Aligning with a national improvement, B.C. small-business sentiment remained on an upswing in May, according to the Canadian Federation of Independent Business’ Business Barometer Index.
At 69.4 points, B.C.’s index rose for a third consecutive month, marking a 2.3-point increase from April and same-month 2016.
A value above 50 means more business owners expect a stronger performance in the year ahead compared with those expecting a weaker one.
B.C. regained the top spot for confidence among provinces and had a significantly higher score than the national 66 points.
A figure in the 65- to 70-point range is generally associated with stronger economic growth.
B.C.’s reading is not surprising as country-leading growth in 2016 has spilled over to 2017 with rising employment, elevated retail and tourism trends and above-average housing activity. Index levels provide a good signal that B.C.’s growth cycle will continue.
Wage earnings in B.C. continued to trend higher in March, with growth in average weekly earnings more than making up for a February dip.
Including overtime pay, earnings rose 0.4% from February and 1.9% from a year ago to $933. While exceeding national growth on both counts, B.C.’s gains remained near the midpoint among provinces, with national weakness concentrated in Ontario and Atlantic provinces.
Weekly earnings in B.C. were fifth highest among provinces and below the national average of $966, primarily reflecting industry composition factors.
Strengthening momentum over the past six months suggests a tight labour market with low unemployment is contributing to wage inflation.
The year-over-year growth trend has moved to about 2% from about a 1% pace in the third quarter of 2016.
That said, with employment growth tracking more than 3%, this likely understates wage pressures.
Multiple factors influence weekly earnings outside wage growth, such as changes in industry composition, occupational changes and average hours worked.
Statistics Canada’s index of fixed-weight average hourly earnings climbed 3% year-over-year in the first quarter, pointing to stronger underlying wage growth.
Also, increased hiring may be limiting overtime while employment growth in lower-paying industries over the past year has had a mild dampening effect. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.
