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Bryan Yu: B.C. business optimism improves a bit and payroll counts increase

B.C. job market sees growth in services sector, manufacturing remains flat
According to the latest Business Barometer from the Canadian Federation of Independent Business, slightly fewer businesses expect to reduce full-time staff in comparison to February.

Prospects of interest rate relief and waning fears of a recession supported an uptick in B.C. business optimism in March, according to the latest Business Barometer from the Canadian Federation of Independent Business. Still, optimism remained shallow.

The index for longer-term expectations rose to 53.8 points from 52.9 points the previous month, as there were more businesses that expected conditions to improve than there were expecting weaker conditions. Meanwhile, the short-term three-month index increased to 52.1 points from 47.7 points and is now above the index’s neutral benchmark of 50 points for the first time since May 2023. B.C. was consistent with the national index readings. That said, levels held below the 65-point mark that would typically prevail under normal growth conditions. A slowing economy, high interest rates, uncertainty around future rate cuts and CEBA loan repayments are taking a toll on businesses. Nationally, average wage-increase plans were unchanged at 2.6 per cent, and average price-increase intentions fell to 2.7 per cent.

According to the survey, slightly fewer businesses expect to reduce full-time staff in comparison to February. Additionally, 31 per cent of B.C. SMEs considered themselves in a good state of business health, up from 29 per cent the prior month. SMEs report insufficient demand, shortages of skilled and unskilled labour and limited working capital are still the largest limitations to expanding production and sales growth. Limited physical space and distribution constraints were also factors contributing to subdued sales and production growth. Tax, insurance and wage costs were the primary factors constraining input costs, while fuel, occupancy and borrowing costs were also significant constraints.

B.C. payroll counts increased in January—something that suggests hiring momentum. According to the latest Survey of Employers, Payroll and Hours, there was a provincial increase of 3,398 positions in January, bringing the total job count in B.C. to 2.56 million positions. Goods-producing industries reported 0.2 per cent or 843 fewer positions. Services-producing industry payrolls contributed to overall growth, and were up 0.3 per cent or 5,293 positions. The seasonally adjusted job vacancy rate edged down to 4.3 per cent in January compared to December, with 2,220 fewer vacancies reported during the month. Total vacancies reached 109,425 positions.

The goods-producing industries recorded a broad decline in positions outside of manufacturing. That said, manufacturing jobs have remained near their lowest level since the end of 2020. Construction experienced the largest decrease among these goods-producing industries. Meanwhile, services-producing industries showed mixed results. There were notable increases in trade, with 1,916 positions added (up 0.5 per cent) and in finance and insurance, with 1,694 positions added (up 1.8 per cent). On the other hand, 4,854 fewer positions (down 1.4 per cent) were reported in health care and social assistance.

On the wage front, seasonally adjusted average weekly earnings in B.C. rose to $1,248.4—up 1.1 per cent from December , when average weekly earnings saw a modest decline. On a year-over-year basis, the average earnings in B.C. for January were up 5.7 per cent.

Bryan Yu is chief economist at  Central 1.