We have long anticipated that the drop in oil prices would have mild effects on B.C.’s economy given the lack of commercial oil production, positive impact of the lower Canadian dollar on goods exports and tourism and lower interest rates for the housing market. However, it was clear that there would be some risk to regional markets given the labour-market ties of some communities to the oilsands. Research by Statistics Canada suggests that 25% of Alberta’s interprovincial workforce in 2008 was B.C. residents. While this number is dated, data from the 2011 National Household Survey, and anecdotal evidence from around the province, also point to direct labour-market linkages, not to mention some indirect effects on businesses servicing the oil market, and tourism inflows.
We have yet to see the effects of an oilpatch downturn on regional labour force survey estimates, but the release of February employment insurance beneficiary data points to a rise in unemployment in some regions that could be oil-market-related.
Employment insurance beneficiaries in B.C. continued to drop in February. The count was a seasonally adjusted 48,180, down 0.74% from January and 7% lower than a year ago. This contrasted with a 2% monthly gain countrywide. Meanwhile, Alberta beneficiary counts jumped 15.6% from January and were up nearly 17% from a year ago – seemingly a clear indication of a labour market being walloped by an oil market upheaval.
B.C.’s low EI counts and declining trend is in line with our view that B.C. is coming out of this oil shock with minimal damage. However, EI counts in some communities have climbed significantly from a year ago. In particular, Kootenay EI counts are up more than 10% from a year ago, with levels in the Columbia-Shuswap up 8%. These areas are exposed to Alberta’s economy through residents working in the oilsands, as well as some tourism and (secondary) housing market connections. Counts have also climbed in the northeast, owing in large part to the impact of coal mine closures in Tumbler Ridge. •
Bryan Yu is senior economist at Central 1 Credit Union.
