TORONTO, Sept. 22, 2015 /CNW/ - Fuelled by consumer spending and strong
housing market activity, British Columbia's economy is expected to
record a country-leading pace of growth in 2015, according to the
latest Provincial Outlook released today by RBC Economics. RBC forecasts that real economic
activity will expand by 2.9 per cent in 2015 and strengthen marginally
to 3.1 per cent in 2016.
"Thanks to the strength of its consumers, British Columbia continues to
maintain its position at the top of the provincial growth rankings in
2015," said Craig Wright, senior vice-president and chief economist,
RBC. "While softer growth prospects in Asia are tempering activity in
some export-oriented sectors, domestic demand continues to benefit from
rising housing valuations, low gasoline prices and relatively
inexpensive borrowing costs."
With low interest rates boosting resale activity in the already frothy
Vancouver market, and with sellers holding the upper hand in the supply
constrained market, home prices in August 2015 saw their biggest annual
increase since 2010 at 12 per cent.
"Against this backdrop, homeowners in the province ramped up renovation
activity and construction of new homes gathered speed with few signs
that the housing boom will ease in the current low interest rate
environment," added Wright.
The spending binge of households showed no signs of abating in 2015,
with retail sales advancing strongly by 7.6 per cent from year-ago
levels. RBC noted that strengthening housing market activity and
unseasonably warm weather earlier this year no doubt spurred demand for
housing-related goods with a surge in sales at furniture stores
accompanying a nearly 30 per cent increase in building material and
garden equipment stores.
The warm-glow effects of rising housing wealth further extended to
services, with spending at restaurants and bars continuing to climb in
the first half of this year. A weaker Canadian dollar and sporting
events such as the FIFA women's World Cup also played a hand in
boosting sales in the province this year by shifting the tourism sector
into high gear.
Firm domestic demand prevailed despite employment in the province
hitting a slow patch so far this year, according to RBC.
"While private sector hiring took a step back in the first eight months
of 2015, we still expect the labour market to gain traction in 2015, as
hiring in health care and social assistance is helping to keep
employment above year-ago levels," said Wright. "These gains have been
insufficient to move the needle downward on the unemployment rate,
Entrants to the labour force outpaced job growth so far this year,
despite population growth losing some steam. The net increase in the
number of immigrants from abroad fell to the lowest number since
records began in 1991 and was led by a sharp decline in the number of
non-permanent residents locating to the province.
Impressive gains in nominal lumber exports to the U.S. are helping to
keep merchandise exports marginally above year-ago levels. Anemic
prices and softer demand from Asian markets for products such as copper
and coal resulted in a lull in the value of shipments sent overseas and
prompted the temporary closure of steelmaking coal mines in the
province during the summer months. A bright spot remains at Port Metro
Vancouver, however, where activity was up from a year-ago in the first
half of 2015.
The RBC Economics Provincial Outlook assesses the provinces according to
economic growth, employment growth, unemployment rates, retail sales,
housing starts and consumer price indices. The full report and
provincial details are available online as of 8 a.m. ET today.
For further information:
Craig Wright, RBC Economics Research, 416-974-7457
Laura Cooper, RBC Economics Research, 416-974-8593
Romina Mari, Communications, RBC Capital Markets, 416-974-3558