After a surprisingly sour August reading, B.C. employment bounced back as expected in September – a reminder not to read too much into a single month of data.
Total employment rose 1.2 per cent or 32,900 people to reach 2.752 million and fully retrace August’s 1.0 per cent decline. This was led by Metro Vancouver. Meanwhile, the unemployment rate fell to a pandemic low of 4.3 per cent and near historic lows.
Just as we were skeptical of August’s slide, the rebound should be observed with care. September’s increase was led by part-time work (up four per cent) while full-time work rose 0.5 per cent. The latter did not recoup August losses, suggesting moderation. Among sectors, the rebound was led by services (up 1.5 per cent). Consistent with the national picture, public-sector gains led the increase. Education employment rose by 12,300 people or 6.3 per cent, while health care and social assistance added 5,400 employed persons (1.5 per cent). Professional/scientific/technical services employment rose 10,500 or 4.0 per cent, and accommodations/foodservices rose 5.500 or 3.1 per cent. Goods-sector employment was broadly unchanged, but was weighed down by the manufacturing sector that fell back by 3.1 per cent.
The latest data isn’t all that telling but still indicative of solid economic activity in the province that is holding up well compared with the national picture, where employment has generally eased. Growth momentum has slipped in line with rising pressures from inflation, higher interest rates and the spectre of recession in the U.S and potentially Canada. That said, with an unemployment rate of 4.3 per cent, even if fleeting, the labour market is clearly tight and supportive as the economy slows. The average wage rate rose 4.7 per cent year over year but slowed from 5.1 per cent in August.
On the housing front, not even surging immigration and population growth was enough to arrest the housing market slide as high interest rates continue to push buyers to the sidelines. Lower Mainland Multiple Listing Service (MLS) sales fell to a 10-year low in September at 2,550 units. This was nearly 50 per cent lower than same-month 2021 and 30 per cent below the average September sales from 2010-19. Moreover, momentum continued to weaken with sales down from August on a seasonally- adjusted basis.
Bank of Canada rate hikes during the month further eroded affordability and more are expected. Many prospective buyers have been priced out of the market or are understandably skittish of price declines and choosing to remain on the sidelines rather than risk financial loss.
September’s sales decline drove a further softening of market conditions with both the sales-to-active ratio and sales-to-new-listings ratio declining to levels historically aligned with balanced market conditions. However, the speed of descent and declining prices makes it clear that the market favours buyers.
While the average MLS transaction price rose 1.5 per cent to nearly $1.14 million, marking the first increase since February, the trend is still negative and 14 per cent lower than peak. A shift in sales composition may have contributed to the gain. The constant-quality benchmark price index fell 2.4 per cent and is down 12 per cent from peak. Ground-oriented dwellings have experienced a more substantial rollback compared with condo apartments, owing in part to stronger gains on the upside.
Declining price trends are expected to deepen as further rate hikes impede financing and weaker economic conditions also temper demand. However, there are signs that sales and price lows are near. New listings increased from August but remain 13 per cent lower than a year ago. This suggests many would-be home sellers, like buyers, are sitting out the market and delisting properties. These sellers are still clamoring for yesterday’s prices in a new reality, but a tight labour market and strong rental market have minimized panic selling. This could change if economic conditions worsen considerably. •
Bryan Yu is chief economist at Central 1 Credit Union.