As we close the books on 2021 and nervously contemplate a third consecutive year of living with COVID-19, we can take comfort that B.C.’s economy and labour market have largely healed after the dramatic slump experienced in the spring of 2020.
Over the last 18 months, overall economic production (gross domestic product, or GDP) has rebounded. In addition, B.C.’s employment recovery has been the strongest in the country, with job growth in 2021 expected to exceed 6 per cent. British Columbia was the first province to return to pre-COVID employment levels – a milestone achieved several months ago.
Job creation has been impressive, extending from energy and mining to manufacturing, professional and scientific services, wholesale trade, logistics, and the public sector — where employment growth has been especially pronounced.
That said, businesses in some parts of the B.C. economy are still hurting amid persistent COVID-related limitations, shifts in consumer behaviour and buying habits, and a severely hobbled tourism and travel sector.
Employment has not fully recovered in several important industries, including construction, hospitality, accommodation, leisure and entertainment, and air transportation – most of which are part of the broad tourism economy, where the damage done by the pandemic is most visible.
Moreover, B.C.’s unemployment rate remains higher than it was back in 2018-19, suggesting that some degree of “slack” still exists in the labour market. Finally, the severe flooding that the province endured in November will detract slightly from economic growth in 2021 – but then boost aggregate spending in 2022, as rebuilding and repair work accelerates and the $5 billion in assistance promised by the federal government begins to flow.
With the significant normalization of economic and business activity following the lockdowns imposed in 2020, the demand for workers has grown faster than the supply, aggravating labour market pressures.
This is apparent in Statistics Canada’s job vacancy survey, which estimates the number of unfilled positions as a share of all paid jobs. In B.C., the vacancy rate now stands at 7.4 per cent, the highest in the country. This equates to 173,000 unfilled positions. (For Canada as a whole, there are more than one million vacant jobs.) Shortages of workers are widespread, affecting retail trade, health care and social services, advanced technology, trucking, and manufacturing, among others.
Oddly, labour shortages are also being reported in sectors where employment is not yet back to pre-COVID levels, such as restaurants, bars and ski resorts. In these industries, some former employees have shifted to other lines of work or left the labour force entirely. The slowdown in immigration is also impacting some service businesses that depend on temporary foreign workers.
Looking ahead, the unwelcome arrival of yet another COVID-19 variant, Omicron, clouds the economic picture – for the world, and also for B.C. The new variant is sweeping through Europe and will soon be the dominant strain of the virus in North America.
Far more transmissible than previous versions of the disease, it has the potential to hamper economic growth by prompting governments to re-introduce new restrictions (as in the Netherlands in mid-December and Quebec this week), disrupting global manufacturing and transport supply chains, and keeping risk-averse consumers stuck at home. Already, economic forecasters have been trimming their growth projections for the coming year.
The table below summarizes the Business Council of B.C.’s most recent forecast for the provincial economy.
After a sharp rebound in GDP, employment, and retail sales in 2021, we expect slower but still solid growth in 2022. The risks to the forecast are firmly on the downside, with the effects of the Omicron variant on domestic consumer spending as well as B.C.’s international exports being the principal ones.
In addition, higher inflation could lead to earlier and more aggressive action to hike interest rates by the Bank of Canada – a development that would hit housing markets and weigh on consumer purchases of durable goods like automobiles and furniture.
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
