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BC economic snapshot for September 1, 2012
September 1, 2012
VANCOUVER, BC, Sep 1, 2012/ Troy Media/ – Consumer insolvencies in B.C. have trended slightly higher in recent quarters, suggesting that existing debt-loads have become a strain for an increasing number of households.
Insolvencies, which include the combined number of individuals filing for either bankruptcy, or offering to settle debts with creditors under conditions other than the existing terms, reached a seasonally-adjusted 1,000 filings in June, up about 1 per cent from May and 6 per cent higher than a year ago.
While B.C. insolvency levels have retreated from recession highs, levels – both nominal and adjusted for population – remained near or exceeded previous cycle-highs observed in the early 2000s.
B.C.’s uptrend contrasts with a decline in the combined rest of Canada figure. This underperformance has been the norm following the most recent recession. While consumer insolvencies have declined more than 30 per cent from peak recessionary levels outside the province, B.C.’s insolvency figures have dropped by a more modest 20 per cent.
The less than spectacular improvement in B.C. insolvency figures likely reflect the tempered pace of B.C.’s labour activity. While employment levels generally trended higher in the first half of the year, growth hasn’t been strong enough to drive down the unemployment rate which has fluctuated near 7 per cent this year.
At the household-level, persistent unemployment is a significant driver of insolvency filings as loss of income hampers timely debt repayments. A weaker pace of employment growth forecast for the remainder of 2012 could keep insolvency filings elevated. Rising insolvencies this year have pushed year-to-date f lings up by nearly 4 per cent compared to the first half of 2011.
Forestry
Lumber production in B.C. moved higher for a second straight month in June, further rebounding from April’s sharp decline. Estimated lumber output at B.C. mills reached 2.49 million cubic metres in June, up 2 per cent from May, but remained below April’s high.
On a year-to-date basis, first half production outpaced same-period 2011 by 4.3 per cent. Despite the advance, second quarter seasonally-adjusted production fell short of first quarter levels by 3 per cent.
Declines reflected temporary shutdowns related to sawdust clean-up at B.C. mills, and demand-side factors including higher prices, and deceleration of global growth.
Lumber exports to major markets including U.S., China and Japan tempered in the second quarter on a seasonally-adjusted basis. Weaker global growth will remain a headwind for the lumber industry in the quarters to come.
The European recession will continue weigh on the global economy, and although China looks to reverse a deceleration in economic growth through stimulus measures, it seems keen to keep a lid on the domestic property market. China’s growth deceleration and balanced lumber inventories will moderate growth in lumber demand, but exports to China are expected to remain at relatively high levels. On an unadjusted basis, second quarter lumber exports to China were the second highest on record.
The U.S. housing market is slowly improving, with rising home sales and a slight uptrend in starts, which should provide some support to B.C. lumber demand. While lumber export trends to the U.S. slowed in Q2, further improvement in the housing market is expected to fuel further gains in exports and production. However there remains a large inventory of foreclosures that have yet to make it to market which could stall a rebound in new housing starts.
| Central 1 Credit Union
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