BC Economic Snapshot Sept. 28, 2013

---

 At least BC's Population is Growing Faster Than Atlantic Canada

VANCOUVER, BC, Sep 28, 2013/ Troy Media/ – B.C.’s population continued to expand during the second quarter pushing estimated population up to 4.58 million persons as of July 1, up 0.3 per cent from the previous quarter and 0.8 per cent above same July 1, 2012.

Similar to retail trends, and a host of other economic indicators, B.C.’s population growth has underperformed relative to most other provinces. National population gains reached an estimated 1.2 per cent on the year.

While B.C. can boast of higher population growth than the Atlantic Provinces, gains paled when compared to all three Prairie provinces – Alberta saw its population balloon 3.4 per cent from same-period 2012, while Saskatchewan jumped 1.9 per cent. Ontario and Quebec also marginally outpaced B.C. growth.

The tepid pace of population gains over the past year can largely be traced to interprovincial mobility. While net international flows were positive and steady, the province recorded a stronger net outflow to other provinces particularly Alberta and Saskatchewan, reflecting the draw of stronger labour markets and economies.

Growth has been sluggish, but one bright light in the most recent data release was acceleration in quarter-over- quarter population growth trend in the second quarter. After trending at an annualized rate below 1 per cent since the first quarter of 2012, seasonally-adjusted annualized growth jumped to about 1.1 per cent in the second quarter.

However, the devil is in the details, and they suggest the uptick in growth may be fleeting. Second quarter growth reflected higher net non-permanent residents, which is prone to reversal, while net interprovincial trends remained negative. We expect population growth to remain weak over the next few years. Growth is forecast to trend below 1 per cent into 2014, before trending higher to an average of 1.2 per cent in 2016-2017.

Retail
B.C. retailers managed to hold on to recent sales gains into July but demand conditions remained sluggish and the province is still an underperformer relative to the national picture.
Total retail sales were essentially unchanged from June, edging down 0.1 per cent to a seasonally-adjusted $5.23 billion in July. While remaining above the range bound trend observed since early 2012, sales volume was up only 2.7 per cent from same-month 2012. Nationally, growth was 3 per cent.

The recent upshift suggests household demand has firmed slightly in recent months, but there is little denying that the environment remains a strain for provincial retailers. Through July, sales were only 0.6 per cent higher than the first seven months of 2012 with Metro Vancouver performing worse than the rest of the province with a decline of 0.5 per cent.

Stripping out vehicle sales and gasoline sales, which provide a better indication of underlying consumer demand, provincial volume was only 0.2 per cent higher. Sales are down in most subsectors, with the largest pullback in electronics/appliances, clothing and recreation-oriented retailers. While retail inflation has been negligible, mild population gains suggest a cut in household spending this year.

Comparably, year-to-date growth in Canada was 2 per cent through July, led by Newfoundland and Labrador and the Prairie overachievers – Alberta recorded a gain of more than 6 per cent, with a 3.6 per cent gain in Saskatchewan. B.C. was second-to last among provinces, with only New Brunswick faring worse.

The weak retail environment will persist. Consumer demand remains sluggish as a result of a weak labour market, high debt loads, stagnant home prices and minimal population growth. Additionally, a relaxation of duty-free allowances and online sales may also be impacting bricks and mortar operations in the province. (Ed. Note: see BC retailers hit hard by cross-border shopping)

Current-dollar sales growth for full-year 2013 is forecast to reach a subdued 1 per cent. This will mark the slowest gain since 2009 and follows a 1.9 per cent increase in 2012. Growth has been revised up to about 3.5 per cent in 2014, on labour market improvements and higher inflation.

| Central 1 Credit Union