go projects such as the SkyTrain extension to UBC and reworking municipal structures to expedite permitting.

“And definitely hold off on any tax increases,” Peacock said.

“The thinking and logic here is many businesses are hanging on by a thread, they’re underwater, they don’t have any revenue. Why in the world would you enact additional costs to businesses that are struggling to survive at this particular point? We’re not saying never look at taxes again, never increase taxes … But for the next couple of years [it’s] not the time to do that.”

Eventually, the business council would like to see the province adopt a made-in-B.C. value added tax to replace the hybrid PST-GST system the province currently uses.

Peacock acknowledged the harmonized sales tax — which the province transitioned to before transitioning back to the hybrid model — remains a political hot potato, but a made-in-B.C. approach would give the province more flexibility.

Moving forward, he expects the pace of B.C. job gains to slow through to the end of the year with the possibility of losses mounting by the end of 2020.

“For a change, employment was relatively close to expectations in July with a solid advance, and we would look for something roughly comparable in August as Ontario more fully [reopens],” Porter said, referring to national job numbers. 

“However, even then, it's clear that fully recouping the shutdown losses will be a much lengthier affair, and the gains will be harder to come by now.”

B.C. added 43,300 jobs in May as lockdowns on non-essential businesses began to ease before the beginning of Phase 3 brought 118,100 job gains in June.

 “With more than half of losses now recovered, we've seen as unprecedented a recovery in employment as the initial shock itself. Still, when you're a bit more than halfway to recovery, there is a long road ahead, and continued gains of the magnitudes we've been seeing are unlikely,” TD senior economist Brian DePratto said in a note to investors.

“If this is indeed a 'checkmark' or 'swoosh' recovery, expect these and other impressive near-term gains to give way to a much more gradual recovery path and one that will feel very different across industries.”