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Ken Peacock

Labour Market Conditions Ease in the Prairie Provinces But Tighten in BC

Labour market conditions in Western Canada have changed significantly in the past year or so. Amid the dramatic fall in oil prices and generally soft prices for many other key commodities, the ranks of the unemployed have increased in all three Prairie Provinces in recent quarters. Consistent with a rise in unemployment, the number of job vacancies in each of the three Prairie provinces has dwindled. In BC, however, these labour market metrics have been the reverse: the number of unemployed has remained stable or edged down while job vacancies have climbed.

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PART ONE: Municipal Tax Burden Varies Widely in BC and Continues to Outpace Inflation

The Ministry of Community, Sport and Cultural Development compiles data on local government finances, including figures on per capita levels of property tax.  What is discussed below and shown in the graphs is the total amount of tax levied on all nine property classes, as defined in provincial legislation.  This provides a gauge of the overall tax burden in each municipality, with the per capita data allowing comparisons to be made across municipalities of different sizes.  To make such comparisons more meaningful, the figures below show per capita taxes just for municipalities with populations that exceed 10,000.  Taxation in smaller municipalities will be discussed in subsequent blog posts.  The first figure shows the 2015 per capita levels of property taxes for BC’s larger municipalities.  The additional numbers on the right side of the chart are the average annual growth rates of per capita taxes in each municipality over the past three years, and are included in the graph for quick reference.

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Solid Gains in Retail Spending Suggest British Columbians are Optimistic

Following an unusually weak period in 2013, retail spending in BC has steadily strengthened and is now growing at the strongest annual pace since the 2010 Olympics. The total value of retail sales surged in May by 8.3% over the same month of last year. What’s more, BC is now leading the country in the growth of retail sales at a time when activity has slowed markedly in some other provinces. In Alberta and Saskatchewan retail sales are now well below year-ago levels, even on a non-inflated adjusted basis. Canada-wide growth in retail sales is running around 2.5%. Sales in BC are growing at about three times the national pace. Ontario is quite closely aligned with BC as retailers there are seeing spending growth of about 5%.

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Q1 Net Inflow of People to BC from Other Provinces the Strongest in Two Decades

BC’s comparatively healthy economic performance and attractive climate are luring people from other parts of Canada at a rate not seen in many years.
Migration has well established seasonal patterns, so to compare the movement of people over time the data can be seasonally adjusted or one can simply compare first quarter data to first quarter results from prior years. For simplicity, the graphs and analysis below adopt the latter approach and examine Q1 migration flows to BC for the years 1988 through 2015.

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BC Now a Growth Leader in Canada

According to recently released data from Statistics Canada, the BC economy grew by 2.6% in 2014.  Against the backdrop of sluggish commodity markets, sub-par global growth and ongoing turbulence in Europe and some emerging economies, this is very respectable showing.  In historical terms, it is just slightly ahead of the province’s 2.5% long-term average growth rate.  And measured against other provinces, our economic expansion was second among the ten provinces last year.  

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Digital Infrastructure will continue to transform the Way People Work and Interact

The internet and wireless communication networks have become an essential part of society’s infrastructure in the 21st century.  It has altered the way people work and interact and the way businesses operate and serve customers. And the transformation has been very rapid considering that in less than two decades the commercial internet has become fundamental to business operations. Already about 2.5 billion people are connected to the internet, a third of the world’s population; projections point to 4 billion users by 2020, equal to more than half of the global population 

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Rising Exports will Support Strong Economic Growth in BC

Exports are vital to sustaining and increasing BC’s standard of living because they allow us to pay for imports of goods and services not produced locally, they support hundreds of thousands of jobs, and they provide local firms with opportunities to grow and benefit from economies of scale. The discipline of having to compete in the international marketplace encourages firms to invest in productivity enhancing equipment and processes. In turn, this means that export-oriented industries tend to have above-average levels of productivity and therefore are able to pay above-average wages/benefits.

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Canada’s Environment for Entrepreneurship Compares Favourably

Entrepreneurship is an important source of innovation, economic growth and job creation. As such, greater attention is being paid to the role of public policy in fostering entrepreneurial activity.  Governments and international organizations are working to better understand and measure the factors that influence and support entrepreneurial activity.  The Organization for Economic Coordination and Development (OECD), for example, has developed a framework – Indicators of Entrepreneurial Determinants – that outlines some of the different factors it has identified as influencing entrepreneurship.  The framework provides international benchmarks for factors linked to business entrepreneurship.  Recognizing the need to better understand and quantify entrepreneurship, Industry Canada has prepared a research series that applies the OECD framework to the Canadian context.  The first in the Industry Canada series examines how Canada performs on two of the OECD’s six categories: Regulatory Framework and Market Conditions. 

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Plunging Oil Price Good for the BC Economy in 2015…

The rapid and steep decline in world oil prices has prompted a fair amount of commentary on the accompanying economic impacts. For Canada, much of the analysis points to modestly negative economic implications, stemming from reduced business investment, lower corporate revenues, a decline in the value of exports, and diminished job creation in the oil patch. Lower oil prices also translate into a decline in revenues flowing to the federal government and to provinces like Alberta and Newfoundland.

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Healthy Gains in Retail Spending in BC

After a number of years of sluggish growth, retail sales in BC have made some impressive gains recently. A year ago, retail spending in the province was basically flat. In the second half of 2013 and through the first quarter of this year the retail environment improved, with annual growth in retail sales advancing to around 4%. Over the past three months, spending has accelerated again, climbing to a 7% annualized growth rate.

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Job Market Improving…But Employment Growth in BC Remains Soft

July’s revised labour force report from Statistics Canada shows that employment growth remains sub-par in the province. The total number of people working did not change in July. But this sideways result follows an increase of 6,700 jobs the previous month. The past two months have seen a decent gain in the aggregate number of people working in the province and extends the modest positive trend that has been in place for seven or eight months.

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Interprovincial migration is again adding to BC's population

In the first quarter of 2014, BC saw 1,300 more people move into the province from other parts of Canada than leave to settle in other provinces.  This marks the first time in nearly three years that BC has experienced positive net in-migration from other provinces.  The shift from a net loss to a net gain is a positive sign because changes in interprovincial migration are driven largely by working-aged people.  A net inflow means there will be more workers available in the BC labour market and also suggests job opportunities are becoming more plentiful – relative to other provinces and in particular Alberta – than was the case over the past couple of years. 

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In 2013, BC's economy was stronger than estimated

According to figures recently released by Statistics Canada, BC’s economy grew by 2.0% in 2013.  Considering that prior to the official data being released the consensus estimate was that economic growth would come in at 1.4% in 2013, the above-expectations 2% expansion looks pretty good.  In a historical context and relative to other provinces, however, BC’s economic performance was more on the modest side.  Over the past decade and a half, real GDP growth has averaged 2.4% so 2013’s gain was a little subpar.  And in comparison to other provinces BC ranked fifth among the ten provinces.  

 

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BC's growing orientation towards Asia

The ascent of China and other Asian countries more generally is transforming the global economy and reshaping trade patterns.  The extent of this shift is exemplified by the fact that last year China overtook the United States to become the world’s largest trading country.  This historic reorientation of trading patterns is certainly being felt here in British Columbia.  BC’s merchandise exports to China have soared over the past decade, rising from just over $1 billion to $6.6 billion last year. Other Asian countries are also buying more BC products.  Collectively, Asia Pacific countries now account for as big a share of BC’s exports as the United States, despite the natural trading advantages that BC has with the US – geographic proximity, a common language, similar institutions and business practices, a comprehensive free trade agreement (NAFTA) and a long history of close commercial and people-to-people ties. 

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Plenty of Job Openings for People with the Right Skills

For anyone planning a career path or deciding what to take or study at school, the provincial government’s WorkBC website (http://www.workbc.ca/) is a very useful resource.  It contains information for job seekers and employers along with lots of statistics on the labour market outlook for different regions and occupations.

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Recent Jump in Part time Employment is Not a Reflection of Deteriorating Job Quality

Amid soft labour market conditions in BC last year, some concerns emerged about the quality of jobs being created in the province. In particular, an increase in the number of part-time jobs in the latter months of year was seen as an indication that people were unable to find a full-time job and settling for part-time work.

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The Upside of a Lower Dollar for BC

In early May last year the Canadian dollar was trading near parity with the US dollar. Between May and mid-October it fluctuated between 99 and 96 US cents per Canadian dollar.  In November the Loonie started on a more definitive downward trend and by early 2014 it had fallen sharply to about 91.5 US cents.  This relatively rapid decline hurts Canadian residents inclined to shop in the US, snowbirds and residents vacationing south of the border.  But on balance, the fall in the Loonie is good news for BC in an overall economic sense.

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Signs of Life: Retail Spending in BC Gaining Some Strength

After more than a year of moving sideways, retail spending in BC is finally showing some signs of strengthening.

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HST Era Food Services Receipts Rose and Fell, But Stronger Growth has Followed the Return to PST

BC reverted back the PST system on April 1st of this year.  It is still too early to determine what specific impacts this important change in tax policy will have on BC’s economy.  Economists and public finance scholars are virtually unanimous in believing that shifting back to the PST will have negative long-term consequences in key areas such as business investment, productivity and the growth of real wages.  However, the picture is a bit less clear from a shorter-term perspective.

One sector where the return to the PST may have a favourable near-term impact is the food services industry.  This is because the HST raised the tax-inclusive price of meals purchased from food services establishments, whereas restaurant meals are not subject to the PST – meaning the retail price is lower for consumers.  While it is still early, data on restaurant sales receipts are available through July of this year, providing a full quarter of sales figures under the reinstated PST.  The graph below shows the total value of all food services receipts in BC (full service and limited service food establishments, drinking places and special food services such as caterers).  The data are seasonally adjusted to better show short-term changes and trends.

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Employment up slightly in August but still waiting for a sustained improvement

The August employment report contained a bit of good news for BC, but not enough to materially change the generally muted labour market conditions in the province.

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