Listen to our podcast episode with CPABC's economist, Aaron Aerts, and communications manager Vivian Tse. Part of our Coffee Chats with CPABC podcast series. Want the full story? Read CPABC's complete economic snapshot report.
After eleven consecutive months of job gains in BC, April marked a set back as both the province and the country as a whole saw total employment decline. In April, the province shed 43,100 jobs leading to an increase in the unemployment rate, up 0.2 percentage points to 7.1%. Meanwhile, Canada’s unemployment rate saw a larger increase, up 0.6 percentage points to 8.1%.
The job losses were largely attributed to an increase in business restrictions across the country in late March and early April (including BC’s “circuit breaker”) to combat the rising number of cases during the third wave of the COVID-19 pandemic. As a result, the job loss in BC was concentrated in industries directly affected by the new restrictions, such as accommodation and food services (-21,900), entertainment and media (-16,900), and wholesale/retail trade (-4,600). Job losses were concentrated within part-time positions, making up around 87% of the monthly decline.
Despite the recent setback, the provincial workforce still remained near pre-pandemic levels due to its strong overall recovery to date. In contrast, overall employment in Canada remains down by 2.6% in April 2021 compared to February 2020. The expectation is that this was a short-term blip, and as business restrictions ease, employment should rebound.
After falling to historic lows early in the pandemic, retail spending has seen a strong recovery. In fact, since June 2020, retail spending in both Canada and BC has been at least as strong as pre-pandemic levels. In BC, retail spending was over 10% higher in both January and February of 2021 compared to February 2020. While StatsCan data for March and April 2021 is not yet available, RBC consumer spending data shows the recent restrictions did have a negative effect on spending, but did not result in a significant decline in spending overall as seen in previous shutdowns.
Throughout the crisis, consumers’ basket of goods purchased at retail stores has shifted dramatically. Since late fall, social, business and travel restrictions put significant pressure on industries related to travel, office work, and social interaction. However, as of February 2021, total retail spending in all but two categories had increased compared to January 2020.
As Canadians continue to work from home in greater numbers and minimize social engagement, clothing stores continued to see sales well below pre-pandemic levels, with spending down by nearly a third (31.9%). Spending at gasoline retailers was also down by 10.2% despite recent strength in gas prices. The three retail categories that experienced the largest increases as of February 2021 were building/garden supplies (+26.7%), electronics (+18.5%) and miscellaneous (+17.2%) which includes services such as florists and office supplies.
Some of the most optimistic data continues to be found in BC’s commodity export market.
After struggling early on in the crisis, BC’s commodity export market has seen a resurgence in recent months. In March 2021, overall exports were up 25.3% compared to March 2020, led by increases in solid wood products (+71.8%), metallic mineral products (+22.7%) and agriculture goods (+3.9%).
The rebound has been driven by burgeoning prices for most of BC’s key export commodities. The top performer in terms of key BC commodities has been forestry products, which saw its prices more than double when compared to any period between 2019 and early 2020. Prices of energy, metals/minerals and agriculture products have also experienced gains thus far in 2021, with all three now higher than where they started in 2020. If global demand remains strong and commodity prices continue to perform well, BC’s commodity export market will be an increasingly important component of BC’s economic recovery.
The 2020 recession saw Canadian real GDP fall by 5.4% compared to 2019. While BC’s economy fared relatively better, real GDP is still estimated to have fallen around 4.8%. The unemployment rate also spiked, reaching 9.6% for Canada and 8.9% in BC for 2020 as a whole – well above the 4.7% rate seen in BC in 2019.
However, the forecasts expect both the Canadian and BC economy to bounce back in 2021 and into 2022. The economic picture improved considerably over the later half of 2020 and coming into 2021, with many indicators indicating a strong economic recovery is underway. This is expected to result in a strong rebound in 2021, with real GDP forecast to grow 5.9% in BC and 6.1% in Canada. While unemployment is expected to lower, it’s still expected to remain above pre-crisis levels. By 2022, GDP is forecast to be above pre-crisis levels in both Canada and BC, while the unemployment rate is expected to return to slightly above pre-crisis levels.
Read our full economic snapshot for more details.
Aaron Aerts is an economist for CPABC.
In Other News
According to BC Check-Up: Invest, an annual report by the Chartered Professional Accountants of British Columbia (CPABC) on investment trends across the province, there were 43,106 housing units started in 2022, down slightly from the 43,360 started in 2021.
Starting in early 2022, central banks around the world began to increase interest rates to combat inflation, resulting in significant and quick successions of interest rate increases. As of the writing of this article, the Bank of Canada’s (BoC) key interest rate stands at 4.5%, up from 0.25% at the start of 2022.
On December 7, the Bank of Canada (BoC) raised the overnight interest rate to 4.25%, another 50 basis point hike. This marks the seventh consecutive increase in 2022, up a total of 400 basis points from the 0.25% rate at the start of the year.