Restaurants and other food services sectors were among the hardest hit during the pandemic amid closures of dining spaces, a collapse in tourism and shutdowns of large events.
Business has rebounded since B.C.’s restart phase, which allowed dining spaces to reopen, albeit with physical distancing requirements, but sales remain shallow.
July food services and drinking place receipts climbed 6.6% from June to a seasonally adjusted $757.4 million. This was a third straight monthly gain following a 60% decline from February through April when many restaurants shuttered temporarily. Nevertheless, sales were still 28% below February and down 26% on a year-over-year basis. The latter was worse than the national decline of 24.4%.
A scan of the data shows the deepest decline in full-service restaurants (down 32.6% year-over-year) which contributed to more than 60% of the decline. Special food services, which reflects catered events, fell 52.7% from a year ago as weddings, business conferences and other events were cancelled.
Momentum is likely be short-lived. Temporary patios constructed to lift revenues during the summer months will be less attractive as the weather turns, while no lift from business conferences and sporting events is forthcoming.
Payroll employment data for B.C. pointed to a strong pace of rehiring through July as the count rose 4%. This marked a second consecutive increase following a May trough. However, estimates were still down by 11.8% from February.
Industry patterns reflected the restart phase of the economy as businesses ramped up activity following a painful period of partial or full closures of businesses during the spring. The largest gains were in the hardest-hit sectors, with payroll counts up 13% in accommodations and foodservices, which contributed to 20% of the increase. Arts, entertainment and recreation positions rose 16% (a 5% contribution to the total gain), while education rose 8.3% (a 17% contribution). Retail trade employment also propelled higher by 5.8%, contributing to 18% of the net increase.
That said, sectors geared toward hospitality and tourism, culture and events and building management remained well below pre-pandemic levels.
Payroll employment has underpaced the rebound in the Labour Force Survey (LFS), which was down 6.5% from February. This could reflect factors such as multiple job holders with fewer positions, as well as individuals taking unpaid leave due to COVID-19 factors or child care but still tied to their employers, and timing mismatch of rehiring. We expect payroll counts to trend higher and dovetail more closely with the LFS data.
Average weekly earnings rose 0.6% from June and 10.8% on a year-over-year basis to $1,104. Headline weekly earnings spiked during the pandemic, but this reflected the compositional impact of job losses among lower-wage sectors and front-line workers during the pandemic. As a result, average earnings were skewed towards sectors and occupations less affected by job loss.
Bryan Yu is deputy chief economist at Central 1 Credit Union.
