B.C. economic snapshot for June 24, 2011

June 25, 2011

VANCOUVER, BC, June 25, 2011/ Troy Media/ – The slumbering consumer re-awakened in April, pushing retail sales volumes up 1.3 per cent from March to a seasonally-adjusted $4.96 billion.

This was the third consecutive monthly gain and pushed monthly sales to the highest level since November, and back to near pre-recession peaks. An approximation of constant dollar sales suggests that April’s gains reflected an increase in goods sold rather than price increases.

Based on data adapted from Statistics Canada, monthly gains were broad-based among retail sectors with motor vehicle and parts (2.6 per cent), furniture and home furnishings (5.1 per cent), and sporting goods and other hobby items (2.8 per cent) leading the way.

While the multi-month gain in sales is a positive indicator for the economy, retailers shouldn’t get too excited just yet. Short-term fluctuations are not uncommon and further gains or stability in sales is needed to confirm a sustainable trend. This will be difficult given broader economic factors.

In the first few months of the year, the increased activity in goods related to housing such as furnishings and electronics coincided with strong early year housing market activity. However, housing sales dropped substantially in April and May which could crimp demand in future retail goods reports.

Meanwhile, moderate gains in employment and elevated debt levels will continue to temper demand for discretionary items. Discretionary retail spending, which excludes gasoline, health products and food/beverage sales, has remained range-bound since the beginning of 2010 – albeit with some significant monthly deviations in recent quarters.

In contrast, sales of non-discretionary retail goods have moved higher, likely reflecting stable demand and price growth, particularly for gasoline. Given fixed household incomes, increased spending on nondiscretionary items leaves less for discretionary goods purchases and savings.

Population growth tepid in Q1

According to Statistics Canada, British Columbia’s population reached an estimated 4.56 million persons as of April 1, representing a gain of 9,211 individuals (0.2 per cent) from January 1. Adjusting for seasonal trends, annualized population growth recovered moderately to 0.9 per cent following a sharp slowdown observed in the fourth quarter but remained low relative to the past five years.

Weaker net international migration was the primary contributor to slow population growth in the first quarter. Total net international migration added 7,049 persons to the province in the first quarter, down from 12,375 persons added in the same quarter of 2010.

Since 2000, the average net international migration was approximately 10,175 persons. A slowdown in the flow of landed immigrants drove net international migration lower during the f rst quarter. While the net number of non-permanent migrants steadied following a fourth quarter plunge, the flow of landed immigrants to the province fell to 7,300 persons. This was down from 9,600 persons in the f rst quarter of 2010. On a seasonally-adjusted basis, the flow of landed immigrants slowed for a third consecutive quarter, declining 14 per cent from the fourth quarter to the lowest level since 2003.

Meanwhile, B.C. also observed a small net loss of 98 persons to other provinces during the quarter, marking the first loss since 2003. While the net flow of interprovincial migrants from Saskatchewan and Manitoba was positive, B.C. lost more people to Alberta than it gained. Net out-migration from B.C. to Alberta was approximately 900 persons in the first quarter. This likely reflects the draw of improving economic prospects in Alberta. Year-over-year employment gains in the province reached 2.8 per cent in May compared to 1.3 per cent in B.C., while the unemployment rate in Alberta declined to 5.4 per cent.

On a seasonally-adjusted basis, interprovincial migration has trended lower since the beginning of 2010.

If Alberta’s economy continues to improve at quicker pace than B.C., expect further net outflows in the quarters ahead.

| Bryan Yu, Central 1 Credit Union