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BC Check-Up 2017

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BC Check-Up is an annual economic report by the Chartered Professional Accountants of British Columbia. The report evaluates BC as a place to work, invest, and live. BC data is compared with those of Alberta and Ontario, as well as Canada as a whole.

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BC Check-Up 2017

  1. 1. BC CHECK-UP 2017 bccheckup.com
  2. 2. 2017 BC CHECK-UP bccheckup.com +13.5 ppt to 87.1% in Vancouver +5.5 ppt to 53.0% in Victoria Share of median income spent on housing Value of international exports $39.0 billion Average labour compensation to $54,030 – 0.6% $4.4billion Private sector on-residential building investment + 12.8% + 8.6% +5.0% Consumer debt per capita to $62,935largely due to rising mortgage debt—highest in Canada Percentage of labour force between ages 19 and 25 with less than a high school education-0.4 ppt to 5.5% 0.6% Long-term unemployment rate -0.1 ppt to 6.0% Unemployment –0.2ppt to... ...Largely driven by employment activity in Southwest BC Government net debt as a percentage of GDP     to 15.3% 2.5x the growth than in 2015 jobs to 2.38m Top 3 export destinations of labour force has at least some post-secondary education 69.4% ppt = percentage point United States (54%) China (16%) Japan (9%) WORK INVEST LIVE + 73,000 – 0.6ppt
  3. 3. 2017 BC CHECK-UP bccheckup.com 2016 Summary British Columbia led the rest of the provinces with a 3.7% real GDP growth rate in 2016. This was fueled by robust in-migration and strong housing activity. Population in BC grew by 1.25% to reach 4.75 million in 2016. Net in-migration accounted for 49,489 of these new residents, split almost evenly between international and interprovincial residents. Unprecedented housing activity in BC generated employment in housing-related industries, such as construction and finance, insurance, and real estate. This helped to push employment up by 73,300 jobs to 2.38 million jobs in 2016. The BC government posted a budget surplus of $2.7 billion for the fiscal year 2016/17, registering its fifth successive balanced budget in a row. GDP Growth Rate 2016 Goods: +11,000 Services: +62,200 +3.7%+73,300 Jobs
  4. 4. 2017 BC CHECK-UP bccheckup.com Outlook 2017-2018 British Columbia’s economic outlook for 2017 is cautiously optimistic, with TD Bank forecasting a GDP growth rate of 2.9%. Retail demand in BC is expected to soften, but continued employment growth, particularly in Southwest BC, is expected in construction, resources, tourism, and high technology. Changes towards protectionism in US policy could constrain BC’s exports and have negative economic repercussions felt in every part of the province. Policy shifts with the new provincial government will also impact BC’s economy. The future of some major resource projects in BC is uncertain; and any decisions made pertaining to these projects will impact BC’s investment climate. GDP Growth Rate Forecast Goods: +37,200 Services: +67,200 Dec 16-Jul 17 +2.9%+104,600 Jobs
  5. 5. 2017 BC CHECK-UP bccheckup.com About BC Check-Up BC Check-Up evaluates BC as a place to work, invest, and live. BC data is compared with those of Alberta and Ontario, as well as Canada as a whole. The data is obtained from Statistics Canada, and supplemented with information from other credible published sources. For the purpose of this analysis, we use Alberta, Ontario, and the national average for Canada as our comparative jurisdictions. CANONABBC
  6. 6. 2017 BC CHECK-UP bccheckup.com WORK – BC 2016 2015-2016 CHANGE in BC EMPLOYMENT UNEMPLOYMENT RATE EDUCATIONAL ATTAINMENT LABOUR COMPENSATION PER EMPLOYEE + 73,300 – 0.2ppt – 0.8ppt – 0.6ppt ON 6,999,600 BC 2,379,500 AB 2,263,800 18,079,900 AB 8.1% ON 6.5% BC 6.0% 7.0% ON 74.1% AB 70.6% BC 69.4% 73% AB $72,665 ON $59,692 BC $54,030 $58,162 BC IMPROVED as a place to WORK BC British Columbia Canada AB Alberta ON Ontario ppt = percentage point
  7. 7. 2017 BC CHECK-UP bccheckup.com Summary of WORK Indicators WORK INDICATOR BC AB ON CAN Employment 2,379,500 2,263,800 6,999,600 18,079,900 2016VALUE Unemployment Rate 6.0% 8.1% 6.5% 7.0% Educational Attainment 69.4% 70.6% 74.1% 73.0% Labour Compensation per Employee $54,030 $72,665 $59,692 $58,162 Job Creation +73,300 -37,300 +76,400 +133,300 15-16CHANGE Unemployment Rate -0.2 ppt* +2.1 ppt -0.3 ppt +0.1 ppt Educational Attainment -0.8 ppt +2.7 ppt +0.9 ppt +0.9 ppt Labour Compensation per Employee -0.6% -2.8% +1.2% +0.3% Job Creation +151,700 +164,300 +341,200 +858,900 11-16CHANGE Unemployment Rate -1.5 ppt +2.7 ppt -1.4 ppt -0.5 ppt Educational Attainment +3.5 ppt +6.3 ppt +4.6 ppt +4.9 ppt Labour Compensation per Employee +7.2% +4.1% +5.5% +5.9% *ppt = percentage point Source: All WORK indicators are based on Statistics Canada CANSIM Tables 282-0002, 282-0004, 282-0008, 282-0012, 326-0021, 382-0006. The data was accessed between January and April 2017.
  8. 8. 2017 BC CHECK-UP bccheckup.com WORK Job Creation • Employment in BC grew by 73,300 jobs in 2016, reaching a total of 2.38 million. Most of this growth occurred in Southwest BC, where the number of jobs swelled by 69,100. • The service sector accounted for approximately 85% of new jobs in BC in 2016. Three service industries saw significant employment gains in 2016 — trade; information, culture and recreation; and business, building and other support services. • BC’s goods sector added 11,000 new jobs in 2016, mostly in the construction industry, which accounted for 9,800 of the new jobs. 2.5x the job growth than in 2015 Job Creation 2016 SECTOR NUMBER OF JOBS (000s) CHANGE 2015-2016 Goods 470.1 +11.0 Services 1,909.4 +62.2 Total 2,379.5 +73.3 2015 2016 2016 2016 Source: Statistics Canada CANSIM Table 282-0008,
  9. 9. 2017 BC CHECK-UP bccheckup.com WORK Unemployment • BC’s unemployment rate declined by 0.2 ppt to 6.0%. Alberta, the other western provinces, as well as Canada, all experienced higher unemployment rates. • BC’s labour force grew by 3.0% or 74,700 workers to 2.53 million, corresponding with an increase in population and labour force participation. • BC’s youth unemployment rate decreased by 1.4 ppt to 10.3% in 2016. This rate has followed a declining trend since 2011. However, some parts of the province—specifically northern BC and the Kootenay Development Region—saw dramatic one-year increases. +3.0% +1.6% +3.2% Labour Force Labour Force Participation Employment
  10. 10. 2017 BC CHECK-UP bccheckup.com WORK Productivity • The proportion of BC workers aged 25-54 with at least some post-secondary education declined by 0.8 ppt to 69.4%. The Canadian average increased by 0.9 ppt to 73.0%. • Average labour compensation fell by 0.6% to $54,030, the lowest in Canada. The Canadian average increased by 0.3% to $58,162. • If both educational attainment and average compensation continues to decline, this can lead to a potential decrease in business productivity. Decrease in business productivity
  11. 11. 2017 BC CHECK-UP bccheckup.com INVEST – BC 2016 BC IMPROVED as a place to INVEST BC British Columbia Canada AB Alberta ON Ontario 2015-2016 CHANGE in BC Private Sector Non- residential Building Investment ($000s) Employment in the Sciences Value of Exports per Worker Government Net Debt as a % of GDP + 12.8% – 0.2ppt + 5.4% – 0.6ppt ON $14,187 AB $7,522 BC $4,398 $35,862 ON 8.2% AB 7.9% BC 7.0% 7.8% AB $32,025 ON $27,424 BC $15,405 $24,130 ON 38.6% BC 15.3% AB 3.1% 31.5% ppt = percentage point
  12. 12. 2017 BC CHECK-UP bccheckup.com Summary of INVEST Indicators INVEST INDICATOR BC AB ON CAN Private Sector Non-residential Building Investment ($000s) $4,398 $7,522 $14,187 $35,862 2016VALUE Employment in the Sciences 7.0% 7.9% 8.2% 7.8% Value of Exports per Worker $15,405 $32,025 $27,424 $24,130 Government Net Debt as a % of GDP 15.3% 3.1% 38.6% 31.5% Private Sector Non-residential Building Investment ($000s) +12.8% -18.1% +2.1% -3.0% 15-16CHANGE Employment in the Sciences -0.2 ppt* -0.4 ppt 0.0 ppt 0.0 ppt Value of Exports per Worker +5.4% -15.2% +3.4% -3.4% Government Net Debt as a % of GDP -0.6 ppt +4.3 ppt 0.0 ppt +0.5 ppt Private Sector Non-residential Building Investment ($000s) +20.1% +2.2% +10.2% +6.2% 11-16CHANGE Employment in the Sciences +0.6 ppt -0.2 ppt +0.6 ppt +0.6 ppt Value of Exports per Worker +13.6% -23.7% +27.5% +7.2% Government Net Debt as a % of GDP -1.3 ppt +12.0 ppt +2.9 ppt -1.5 ppt *ppt = percentage point Source: Data for INVEST indicators are based on Statistics Canada CANSIM Tables 026-0016, 282-0002, 282-0142, BC Stats Export and Import Tables, and RBC Economics Provincial Fiscal Tables.
  13. 13. 2017 BC CHECK-UP bccheckup.com INVEST Private Sector Non-residential Building Construction Investment • BC’s private sector non-residential building construction investment rose by 12.8% in 2016 to $4.4 billion. • By comparison, Ontario’s increased by 2.1%, while the Canadian total declined by 3.0%. The economic downturn in Alberta led to a 18.1% decline in that province. Non-residential Building Construction Investment in BC SECTOR VALUE IN 2016 ($000s) PERCENTAGE CHANGE (%) 2011-2016 2015-2016 Total Private Sector $4,397,520 +20.1% +12.8% Industrial $648,907 +57.7% +21.2% Commercial $3,748,613 +15.4% +11.5% Institutional and Governmental $1,457,958 -18.4% -8.4% Total Private and Public Sector $5,855,478 +7.5% +6.7% Source: Statistics Canada Table 026-0016.
  14. 14. 2017 BC CHECK-UP bccheckup.com INVEST Employment in the Sciences • In 2016, BC’s share of employment in the natural and applied sciences declined by 0.2 ppt to 7.0%. • A labour force with a large proportion of workers in the natural and applied sciences and related occupations tends to be more productive, and attracts employers seeking a well-educated workforce.
  15. 15. 2017 BC CHECK-UP bccheckup.com INVEST Exports per Worker • In 2016, the value of international exports per worker in BC increased by 5.4% to $15,405, signifying continued economic growth and a healthy investment climate. • The increase in the value of exports is due to a spike in demand for BC’s wood and energy products. • Comparatively, Ontario saw a gain of 3.4% in exports per worker, while Canada and Alberta experienced declines of 3.4% and 15.2% respectively. However, BC continues to fall behind in terms of the absolute value. Trends in Top Five BC Export Commodities ($000,000s) COMMODITY 2015 2016 PERCENTAGE CHANGE (%) 2015-2016 Wood Products $8,406 $10,018 +19.2% Energy Products $5,912 $7,580 +28.2% Machinery and Equipment $4,823 $4,826 +0.1% Metallic Mineral Products $4,432 $4,826 +8.9% Pulp and Paper Products $4,366 $3,936 -9.8% Subtotal $27,939 $31,186 +11.6% All Other Products $7,981 $7,823 -2.0% Total Exports $35,920 $39,009 +8.6% Source: BC Stats, annual data for BC exports with selected destination and commodity detail.
  16. 16. 2017 BC CHECK-UP bccheckup.com INVEST Government Debt as Percentage of GDP • BC’s government net debt-to-GDP ratio declined by 0.6 ppt to 15.3% in fiscal year 2016/17, the lowest level after those of Alberta and Saskatchewan. • BC’s continued decline in the share of government net debt to GDP strengthens the province’s credit rating and encourages investment. • Comparatively, Ontario’s ratio of debt to GDP remained at 38.6%, while Alberta’s increased by 4.3 ppt to 3.1% and in Canada overall, the government net debt-to-GDP ratio increased by 0.5 ppt to 31.5%. -0.6ppt BC’s Government Net Debt-to-GDP Ratio Declined to 15.3%
  17. 17. 2017 BC CHECK-UP bccheckup.com LIVE – BC 2016 HOUSING and debt Remain top Challenge in BC. BC British Columbia Canada AB Alberta ON Ontario 2015-2016 CHANGE in BC Consumer Debt per Capita Housing Affordability* Long-term Unemployment Youth at Risk + 5.0% + 13.5ppt + 5.5ppt – 0.1ppt – 0.4ppt BC $62,935 AB $52,693 ON $52,636 $54,191 BC Vancouver 87.1% ON 61.7% BC Victoria 53.0% AB 33.5% 43.2% AB 1.0% ON 0.8% BC 0.6% 0.8% AB 9.0% ON 5.8% BC 5.5% 7.6% ppt = percentage point *Percentage share of median pre-tax household income required to cover the cost of mortgage payment (principal and interest), property taxes, and utilities based on the median market price for an overall aggregate of housing types. Vancouver Victoria
  18. 18. 2017 BC CHECK-UP bccheckup.com Summary of LIVE Indicators LIVE INDICATOR BC AB ON CAN Consumer Debt per Capita $62,935 $52,693 $52,636 $54,191 2016VALUE Housing Affordability* Vancouver 87.1% Victoria 53.0% 33.5 61.7 43.2 Long-term Unemployment 0.6% 1.0% 0.8% 0.8% Youth at Risk 5.5% 9.0% 5.8% 7.6% Consumer Debt per Capita +5.0% -0.1% +3.8% +2.8% 15-16CHANGE Housing Affordability* Vancouver +13.5 ppt Victoria +5.5 ppt +0.3 ppt +6.5 ppt +3.0 ppt Long-term Unemployment -0.1 ppt +0.6 ppt 0.0 ppt 0.0 ppt Youth at Risk -0.4 ppt -0.9 ppt +0.4 ppt 0.0 ppt Consumer Debt per Capita +16.1% +8.0% +20.3% +23.1% 11-16CHANGE Housing Affordability* Vancouver +13.5 ppt Victoria +5.5 ppt -5.4 ppt +10.6 ppt +1.6 ppt Long-term Unemployment -0.4 ppt +0.5 ppt -0.4 ppt -0.2 ppt Youth at Risk -0.8 ppt -2.5 ppt -2.8 ppt -2.0 ppt Source: Data for LIVE indicators are based on Statistics Canada CANSIM Tables 051-0001, 176-0027, 176-0069, 176-0074, 282-0086, Statistics Canada Labour Force Survey Custom Table (Youth at Risk), and Housing Affordability Index from RBC Economics. This data was accessed between February and May 2017. *Percentage share of median pre-tax household income required to cover the cost of mortgage payment (principal and interest), property taxes and utilities based on the median market price for an overall aggregate of housing types. ppt = percentage points
  19. 19. 2017 BC CHECK-UP bccheckup.com LIVE Affordability • In BC, consumer debt per capita rose by 5.0% in 2016 to $62,935, the highest among Canadian provinces. Mortgage debt comprised three-quarters of this debt, due to the unprecedented activity in BC’s housing market. • Total consumer debt per capita held at Canada’s banks and credit unions has doubled since 2007. Low interest rates since the financial crisis of 2008 and rising housing prices have encouraged consumers to take on more debt, which has put families at greater risk. • In 2016, households in Metro Vancouver earning the median pre-tax income put 87.1% of this income towards their mortgage payment, property taxes, and utilities, while households in Victoria earning the median pre-tax income contributed 53.0% of their income to home ownership. • With average labour compensation being the lowest in the country and consumer debt per capita being the highest in the country, it is even more difficult for the average household to afford a home in BC.
  20. 20. 2017 BC CHECK-UP bccheckup.com LIVE Vulnerability • In BC, the long-term unemployment rate declined by 0.1 ppt to 0.6% in 2016, below the Canadian average of 0.8%. Over the past five years, long-term unemployment has been on a consistent decline, indicating that labour market conditions have improved. • In BC, 5.5% of the labour force aged 19-24 has less than a high school education. Over the past five years, this indicator has declined, implying that there are fewer youth experiencing financial and/or social difficulties due to lower earning potential. • The steady decline in BC also reflects rising high school completion rates, and an inflow of educated immigrants.
  21. 21. 2017 BC CHECK-UP bccheckup.com Definitions WORK Job creation: the annual change in the number of employed workers. Unemployment rate: the number of unemployed persons as a percentage of the labour force, which is defined as people aged 15 and older who are employed or actively looking for work. Educational attainment: the percentage of the labour force aged 25 to 64 with post-secondary accreditation. Labour compensation per employee: remuneration received by an individual for work done, in the form of wages or salary, and including employers’ social contributions, before deducting government transfers. INVEST Private sector investment in non-residential infrastructure: excludes expenditure on residential construction and engineering work (bridges, roads, and electrical dams). Employment in the sciences: the share of employment in the natural and applied sciences, reflecting the extent of technical knowledge dissemination throughout the workforce. Value of exports per worker: the ratio of the inflation- adjusted value of exports to the number of workers (or exports per capita). Exports include shipments to other countries and other provinces (both goods and services are included). Government net debt as a percentage of GDP: the ratio of government net debt to GDP and measures the fiscal position of a provincial government. LIVE Consumer debt per capita: includes both personal and mortgage debt. Youth at risk: the percentage of the labour force aged 19-24 lacking a high school diploma. Long-term unemployment: the share of the labour force out of work for 52 weeks or more. Housing Affordability Index: the RBC housing affordability measures the proportion of median pre- tax household income required to service the cost of mortgage payment, property taxes, and utilities based on the median market price for an overall aggregate of housing types in a given market.

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