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

  • September 09, 2013

By Jock Finlayson and Ken Peacock

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.

First the positive news – total employment in BC advanced by just over 6,000 in August, which is a respectable increase in the context of the BC labour market. Some of the underlying details were also encouraging. The number of people working in the public and private sectors both increased. A decline in self employment tempered the overall employment gain. The unemployment rate also edged down one tenth of a percentage point to 6.6%. There was also an increase in the labour force (people with jobs plus those actively looking for work), otherwise the drop in the unemployment rate would have been larger.

While the August jobs report is welcome, it must be viewed in the broader setting. For about 18 months now employment in BC has fluctuated month-to-month but overall has disappointed. The pattern has been that one or two months of gains are wiped out by job losses in subsequent months. While the gyrations are partly attributable to the survey and sampling process, the trend line in the graph below is a reasonable representation of the underlying job market picture, which has been unimpressive. The calendar year is often used to track job growth. On this basis, the average employment level over the January to August period this year is the same as in 2012, meaning there has been no overall job growth so far in 2013 in the province.

Another concern related to the overall health of BC’s job market is the fact that private sector hiring has failed to gain any momentum at this stage of the economic cycle. The average number of people on private sector payrolls for the January-August period is down by about 15,000 (or 1.1%) compared to the same period in 2012. Private sector payroll employment accounts for just over 60% of all jobs. The remaining jobs in BC are split more or less equally between public sector employees (the broad public sector which includes public administration as well as health care and education) and self-employed individuals. Again on a year-to-date basis, public sector employment is up by about 4,000, while self- employment up by 11,000. Taken together, all of this leaves overall employment levels flat.

Hopefully the August increase in employment is an early sign of a more sustained upturn. This is a difficult call, however. BC’s labour market has been very weak for more than a year. At some point job growth will resume. But the pattern over the past 18 months could persist for a while, especially considering that consumer spending in BC remains weak, the federal and provincial governments are both in fiscal restraint mode, and some indicators of construction activity have softened. In all likelihood the province is in for a few more months of a very subdued employment environment.