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Data points: B.C. payroll counts climb as SME confidence continues to erode

Central 1 chief economist Bryan Yu's weekly analysis of the latest economic indicators
The Canadian Federation of Independent Business reports declining confidence among B.C. small and medium-scale enterprises

B.C. employers recorded an increase in payroll counts in June, marking a third consecutive month of increases despite slowing economic growth.

From the latest Survey of Employers, Payroll and Hours (SEPH), June saw a seasonally adjusted 0.2-per-cent monthly gain (6,060 positions), lifting total job count to 2.56 million positions.

This contrasts with a marginal decrease in employment as per the Labour Force Survey for the same month. While these measures typically move in tandem over the long run, divergence could reflect timing of job losses, agriculture employment or multiple job holders. Broadly, however, the trend still points to a loosening of conditions. The job vacancy rate fell for a fourth straight month to 4.6 per cent and closer to a level observed prior to the pandemic.

June’s job increases were observed broadly, although service-producing industries showed a 0.3-per-cent monthly increase while goods-producing industries were virtually the same. Construction (917 positions) and utilities (380 positions) led the way among goods-producing industries, but they were offset by fewer positions in manufacturing (1,049 positions) and forestry (438 positions). Gains on the services side were led by health care and social assistance (4,970 positions), professional, scientific and technical services (1,142 positions) and accommodations and food services (851 positions). Services-producing industries that saw fewer positions include information and cultural industries (1,675 positions) and administrative and support, waste management and remediation services (310 positions).

On the wage front, seasonally adjusted average weekly earnings jumped 3.1 per cent to $1,203.72 on a year-over-year basis, which is lower than last month’s four-per-cent increase. Month over month, average weekly earnings declined 0.3 per cent in June.

The Business Barometer survey released last week by the Canadian Federation of Independent Business showed declining confidence among B.C. small and medium-scale enterprises (SMEs). The long-term index fell to 54 points from the 54.6 points recorded in July, while the short-term three-month index fell to a disappointing 43.5 points from 46.5 points the previous month – a further slide below the index’s neutral benchmark of 50 points.

B.C. continued to record the lowest short-term optimism reading among all provinces. In addition to the higher interest rate environment, inflation and economic risks, the port strike may have weighed on small business sentiment. Nationally, the sentiment was more upbeat. Long-term SME optimism edged up by 0.4 points in August while the short-term forecast dropped 1.2 points to 47.9.

On general business indicators, small businesses in B.C. reported wage, tax and regulatory costs as some of their major cost constraints. A shortage of skilled labour and insufficient domestic demand continued to top the lists of limitations on sales or production growth for B.C. SMEs. Meanwhile, 35 per cent of B.C. small businesses regard themselves to be in good business health, while 21 per cent report otherwise. Moving gradually into the latter half of summer, 24 per cent of respondents reported plans to expand full-time staff, yet 21 per cent of the businesses surveyed expected to see lower employment levels in the coming three to four months.

Bryan Yu is chief economist at Central 1.