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Labour market buoyant, home sales down in B.C.

B.C.’s labour market remained strong through October with Labour Force Survey estimates pointing to positive hiring momentum and a lower jobless rate. Employment rose 0.4 per cent or a modest 9,800 people in October.
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B.C.’s labour market remained strong through October with Labour Force Survey estimates pointing to positive hiring momentum and a lower jobless rate.

Employment rose 0.4 per cent or a modest 9,800 people in October. While this lagged behind the national gain of 0.6 per cent, it followed a sharp September rebound of 1.2 per cent and re-established a modest upward trend. Relative to pre-pandemic February 2020 levels, B.C. employment was up by 4.5 per cent. This exceeded the national increase of 2.7 per cent and trailed only Prince Edward Island and Alberta.

That said, labour market details were mixed. Employment growth was led by part-time work, which rose one per cent, while full-time employment gained only 0.2 per cent. The latter is near the mid-year peak. Stronger gains in part-time work could reflect an increase in voluntary workers attracted by opportunities and higher wages.

Among industries, construction employment rose by 6,000 or 2.5 per cent and manufacturing employment jumped by 11,500 or 6.9 per cent. While the housing market is slowing, building continues on pre-planned projects while major project activity remains strong. Slowing global growth and the weaker housing market trends should temper in both sectors.

Services-sector employment growth was generally negative. Finance/insurance/real estate employment fell sharply by 7,100 people or 4.2 per cent, which likely owed to weak resale market housing activity, while significant declines were also recorded in accommodation/foodservices (down 3.1 per cent), and education (down 3.4 per cent).

Nevertheless, there is little doubt that B.C.’s labour market remains exceptionally tight. The unemployment rate fell from 4.3 per cent to 4.2 per cent, the lowest among provinces and consistent with a high job vacancy rate. Wage growth is picking up with the average hourly wage up 1.4 per cent over the latest month and 5.7 per cent year over year as employees demand higher wages due to inflation and a plethora of job opportunities, while employers look to retain and attract workers. Labour market conditions are anticipated to cool into 2023 as higher interest rates work through the economy and curb economic growth.

Lower Mainland multiple listing service (MLS) home sales showed faint signs of reaching a bottom in the latest October real estate board statistics. While interest rate-sensitive buyers remained anchored to the sidelines due to rapid rate hikes, sales flow held steady amidst strong population growth. Furthermore, lower prices may be providing incentives for some buyers armed with higher down payments and existing home equity to peck at perceived deals.

Nevertheless, at 2,784 units in October, total MLS sales in the region spanning Metro Vancouver and Abbotsford-Mission remained low. This marked a 48.5 per cent decline from a year ago and was consistent with September’s decline. Moreover, sales are 30 per cent below the 10-year October average from 2010-19 reflecting the rapid rise in borrowing costs. Annual home sales are on track to reach 44,000 sales this year marking a 38 per cent decline from 2021, but 10 per cent higher than 2019 due to stronger early year performance.

Market conditions, as measured by the sales-to-active listings ratio, sit in a range consistent with a balanced market at about 18 per cent, although price erosion suggests conditions are favouring buyers as the supply of homes has remained tame. Prospective sellers have seen the price peak and are loathe to reduce prices.

Nevertheless, sales prices are generally grinding lower. The average price reached $1.14 million, which was up 0.6 per cent from September but down 14 per cent from peak. Sales composition contributes to monthly fluctuations. Benchmark values, which adjust for housing attributes, continued to decline, with the composite down 0.9 per cent in October and 12 per cent from peak. With expectations of further rate hikes to come, a slowing economic environment and greater financial stress, we anticipated prices to ease further to 20 per cent below peak.

Bryan Yu is chief economist at Central 1 Credit Union.