There are signs that 2016’s strong labour market performance is finally generating some positive wage momentum, with B.C. payroll data for November showing a strong gain in average weekly earnings of 0.9% from October to reach $925 – although the increase from a year earlier was a mild 1.5%. Monthly gains exceeded the national performance, but were generally weaker than most provinces on a year-over-year basis. Declines in Alberta and weak gains in Saskatchewan were key drags on national wages.
A sectoral scan points to healthy year-over-year gains in utilities (11.5%), finance and insurance (8.7%), professional and management services (about 4%) and information and cultural industries (3.9%). In contrast, average weekly earnings fell in forestry and logging (-11.2%), arts, entertainment and recreation (-9.2%), and transport and warehousing (-1.4%).
While November’s increase in average weekly earnings maintained an underwhelming pattern, it partly underestimates growth improvement in more recent months. The fixed index of earnings, which adjusts for changes in industry composition and hours, has improved to 3% year-over-year since September after a trend of roughly 1% in the first half of the year.
Stronger wage gains better align with a tight labour market, which has driven the B.C. unemployment rate below 6% and contributed to the highest job vacancy rate in Canada at 3.6% in the third quarter, specifically in the Lower Mainland-Southwest, Vancouver Island and Coast and the Thompson Okanagan regions. The rate climbed through 2016 and was higher than the 3.4% recorded in the same period in 2015. Despite recent deceleration, year-over-year growth of 2.7% in payroll employment levels was the strongest in the country in November.
This difference in trend between the fixed earnings index and average weekly earnings reflects several factors. Part-time employment growth climbed faster than full-time positions, which contributed to a slip in average hours worked and lower growth in earnings. Some of B.C.’s more heavily weighted sectors, including construction and trade, posted relatively mild or negative growth in weekly earnings.
Job market composition may have also be a factor. Substantial job growth was recorded in lower-paid sectors such as arts, recreation and entertainment (10%) and accommodations and food services (4.3%), reflecting strong tourism growth, while the high-paid resource extraction sector shed jobs (-6.8%). However, previous analysis suggests composition was a mild driver of weaker headline earnings gains.•
Bryan Yu is senior economist at Central 1 Credit Union.
