B.C. Economic Briefing
Volume 19 • Issue 32 • Week of August 5 - 9 2013 | ISSN: 1981-3535
HIGHLIGHTS:
•
•
•
•
•
Estimated employment fell to a seasonallyadjusted 2.31 million persons in July, down
0.5 per cent from JuneExp
Unemployment rose 0.4 percentage points
to 6.7 per cent
Urban-B.C. housing starts rose to a seasonally- adjusted annualized rate of 30,800
units in July up 29 per cent from the same
month last year
Building permits reboud in June, led by a
jump in non-residential acitivity.
B.C. Labour Market
Employed Persons, 000s s.a.
Growth in Employment Metrics (Per Cent)
6
2,350
Employment
Hours worked
4
2,300
2
2,250
0
-2
2,200
0%*
-4
2,150
2007
-6
2009
2011
2013
Source: Statistics Canada, Central 1 Credit Union
2003
2006
2009
2012
*YTD 2013
Total goods shipments to international
Employment by Position
B.C., monthly
Employment retreats in July
One month giveth and the next taketh away. In what
has been a common occurrence for B.C.’s labour
market, employment growth observed in June was
fully reversed in July. Estimated employment fell to a
seasonally-adjusted 2.31 million persons in July, down
11,700 positions or 0.5 per cent from June, to the
lowest level since March. Unemployment rose 0.4
percentage points to 6.7 per cent, despite a slight
decline in the participation rate. Losses were concentrated among younger workers (-2.4 per cent) and
females over the age of 25 (-0.7 per cent).
Metro Vancouver fared slightly better than the rest of
the province with employment edging down only 0.2
per cent
Among B.C. industries, employment declines were
most significant in retail and wholesale trade, which
contracted by 15,300 persons (3.9 per cent), manufacturing (3.9 per cent) and public administration
(4.9 per cent). In contrast, construction employment
expanded by 9,500 persons (5 per cent), providing a
significant offset.
July’s headline numbers underscore the ongoing
weakness in B.C.’s labour market. Over the first seven
months of the year, job growth has essentially been
nil relative to the same period in 2012. While the
unemployment rate has been low, and below last
year levels, this reflects lower labour force participation rather than a tighter market. Some prospective
workers may have stepped back from the labour
Full-time Employment (000s persons)
Part-time Employment (000s persons)
540
1,840
1,820
520
1,800
500
1,780
480
1,760
460
1,740
440
1,720
1,700
2007
2009
2011
2013
420
2007
2009
2011
2013
Source: Statistics Canada, Central 1 Credit Union
market given weak job prospects, rather than join the
ranks of officially unemployed.
If there is a silver lining, it is the ongoing shift towards
full-time employment from the part-time sector.
Full-time employment returned to historical highs
in July and through the first seven months of the
year was up 0.6 per cent, offsetting a 2.2 per cent
decline in part-time work. This suggests employers
are adapting to the slow-growth environment by
converting part-time workers to full-time as needed,
rather than focusing on new hires. The net impact is a
gain in total hours worked in the economy of about 1
per cent. While better than zero growth, expansion in
hours worked is still well below normal and indicative
of a weak economy.
Central 1 forecasts employment gains of only 0.5 per
cent this year and a gain of 1.4 per cent next year as
tempered economic growth continues to weigh on
hiring.
1
Centralb1 Credit Union
More cranes dot the skyline with elevated
housing starts
July was busy for new home starts as builders kept
their foot on the gas for a second straight month.
Total urban-B.C. housing starts rose to a seasonallyadjusted annualized rate of 30,800 units in July, up
5 per cent from June and up 29 per cent from the
same month in 2012. A recent rebound in multi-family
construction, particularly in Metro Vancouver, but
also in other areas of the province, propelled monthly
starts to the highest levels since 2008. Metro Vancouver, which recorded 23,700 annualized starts in July,
is observing activity reminiscent of the pre-recession
period.
Housing Starts
B.C., Monthly
Units (000s, SAAR)
40
Detached
20
10
0
2007
2008
General housing demand remains sluggish albeit
stable and new and existing home inventories are
elevated. Builders are expected to lessen the risk
of over supply by delaying starts and lengthening
construction times. Provincial housing starts, which
include both urban and rural markets, are forecast to
dip about 7 per cent this year to about 25,500 units.
This is a slight upward revision to previous forecasts,
in light of some positive momentum in resale markets
and second-quarter starts, but still the lowest since
2009.
B.C. building intentions buck national
decline in June
Seemingly unfazed by the soft economy and labour
market conditions as well as a persistence of elevated
housing inventory, builders seemed intent on getting
more projects off the ground in the second quarter,
following a quiet six months of activity, fuelling a
ramp up in housing starts. B.C. municipalities issued
building permits valued at a seasonally-adjusted
$901.3 million in June, marking a 10 per cent rebound from May, led by a jump in non-residential
activity. The gain bucked a decline observed at the
national level.
B.C. Economic Briefing
2009
2010
2011
2012
2013
Source: CMHC, Central 1 Credit Union
The recent upshift has narrowed the year-to-date
decline in urban housing starts to 6 per cent relative
to 2012, compared to a 12 per cent gap in June.
Recent months’ activity will likely lift economic
growth in the second half as related construction
activity ramps up. However, starts are expected to
revert lower by the fourth quarter. Housing starts are
notoriously volatile; reflecting the high number of
units associated with individual multi-family project
starts and prior to June starts fluctuated near a pace
of about 22,000 units.
Multi-family
30
Building Permit Volume
B.C., Monthly
Residential ($ millions)
Non-Residential ($ millions)
600
1,000
500
800
400
600
300
400
200
200
0
2007
100
2009
2011
2013
0
2007
2009
2011
2013
Source: Statistics Canada, Central 1 Credit Union
Seasonally-adjusted residential permit volume was
unchanged from May at $588 million, while nonresidential activity rose 35 per cent on commercial
building activity.
Higher permit volumes in recent months point to
some positive momentum in construction investment in the latter half of the year, but activity still
lags relative to year-ago levels. Actual (unadjusted)
permit volume was down 5 per cent in June on a
year-over-year basis. While monthly comparisons are
notoriously volatile, permits through the first half of
2013 were down 11 per cent, reflecting a drop in
non-residential activity of 31 per cent. Fewer major
projects have started in the North Coast and Lower
Mainland regions. Annual non-residential permit
volume is forecast to settle at 20 per cent below
2012 levels.
While non-residential intentions have withered, residential activity has held up. First-half dollar volume
was 1.6 per cent higher than a year ago, and was the
strongest since 2008 on a ramp up in multi-family
activity. However, Central 1 expects this trend to shift
lower. Recent gains reflect a coincidence of project
2
Centralb1 Credit Union
starts that were years in the making, planned when
the market was stronger. Slow sales over the past
year, tempered demand, and constraints to federal
mortgage insurance points to fewer potential projects in the pipeline, which will curtail future permits
and housing starts.
International exports pull back in June
International Merchandise Exports
Ontario-Origin, Monthly
$ Millions
17,000
16,000
15,000
14,000
13,000
B.C.’s export sector was unable to match May’s
stronger performance in June as a pull-back in
forestry-related and processed mining product shipments dampened overall sales. Total goods shipments
to international markets fell to a seasonally-adjusted
$2.68 billion in June, down 6 per cent from May.
Despite the drop off, June volume remained 2 per
cent higher than the same month last year – a fourth
consecutive year-over-year increase.
12,000
11,000
Seasonally-adjusted
10,000
9,000
2007
2008
2009
2010
2011
2012
Trend
2013
Source: Statistics Canada, Central 1 Credit Union
Export Growth By Sector
YTD June
Fluctuations in monthly export volumes are the norm,
but June’s lower performance suggests the already
modest export recovery lost steam in the second
quarter on tempered growth in both the U.S. and
China. Nonetheless, year-to-date current-dollar export
volume still outpaced year-ago levels by 4.4 per cent
in June, albeit down from the 4.9 per cent gain in
May. Exports to the U.S. and China were each up 11
per cent.
Dollar-volume export gains have largely been priceled, with product shipments up about 1.5 per cent.
Higher prices have lifted forestry volumes up $747
million or nearly 15 per cent from the first half of
2012. In addition, raw mining output and agriculturerelated shipments activity have contributed.
Total
Agriculture/Fishing
Energy
Raw metals/minerals
Processed metal/mineral
Chemicals/plastics/rubber
Forestry/Packaging
Ind. machinery, equipment
Electronic and electrical equi
Motor vehicles and parts
Aircraft/other transport equ
Consumer goods
Special transactions trade
-500
0
500
1000
$ Millions
Source: Statistics Canada, Central 1 Credit Union
June’s export decline outpaced a drop in imports,
contributing to a wider merchandise trade deficit during the month. However, export and import growth
has been consistent this year, leading to trade deficit
consistent with the first half of 2012.
Despite a recent deceleration, we remain optimistic
for a second half export rebound led by stronger
U.S. and global economic conditions. Annual currentdollar exports are forecast to rise by about 5 per cent
this year. Nonetheless, we expect international trade
to contribute only modestly to GDP growth this year
as imports also rise.
Bryan Yu
Economist, Central 1 Credit Union
[email protected]
www.central1.com
604-742-5346
B.C. Economic Briefing
3