BC Economic Snapshot May 11, 2013

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VANCOUVER, BC, May. 11, 2013/ Troy Media/ - B.C.’s labour market showed a modest improvement in April, as employment rose, partially reversing the prior month’s decline.

Total estimated employment reached a seasonally-adjusted 2.312 million persons in April, up 9,500 persons or 0.4 per cent from March. The gain was led by a rebound in full-time employment, which increased by 16,500 persons or 0.9 per cent.

Among industries, monthly employment gains were led by a surge in the finance, insurance, real estate and leasing sector (11 per cent) and the healthcare and social services sector (5.4 per cent). These gains were offset in part by significant declines in construction, manufacturing and accommodations and food services.

Job gains are far better than losses, but April’s employment rebound does little to change the trajectory of the labour market. Despite the rebound, the hiring environment remains weak with total employment in line with the range observed during the first quarter and still below mid-2012 levels. Relative to same-month 2012, employment was down 0.3 per cent, significantly underperforming national employment growth of about 0.9 per cent.

On a slightly more positive note, April job growth pulled the provincial unemployment rate down from 7 per cent in March to 6.4 per cent. This is a reversion back to near levels observed earlier in the year and below with the range observed in 2012.

However, the steady unemployment rate partially reflects a downswing in the provincial labour force participation rate. Some prospective workers may have stepped back from the labour market given weak job prospects rather than join the ranks of officially unemployed.
Average employment for the first four months of 2013 is only slightly above same-period in 2012. Given the weak hiring environment and sluggish economy, 2013 employment growth of less than 1 per cent in 2013 would not be a surprise.

Housing

The pace of new home starts in B.C. edged lower in April following a March spurt in multi-family projects. Total housing starts in the province’s urban areas reached a seasonally-adjusted annualized pace (SAAR) While SAAR starts have perked higher following a late-2012 lull and fluctuate within the range observed since early-2010, activity still trails last year’s pace.

Through April, year-to-date urban housing starts were down 9 per cent to 7,005 units, entirely reflecting a pull-back in multi-family units. Metro Vancouver accounted for most of the unit declines, but areas like Nanaimo, Courtenay and Kamloops recorded larger relative drops from last year.

We forecast annual housing starts, in both urban and rural areas, to reach about 24,800 units this year – a 10 per cent drop from 2012 and the lowest since 2009. Builders will continue to adapt to tempered demand and high levels of existing and new home inventory by curtailing projects or extending build out times.

Construction

The softer pace of building intentions recorded since the third quarter of last year continued into March as B.C. municipalities issued building permits valued at a seasonally-adjusted $701.2 million.

While up from February by about 1.7 per cent, led by a 1.9 per cent gain in the residential sector, it was not enough to reverse the previous month’s pull back of 10 per cent. Through the first quarter, total permit volume was down 16 per cent from same-period 2012. Residential permit volume was unchanged from same-quarter 2012, but the trend has softened since the beginning of the year.

Coupled with tempered housing starts activity, developers seem to be taking heed of market signals and slowing construction. In contrast, non-residential permit volume fell nearly 40 per cent from the first quarter of 2012, led by a 70 per cent drop in industrial permits and 23 per cent drop in commercial activity.

The drop is not surprising however; as it reflects the impact of large project starts in northern B.C. and hospital expansions in the Lower Mainland that boosted 2012 volume.

Non-residential permit volume is expected to pull back by about 15 per cent this year following a nearly 30 per cent surge in 2012. Last year’s surge will generate ongoing investment activity this year, contributing to a 4 per cent increase in building construction investment.

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