BC Economic Snapshot May 25, 2013

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VANCOUVER, BC, May 25, 2013/ Troy Media/ – B.C. retail sales jumped 1.0 per cent in March over February to $5.16 billion, seasonally adjusted, mainly on the strength of a spike in new vehicle sales. Despite the best performance in one year, March 2013 sales were slightly below the year ago level.

Adjusting for retail price inflation, real retail sales increased 1.5 per cent over the previous month to the highest level since November 2011. While March’s increase was a positive development, it did not result in a breakout from the range-bound trend that has persisted since late 2011.

Slow job growth during this period is a likely contributing cause which translates directly into slow income growth and subdued consumer confidence. The slower housing market could be another cause. More cross-border shopping is another possible factor, but this is difficult to quantify.

This year is shaping up as another mediocre growth performance with sales to date down 1 per cent to $13.7 billion from the first three months of last year. The retail sales forecast for 2013 calls for a slight 1 per cent increase, the smallest yearly gain since 2009. In 2012, retail sales rose 1.9 per cent compared to 3.2 per cent in 2011.

Housing
Investment in new housing construction in B.C. is declining and past its peak for this cycle. The latest estimates from Statistics Canada, after seasonal adjustment, show a consistent decline off the October 2012 peak through to March 2013. With housing starts and prices trending down and housing sales at low levels, this investment downtrend will continue into 2014.
Less investment spending means fewer construction and related jobs as well as a negative impact on retail sales. It will drag down or hold back overall economic growth in the province.
A similar situation is unfolding nationally. The policy-induced housing slowdown cools the economy as well as housing prices.

Jobs
New survey data from Statistics Canada on job vacancies reveals additional insights into the labour market. The Job Vacancy Statistics survey provides a monthly portrait of the level of unoccupied positions, job vacancy rates and unemployment-to-job vacancies ratios.

One new metric is the job vacancy rate calculated as a percentage of vacancies to labour demand defined as the total of unmet (vacancies) and met demand (occupied positions). A higher job vacancy rate indicates a stronger labour market with more positions posted by employers going unfilled. This is a new survey so some caution in its use is in order until a longer history is available.

The data pertain to all businesses having at least one employee, excluding those primarily involved in agriculture, fishing and trapping, private household services, religious organizations, military personnel of defence services and federal, provincial and territorial public administration.

The graph shows the B.C., Alberta, and Canada job vacancy rates, and not surprisingly, Alberta’s rate at 2.5 per cent was well above B.C. and Canada at 1.5 per cent in the three months ending February 2013. In level terms, the estimated number of job vacancies in B.C. was 27,500 compared to 46,900 in Alberta and 209,900 nationally as of February. These data are three-month moving averages and are not seasonally adjusted.

Higher job openings and labour demand in Alberta will remain a migration magnet at the expense of B.C. and other provinces. Alberta’s job growth so far this year is 2.0 per cent compared to 1.5 per cent for Canada and 0.2 per cent for B.C.

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