B.C.’s labour market was little changed in June with employment down by 2,600 persons (0.1 per cent) from May.
With the latest updates, employment growth trend continued to soften but remained steady. Provincial employment was ahead of a year ago by 1.1 per cent and ahead of pre-pandemic levels in February 2020 by 4.2 per cent. However, the unemployment rate rose to 5.6 per cent, marking the highest level since November 2021 and largely driven by labour force expansion (0.5 per cent). Nationally, the labour market more than reversed May job losses in June in a sign that economic conditions remain resilient with no recession in clear view.
In the Vancouver census metropolitan area, employment fell 5,300 by persons or 0.3 per and the unemployment rate jumped to 5.7 per cent from 4.9 per cent. An increase in full-time hiring offset some of the declines in part-time employment.
The goods-producing sector led June’s employment decline. Specifically, sharper declines in construction (-2.8 per cent) and natural resources (-3.7 per cent) were only partially offset by manufacturing and utilities.
Services-producing sectors’ employment had almost no change from the previous month, with 300 more net hirings in June. Notable increases were reported in health care and social assistance (up 8,200 persons or 2.2 per cent), and finance, insurance, real estate, rental and leasing (up 4,800 persons or 2.8 per cent). Losses were reported in transportation and warehousing, with 1.7 per cent fewer hirings.
The latest round of interest rate hikes is pushing more housing activity to the sidelines as mortgage rates increase. However, the impact is more likely to be seen in the coming months as many buyers pulled the trigger on transactions in June to lock in rate holds.
Multiple listing service real estate board statistics for B.C.’s Lower Mainland showed 4,837 home sales in June. This was 31 per cent higher than a year ago, and while base effects of low sales last year are a factor, levels were consistent with the 10-year average observed from 2010-19.
Despite the massive headwinds of high interest rates and severe affordability erosion, buyers returned to the market in force. They adapted to the shift in rates and bet on future rate reductions and were buoyed by a strong labour market and pandemic savings.
Soaring population growth through immigration – which is flowing to urban centres – is lifting demand, both through direct channels of newcomers able to purchase immediately and pushing prospective buyers off the fence given the spectre of a flood of potential demand from newcomers.
Monthly Lower Mainland unadjusted sales fell four per cent. A 12 per cent drop in Greater Vancouver was largely offset by a 12 per cent surge in the Fraser Valley. The latter could reflect affordability and larger lot sizes in the region as buyers adapt to higher interest rates. Apartment sales look to be heating up as well, which is consistent with the drive for affordable products, particularly given robust rent growth.
The average value reached $1.21 million, which was 4.5 per cent higher than a year ago but down 2.7 per cent from May. Prices remain supported by lack of supply. The benchmark quality-adjusted price index rose 1.5 per cent from May, with growth across housing segments. The benchmark value is eight per cent off its high but lags below average prices.
The housing market heat observed in 2023’s first half is expected to slow following the June and July rate hikes.
Sales are expected to decline in the coming months as rate holds roll off and households are wary of a period of higher interest rates for longer. That said, demand has proven robust, which should persist given elevated levels of immigration, elevated rents and innate desire for homeownership.
Bryan Yu is chief economist at Central 1 Credit Union.