BC CHECK-UP 2019 - bccheckup.com - CPABC
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
bccheckup.com BC CHECK-UP 2019
INDICATORS
CPABC’s BC Check-Up uses the selected economic and social
indicators to evaluate BC as a place to WORK, INVEST, and LIVE.
WORK INVEST LIVE
Employment Did BC’s labour market Private Non-Residential Investment Consumer Debt per Capita What is the
expand or shrink? How much did the private sector invest in average amount of consumer debt held by
BC’s non-residential building projects? an individual living in BC?
Unemployment Rate What is the share of
unemployed workers in BC’s labour force? Value of Exports per Worker What is the Housing Affordability How much of an
value of BC’s total exports per worker? individual's income is spent on housing
costs, which include mortgage payments,
property taxes, and utilities, in Vancouver
Educational Attainment What is the and Victoria?
share of BC workers with at least some Government Debt-to-GDP Ratio What is
post-secondary education? the share of the provincial government’s
net debt to GDP?
Labour Compensation How much did the
average BC worker make? Labour Productivity What is the hourly
output of BC’s labour force?
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
2OUTLOOK 2020
BC’s economic growth is expected to moderate in 2019 Looking at global factors, while the Canada-United States-
compared to previous years and should continue to pick Mexico Agreement (CUSMA) was signed in November 2018,
up momentum in 2020. According to TD Economics, the the treaty has not been ratified and tariffs on our softwood
province’s predicted GDP growth rate for 2019 is 1.7%, down lumber remain in place. This has affected the province's overall
from 2.4% in 2018. This is largely due to a significant slowdown trade outlook. The value of BC's softwood lumber exports fell
of BC’s housing market. Two key factors that are protecting the by almost 20.0% to $2.6 billion when looking at year-to-date
province’s economy from the full impact of the housing market data between June 2018 and June 2019. Continued depressed
slowdown are the ongoing strengths of BC’s labour market and lumber prices and high costs of fibre have shuttered various
private sector investment. However, current global tensions and mills across the province.
politics may further affect BC’s economic opportunities.
Although there are ongoing tensions between Canada and
BC continues to have the country’s lowest unemployment China, as well as between the United States and China, they
rate, adding 34,400 jobs between December 2018 and July have not affected BC’s trade relationships with China. Year-
2019. Growth in the service sector, particularly in the trade; to-date data suggests a 2.9% increase in the value of BC’s
educational services; and finance, insurance, real estate, exports to China between June 2018 and June 2019. However,
rental and leasing industries, was entirely responsible for the as the protests in Hong Kong continues, and the legal case with
employment gains. Job creation is expected to continue Huawei's CFO remains unresolved, there is some uncertainty
into 2020. associated with this trade relationship.
Although the estimated capital cost of BC’s major projects Overall, BC can expect ongoing economic uncertainty into
fell by 13.1% to $355.3 billion between the fourth quarter of 2020, with TD Economics forecasting a slight rebound in
2018 (Q4 2018) and Q1 2019, private sector non-residential economic growth to 2.0%, due to an expected recovery in the
investment remains active, particularly for commercial building housing market. Continuing to diversify BC’s economy — goods
construction. Between Q1 2018 and Q1 2019, non-residential and services as well as trade partners — will be beneficial as BC
building construction investment increased by $447 million. tries to navigate these volatile times.
This was largely propelled by commercial investment, which
grew by 41.3% in the same time period.
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
3WORK
All four WORK indicators were positive in 2018, but the
gains were moderate compared to the previous year.
Population growth remained steady in 2018, and economic activity was sustained despite a slowdown in the
housing market. The number of jobs in BC grew by 26,800 (or 1.1%), the slowest rate since 2014.
BC had one of the lowest unemployment rates in the country in 2018, declining by 0.4 ppt to 4.7%. Similarly
BC's youth unemployment rate was also the lowest in the country, declining by 0.5 ppt to 8.1%.
The province’s labour force is also increasingly becoming more educated, with educational attainment
increasing by 0.7 ppt to 72.1% in 2018, but this was still behind the national average of 74.5%.
A more educated workforce and a diversified economy also pushed average labour compensation up by
2.1% to $57,707 in 2018, but this was still behind the national average of $60,028.
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
4WORK
of labour force has at least
72% some post-secondary 74%
Job growth in Goods > Services education
BC Canada
+1.7%
Employment Educational Attainment
+0.9%
Employment in BC’s The proportion of BC’s
goods sector grew at a labour force with a
faster rate than in the university degree is
Goods Services
service sector in 2018. growing.
8%
57k
UNEMPLOYMENT
7% $
JOB VACANY
6% is the average compensation
per worker in BC
Labour Compensation
5%
Unemployment
BC's real labour
Low unemployment and 4% compensation is low
high job vacancy rates relative to the national
indicate tight labour 3% average of $60,028, but
market conditions. 2015 2016 2017 2018 it is catching up.
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
5WORK Employment
Employment in BC has grown steadily since 2009, and 2018 was no different. Total
employment in BC increased by 26,800 jobs, or 1.1%, to reach 2.49 million. The five-
year trend was more dramatic, with provincial employment growing by 228,000 jobs,
or 10%, between 2013 and 2018.
Employment growth occurred across many service industries in 2018:
Job growth in Goods > Services
• Health care and social assistance industries: +19,700 jobs
• Professional, scientific and technical services industries: +11,300 jobs
• Accommodation and food services industries: +5,100 jobs
+1.7%
Despite overall gains across the service sector, some service industries experienced
job losses, including the information, culture and recreation industry; trade; and the
finance, insurance, real estate, rental and leasing industries.
+0.9% While smaller in absolute terms, employment in BC’s goods sector grew at a faster rate
(1.7%) than in the service sector in 2018, due to
• +9,800 new construction jobs, driven by ongoing construction in both residential
and non-residential projects.
Goods Services
BC +1.1% CA +1.3% ON +1.6% AB +1.9%
0 1.9
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
6WORK Unemployment Rate
Over the past decade, BC’s unemployment rate has declined at a steady pace. In 2018,
8% this indicator declined by 0.4 ppt to 4.7%, one of the lowest in the country.
UNEMPLOYMENT
Strong economic growth for the fifth year in a row and tight labour market conditions
boosted job availability in BC, especially in the service sector. This resulted in a small
7% rise in real wages and a decrease in unemployment.
JOB VACANY
The province’s declining unemployment rate can be attributed to population growth
and economic opportunities, and to some extent, lower labour force participation. In
6% three of the past five years, BC’s labour force participation rate has declined, resulting
in the number of people on the unemployment rolls and seeking work decreasing. This
trend is driven by several factors, including BC's aging labour force.
5% BC’s young workers (ages 15- 24) enjoyed the benefits of an improved labour market,
especially in the service sector. As a result, BC's youth unemployment rate declined by
0.5 ppt to 8.1%, well below the national average of 11.1%. This was the continuation of a
4% decade-long trend.
B BC C AB ON CAN
3%
2017 5.1% 7.8% 6.0% 6.3%
2015 2016 2017 2018
2018 4.7% 6.6% 5.6% 5.8%
AB -1.2ppt CA -0.5ppt BC -0.4ppt, ON -0.4ppt
-1.2 0
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
7WORK Educational Attainment
Rising productivity generally boosts real income and wages. Education and training
of workers is one of the BC's government’s highest priorities and one of the best
tools it has for improving the province's productivity. In addition, rising labour force
of labour force has at least educational attainment creates a better standard of living at the individual and
72% some post-secondary 74% aggregate levels.
education
BC Canada The level of educational attainment in BC’s workforce has increased over the past two
decades. In 2018, educational attainment in BC rose by 0.7 ppt to 72.1%, its highest
level ever. This was a 4.2 ppt increase over its 2009 level of 63.0%.
Similarly, the proportion of the labour force with a university degree rose from 32.4%
to 36.1% during the same period. This can be partially explained by BC's aging labour
force, as older workers with less education retire.
BC +0.7% CA +1.1% AB +1.2% ON +1.9%
0 1.9
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
8WORK Labour Compensation
Real labour compensation per worker is the pre-tax income earned by individual
57k
workers, net of inflation. It is defined here as the average amount of annual labour
$
compensation per worker — including pre-tax wages and salaries as well as
supplementary income paid to employees — and is adjusted for inflation using the
provincial Consumer Price Index.
In BC, real labour compensation per worker grew by 2.1% to $57,707 in 2018. Between
2013 and 2018, this indicator grew by 4.9% for BC.
is the average compensation In Canada and across the developed world, labour markets have improved due to a
per worker in BC favorable combination of demographics, technology, and government policy. But, at
least in Canada, the abundance of jobs has not yet led to a commensurate increase
in real wages. Nevertheless, if high employment continues, it should fuel further
improvements in real earnings.
AB -1.6% CA +0.9% ON +1.2% BC +2.1%
-1.6 0 2.1
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
9INVEST
All four INVEST indicators were positive in 2018,
reflecting a strong investment climate.
After declining in 2017, BC's private sector non-residential building investment rebounded by 23.9% to reach
$5.2 billion.
The value of BC’s exports per worker rose by 6.7% in 2018, and registered a 28.8% growth rate over the past five
years, but it was still behind the national average in absolute terms.
There was no change in BC’s government net debt as a share of GDP in 2018.
Finally, BC's labour productivity grew by 0.9% in 2018. This was a modest gain, but the gain was greater than any of
the other jurisdictions, and one of the best in the country. For at least the past decade, BC’s productivity has been
lower than the national average, but BC may now be closing the productivity gap with Canada.
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
10INVEST
Private sector non-residential Government net
building construction debt to GDP ratio
increased by almost 1/4 to
$
5.2
2018-19 2019-20F
Private Non-Residential
14.8% 14.8%
Investment
billion
Government Net Debt to
GDP Ratio
After a downturn in 2020-21F
2017, BC’s private sector There was no change to
non-residential building 15.5% BC’s government net debt
construction investment to GDP ratio in fiscal year
increased in 2018. 2018/19.
Value of Exports per
Worker
$
17k BC $
26k Canada
BC’s export value per Labour Productivity
worker grew by almost
29% 17%
For every hour worked,
30% over the past five
years, indicating positive the average worker
investment conditions and over the past 5 years over the past 5 years contributed $58.50 to
continued growth. BC’s GDP in 2018.
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
11INVEST Private Non-Residential Investment
Private sector investment is an indicator of individual and business investor confidence.
Private sector non-residential Our indicator, private sector non-residential building construction investment, includes
building construction both commercial and industrial investment.
increased by almost 1/4 to After a downturn in 2017, private sector non-residential building construction
$
5.2
investment in BC increased by 23.9% to $5.2 billion in 2018. Industrial construction
accounts for just over 20.0% of private sector non-residential construction. In 2018,
BC’s industrial construction investment grew by 54.4%, while commercial construction
investment increased by 17.8%.
Non-Residential Building Construction Investment in BC ($000s)
billion
Value in 2018 Percentage Change (%)
Sector
(‘000S) 2013-2018 2017-2018
Total private sector $5,193,603 33.5% 23.9%
Industrial $1,072,321 51.4% 54.4%
Commercial $4,121,282 29.5% 17.8%
Institutional and governmental $1,664,427 26.9% 12.6%
Total private and public sector $6,858,030 31.8% 20.9%
AB -1.4% ON +10.6% CA +10.7% BC +23.9%
-1.4 0 23.9
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
12INVEST Value of Exports per Worker
Exports are the foundation of BC’s resource-dominant economy. In 2017, the exports of
goods and services comprised almost 40% of BC’s real Gross Domestic Product (GDP).
There has been little variation in this ratio during the past decade.
Our indicator is the ratio of the value of international commodity exports to the number
of workers in the provincial labour force. An increase in the value of exports per worker
signifies industrial growth and improved investment conditions.
The value of BC exports grew to $46.4 billion in 2018, despite a decline in the value of
softwood lumber exports. The losses incurred were offset by gains in other sectors of
BC’s more diversified economy (for example pulp and paper, coal, metallic minerals, and
$
17k BC $
26k Canada machinery and equipment).
The United States, China, Japan, South Korea, and India were BC’s top five export
destinations respectively in 2018, comprising 84.2% of all provincial exports. The US
share was 48.9%, down from the previous four years.
29% 17%
Value in 2018 Share of Total
Destination
(X$1,000,000) International Exports
United States $22,723 48.9%
China $6,757 14.5%
over the past 5 years over the past 5 years Japan $5,080 10.9%
South Korea $2,940 6.3%
India $1,598 3.4%
Total $39,098 84.2%
ON +0.2% BC & CA +6.7% AB +15.4%
0.2 15.4
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
13INVEST Government Net Debt to GDP Ratio
Rising government debt as an outcome of successive government deficits is regarded as
a strong disincentive to private sector investment. Growth in government debt places a
Government net greater burden on current and future taxpayers, and can even diminish the government’s
debt to GDP ratio credit rating. Hence, a decrease in the share of government net debt to GDP is regarded as
desirable from an investment perspective.
There was no change to BC’s government net debt to GDP ratio in fiscal year 2018/19.
2018-19 2019-20F For the second year in a row, this indicator was 14.8%, as the BC government budgeted a
second year of surplus. The provincial government is expecting that its debt level would
14.8% 14.8% stay at 14.8% for the current fiscal year.
Continued strong economic growth during the past few years fueled revenue growth in
BC, allowing the government to increase spending on its policy priorities such as childcare
and clean energy with no increase in tax rates. Projections for new spending in the next
few years are predicated on the assumption that economic growth will remain robust, and
2020-21F the construction of the LNG facility in Kitimat will generate significant new government
revenues. For this reason, three more years of revenue surplus have been forecasted.
15.5% Despite the projected revenue surpluses, capital spending in BC is predicted to rise over
the next three years, with investments in health, transportation, and education projects.
The outcome will be an increase in provincial government debt of $14.5 billion over the
three-year fiscal plan. Accordingly, total provincial government debt to GDP is projected
to rise to 16.1% by fiscal year 2021/2022. This will still be one of the lowest debt burdens
among our comparison jurisdictions, and across Canada.
CA -0.5% BC No Change ON +1.0% AB +2.2%
-0.5 0 2.2
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
14INVEST Labour Productivity
Real labour productivity measures the efficiency of the workforce, or the amount of
real GDP produced per hour worked. Workforce skills training and investment in capital
to augment labour are two major factors that boost labour productivity. Jurisdictions
that make significant productivity gains improve their competitiveness, attract
investment, and witness an improved standard of living in the long term.
BC's overall labour productivity grew by 0.9% in 2018, and by 6.4% between 2013 and
2018. While not a strong improvement, these were still the greatest one and five-year
gains in our comparison jurisdictions.
For decades, Canadian productivity growth has been sluggish compared to that of the
US. Greater adoption of technology boosted Canadian output and productivity growth
between 1996 and 2004, but since that time, productivity growth appears to have
waned. After the Great Recession, overcapacity in Central Canada’s manufacturing
sector dampened national productivity growth, and since 2008-2009, BC’s
productivity has gained vis-à-vis Ontario and the national average.
BC's business sector productivity grew by 1.2% in 2018, faster than BC's overall
productivity (0.9%). The goods industries realized greater productivity gains, at 2.2%,
compared to 0.4% in the service industries.
AB -0.3% ON & CA -0.2% BC +0.9%
-0.3 0 0.9
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
15LIVE
Both of our LIVE indicators for BC deteriorated in 2018,
implying that BC is becoming a more expensive place to live.
BC’s consumer debt per capita rose by 2.6% to $58,329 in 2018, still the highest level of personal debt burden
among our comparison jurisdictions.
Housing affordability in Vancouver and Victoria also worsened in 2018. Despite the cooling of housing prices in 2018,
the median share of household income required to pay for housing costs in both cities rose by 5.1 ppt. This continued
to squeeze many potential buyers out of the market.
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
16LIVE
87% 60%
Vancouver Victoria
+2.6%
+2.1% of median pre-tax household
income is spent on housing
FOR SALE
$
$
Salary Debt
Housing Affordability
Consumer Debt per Capita
Despite a slower housing market, housing remains unaffordable for
BC’s consumer debt is higher than the average worker’s salary.
many in Vancouver and Victoria.
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
17LIVE Consumer Debt per Capita
Our definition of consumer debt includes both personal (credit cards, personal lines of
credit, and personal loans) and mortgage debt held at chartered banks.
The accumulation of excessive consumer debt — both individually and as a society —
makes borrowers and their families more financially vulnerable to interest rate hikes
or unanticipated events such as loss of employment, catastrophic events, or a health
crisis. The total amount of consumer debt held at Canada’s chartered banks has more
than doubled since 2008, reaching $1.7 trillion in 2018.
+2.6%
BC’s consumer debt per capita rose by 2.6% to $58,329 in 2018, still the highest
+2.1% level of personal debt burden in Canada. Strong growth in consumer spending and
residential investment, at a time of explosive housing costs combined with tepid real
income gains, propelled many individuals in BC to incur greater personal debt. The
total amount of consumer debt held at BC’s chartered banks grew by $11.3 billion to
$291 billion.
The Canadian average is comparatively lower than the western provinces and Ontario,
because the definition is limited to only personal debt held at chartered banks.
$
$
Note: Previously, we have calculated consumer debt per capita using the sum of consumer debt held at both chartered banks and non-banks
Salary Debt such as credit unions. As of October 2018, the Bank of Canada has ceased publication of credit union consumer debt. While this is available at
the provincial level, we have chosen to omit consumer debt held at credit unions to make Canada and our jurisdictions comparable.
AB -1.3% CA +1.8% BC +2.6% ON +3.0%
-1.3 0 3.0
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
18LIVE Housing Affordability
The cost of housing has risen across Canada, becoming acutely worrisome in BC
and Ontario cities during the past five years. The RBC housing affordability index is
defined as the share of median pre-tax household income needed to cover the cost of
mortgage payments (principal and interest), property taxes, and utilities based on the
87% 60% median market price for a range of housing types in a given market.
Vancouver Victoria When this ratio of income to housing costs rises, it means that housing has become
less affordable. This information is not available on a provincial aggregate basis, so
we use RBC’s indices for the major housing markets in Greater Vancouver, Victoria,
Calgary, Greater Toronto Area, and Canada.
of median pre-tax household
income is spent on housing In both Vancouver and Victoria, housing sales activity moderated through 2018, with
resales declining in both cities. This is expected to carry on through the rest of 2019.
Declining housing prices in the first two quarters of 2019 led to slightly improved
affordability in both cities, but this did not offset activity in the first half of the year.
The overall outcome was a 5.1 ppt worsening in housing affordability for both cities
in 2018. The ownership cost of a home in Vancouver represented 87.3% of household
FOR SALE income in 2018, and 60.2% in Victoria.
Toronto +0.2 ppt Calgary +1.6 ppt Canada +2.2 ppt Victoria & Vancouver +5.1 ppt
0 5.1
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
19BC CHECK-UP 2019
As leaders in analyzing and validating information, CPAs are often called
upon to provide independent, fair, and objective information to assist in
decision-making. It is our hope that BC Check-Up will make a positive
public policy contribution to the province by stimulating discussion about
how to make BC a better place in which to WORK, INVEST, and LIVE.
BC Check-Up is available online at bccheckup.com.
MEDIA CONTACT
Vivian Tse
Public Affairs Manager
604.488.2647 | vtse@bccpa.ca
The report is prepared by Chisholm Consulting, in association with Gold Island Consulting. Opinions expressed in the report do not
necessarily reflect those of individual chartered professional accountants.
© BC Check-Up, Chartered Professional Accountants of British Columbia
WORK INVEST LIVE BC Check-Up 2019 | bccheckup.com |
20You can also read
