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'Concerning signals' in local labour market

Employment increasing in the goods and natural resource sectors, but falling in services sector, including hospitality and retail
BC Check-Up 2022 (Chartered Professional Accountants of British Columbia)

Unemployment in Northeast B.C. was too low to report for a second month in a row in October, but there are “concerning signals” for the local labour market as it still struggles to recover from the pandemic, analysts say.

It’s the fifth time this year that Stats Canada has withheld unemployment data in its monthly labour force survey, citing confidentiality.

Unemployment was too low to report in January, February, and March, before rising to a peak of 5% in May and June.

According to Stats-Can, there were 38,000 people working in October, 200 fewer than reported in September, when unemployment numbers were also too low to report.

Unemployment figures as well as the unemployment rate are suppressed to meet confidentiality requirements of the Statistics Act.

Stats-Can says it suppresses estimates below 1,500 unemployed people to prevent “direct or residual disclosure of identifiable data."

With an estimated labour force of 38,900 in October, however, there were about 900 people unemployed last month.

A year ago in October 2021, there were 36,000 people employed and 2,200 unemployed. And since the beginning of 2022, the jobs count is up by 700 from January, when 37,300 were reported employed.

Among all economic regions of B.C., the northeast has both the highest overall employment rate, 68.3% as of September, and labour participation rate, at 70% for the month.

2022 Northeast B.C. unemployment:

“While the headline unemployment number suggests a healthy labour market, there are some concerning signals,” said analyst Ben Sander, a partner at Sander Rose Bone Grindle, in a release this week from the Chartered Professional Accountants of British Columbia (CPABC).

“For instance, while employment was up over the past year, it remained well below 2019 levels.”

The CPABC’s analysis says overall employment in September of this year was 2.6% lower than in September 2019, when 39,200 were employed.

Job gains in the region between September 2021 and 2022 have been concentrated in full-time positions, up 10%. Part-time jobs though have plummeted by 16.1% over that period.

And the labour participation rate, though the highest in B.C., is still down from 76.1% in September 2019, the CPABC noted. There have been 2,500 residents who have left the labour force, it said.

“The sustained decline in labour participation is a troubling sign, as our region has relied on its robust working age population to drive the economy,” Sander said.

“It has also become a growing challenge for businesses looking to add employees, particularly in the service sector where many industries have struggled to recover. Conversely, the natural resource workforce saw significant growth.”

Other Northeast B.C. highlights from the CPABC report:

  • Service sector employment fell to 24,000 in September 2022, a decline of 0.8% compared to September 2021, and 6.6% from September 2019;
  • Employment in the hospitality industry fell 9.1% over the past year, and declined by a third compared to September 2019;
  • Wholesale/retail employment also declined 9.6% over the past year, and remained 13.0% lower than in September 2019;
  • Goods sector employment increased 14,100 in September 2022, increasing of 17.5% over the past year — “due to a significant uptick in natural resource employment, with the industry’s workforce more than doubling to 6,500 positions (+109.7 per cent)"; and
  • Goods sector employment was up by 3.7% compared to in September 2019.

“The employment data highlights that our economy still has not fully recovered. Worryingly, the region’s job vacancy rate hit a record high this year and many businesses have struggled to find enough employees to fill open positions,” Sander said.

“To improve our economic outlook, it is critical that barriers to re-entering the labour market are minimized, and the region is marketed as an affordable and attractive place to immigrate.”

Northeast B.C. employment figures 2019-2022. (Chartered Professional Accountants of British Columbia)

Unemployment in B.C., October 2022:

  • Northeast - x
  • Vancouver Island and Coast - 3.9
  • Cariboo - 4.3
  • Lower Mainland Southwest - 4.5
  • North Coast and Nechako - 4.8
  • Kootenay - 4.9
  • Thompson-Okanagan - 4.9

As for the rest of B.C., growth tapped the brakes ever so slightly in October, adding 9,800 jobs to the economy compared with 32,900 a month earlier.

The unemployment rate dropped 0.1 percentage point to land at 4.2% — the lowest rate in the country after Quebec (4.1%).

The last two months of gains reverses losses in August (-28,100 jobs) that teased perhaps some relief was on the way for labour markets facing an increasingly tight squeeze to meet job demand.

Jobs in construction (+6,000 jobs), manufacturing (+11,500 jobs) and the information, culture and recreation bucket typically that’s associated with the film and TV sector (+6,900 jobs) delivered the biggest gains for B.C.

Positions associated with finance and real estate (-7,100 jobs) and education (-7,100 jobs) suffered the biggest losses along with accommodation and food services (-5,600 jobs).

Pressure to push rates higher

Meanwhile, the rest of the country also kept pace with B.C.’s gains to the tune of 108,000 jobs last month while the national unemployment rate remained unchanged at 5.2% as more people entered the workforce looking for jobs.

“Early signs of softening in the labour market were part of the reason the Bank of Canada opted for a smaller – but still large – 50 basis point hike to the overnight interest rate in October, signalling that the current rate hiking cycle could be in its late stages,” RBC assistant chief economist Nathan Janzen said in a note. 

“Inflation data will remain the main driver of the BoC's interest rate decisions, but the rebound in labour markets in October will also add pressure to push interest rates higher.”

TD economist Rishi Sondhi said the national numbers blew away expectations as losses over the past few months were more than recouped.

“Wow. This jobs report checked all the boxes in terms of being a blowout report. Headline job growth surged, and gains were powered by full-time, private sector positions,” he said in a note. “The Canadian labour market clearly still has some steam left to it.”

Immigration targets increased

These big gains come the same week Immigration Minister Sean Fraser announced Ottawa would be upping its targets for immigration with the goal of bringing in 500,000 newcomers annually by 2025 in a bid to stimulate the economy.

But it may not be enough to keep up with demand, according to Ken Peacock, chief economist of the Business Council of B.C.

“Even ramping up immigrants very dramatically as the federal government has done is probably not going to provide enough immigrant workers to fill these openings,” he told BIV last month, referring to when Ottawa previously upped its targets in February.

“It would be foolish to say it doesn’t help. Just looking at the numbers, it’s very clear they’ve ramped up significantly. But very quickly … you get into skill-matching. Which roles are open? Are these immigrants qualified? Etc., etc. Many of them may be, but the likelihood of skills matching directly and people rolling right into the job market is probably a little more nuanced.”

Despite those challenges, the BCBC estimates there is currently an 80% participation rate in the province’s labour market among newcomers who’ve arrived within the last five years.

— with files from Tyler Orton/Business in Vancouver

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