economy
A JOURNEY TOWARDS THE THEORETICAL MINIMUM UNEMPLOYMENT RATE Continued job growth amidst a slowly-expanding labour force pushes regional unemployment rates to near all-time lows.
A market with a low unemployment rate has a variety of related features: low credit default rates, including on mortgages; rising wages; and a reason for skilled (and other) workers to migrate into that market, thereby bolstering its productive capacity. This is all true for British Columbia and (largely) for its metro regions, including Metro Vancouver, whose unemployment rate dipped to a rather trim 4.2% in May 2019. This isn’t far off of the historical low experienced within this region (of 3.5% in February 2007), and similarly isn’t far from what could be considered the theoretical
minimum unemployment rate for the region. This is because unemployment can never be zero; there will always be some degree of structural unemployment (a macro-based mismatch between worker skill sets and employer needs as economies evolve) and frictional unemployment (people changing jobs). While creating some challenges for employers (through a relative scarcity of labour and rising wages), the region’s economy and housing market benefit overall from this low unemployment rate.
AN ALREADY TIGHT LABOUR MARKET GETS EVEN TIGHTER
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10.0%
8.0%
6.8% 7.0% 6.3%
6.0%
4.2%
4.0%
2.0%
0.0%
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2015 2016 2017 2018 2019
UNEMPLOYMENT RATE:
EDMONTON CALGARY
TORONTO
VANCOUVER
SOURCE: LABOUR FORCE SURVEY, STATISTICS CANADA DATA: 3-MONTH MOVING AVERAGE, SEASONALLY-ADJUSTED
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