B.C.’s employment and housing cool off in May

B.C. employment softened in May, according to Statistics Canada’s latest Labour Force Survey estimates.

Fewer full-time positions drove a 0.5%, or 12,000-person, dip in total employment from April, entirely attributed to a decline in Metro Vancouver.  Employment has eroded since a December peak owing largely to a plunge in part-time workers, cutting year-over-year growth to 0.1% which was the weakest since 2015. This followed exceptionally strong growth in 2017. 

Year-over-year industry employment performance has been mixed. Agriculture; business, building and support services; and finance, insurance, and real estate were key drags. These losses were largely offset by accommodations and food services; utilities; professional, scientific and technical services; and health care and social assistance.

While the trend is disappointing, labour supply constraints are a factor. Unemployment rates remain low, declining from 5% in April to 4.8% in May, with a plunge in the Vancouver metro area from 4.5% to 3.8%. Labour force participation rates and employment rates are elevated. While employers extend employee hours, positions are going unfilled and employers are constrained by a shortage of skilled workers. Year-over-year growth in average hourly wages continues to accelerate, rising from 5.6% in April to 6.9% in May.

Lower Mainland home sales sank 34% in May on a year-over-year basis to 4,575 units, marking the lowest same-month performance since 2013. On a seasonally adjusted basis, home sales fell to 3,220. Federal mortgage stress test measures and provincial tax policies continue to weigh on demand, although sales are at or near bottom.

Lower purchasing power has created higher inventory and left more buyers on the sidelines  as owners remain firm with their price expectations. That said, active listings are still low on a historical basis and a surge is not anticipated. This would require a spike in new listings, but given strength in the economy, owners may choose to sit out of the market and delist rather than significantly cut prices. An exception is speculators who are more likely to divest.

Sales-to-active-listings ratios point to a buyer’s market in the detached market. Apartment and townhomes have cooled rapidly from a boiling point in 2017 but remain firm. Policy changes and high prices have caused buyers to move down the housing ladder from detached dreams to multi-family reality, and more generally to lower-priced homes.

The average price rose 1.4% from April to $971,900, with the constant-quality benchmark price index up 0.5%. That said, price levels are showing signs of cooling. •

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