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Analysis: Employment holding up better in B.C. than in most other provinces

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Jobs. (via Getty Images)

B.C.’s economy outperformed other provinces in October despite what has been a worrisome trajectory of COVID-19 cases, and new daily records heading into November.

National employment growth came in at 0.5 per cent, slowing from a month-to-month increase of 2.1 per cent in September. In B.C., October employment rose 1.4 per cent or 33,500 persons, which was second only to growth in Newfoundland and Labrador (up 2.7 per cent). Six months of consecutive gains have narrowed the gap from February to 2.4 per cent or 61,300 employed persons compared with a 3.3 per cent gap nationally. Metro Vancouver contributed to the entirety of B.C.’s October net gain, with employment up 3.8 per cent or 52,200 persons.

Whilst targeted efforts to stem the spread of rising COVID-19 cases in areas of Ontario and Quebec led to slowing of the employment recovery, B.C. restrictions were mild up until early November.

B.C.’s unemployment rate declined faster than expected, with October’s estimate at eight per cent compared with 8.4 per cent in September. Metro Vancouver’s rate plunged from 9.1 to 7.7 per cent.

October employment gains were widespread among industries, reflecting demand for health-care workers, improvement in forestry, stronger housing markets and public-sector hiring. Health and social assistance and information and culture industries drove about a third of the increase. Manufacturing employment rose 3.5 per cent, and resource employment increased 10 per cent. Some harder hit sectors accommodations/foodservices and other private services underperformed.

That said, weak conditions persist. The latest gains owed to a surge in part-time work (up 4.6 per cent) as full-time employment edged up. Full-time employment was still five per cent lower than February, while part-time employment rose seven per cent, reflecting an economy operating below capacity.

Future growth momentum will wane. Rising cases have triggered stricter health measures in November, which will curtail hiring. Moreover, with employment in nine of 16 industry sectors fully recovered to pre-pandemic levels, there is less room for improvement. Travel and hospitality sectors are still well below February levels and retrenchment of domestic tourism and rising COVID-19 cases in the winter will limit the recovery.

Housing market activity was robust in October amid high sales and surging prices in Abbotsford-Mission/Metro Vancouver. Sales reached 6,017 units, up 37 per cent year-over-year. While down from September’s 60 per cent gain, this was the strongest October on record. Seasonally adjusted sales were broadly unchanged from September levels but above pre-pandemic February levels by 68 per cent.

While the pandemic economy is still characterized by high unemployment and uncertainty, demand has been on a tear amid sharp declines in mortgage rates, elevated savings and steady incomes for higher earning individuals. Preferences have also shifted amid remote work, driving demand for space and suburban markets, and eschewing the confines of apartment condos. Demand for the latter has also been hurt by low immigration and declines in the number of international students. This is evident in sales, with detached and townhome sales up 50 per cent on a year-over-year basis, while apartments rose 15 per cent.

Through the first 10 months, sales were up 20 per cent, marking the strongest same-period performance since 2017.

Resale inventory of detached units and townhomes are declining while apartment inventory has risen as more units are added to the market both from move-up buyers and investors. This has led to strong seller’s-market conditions in the townhome and detached sectors. The average regional price was steady from September and up 12.3 per cent year-over-year to $1.01 million. Even adjusting for sales composition and housing attributes, the quality-adjusted home-prices index was up 0.4 per cent from September and six per cent year-over-year, led by strong detached home price growth.

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