Earnings slide as small businesses brace for economic headwinds
Earnings slide as small businesses brace for economic headwinds
Following three months of declines, B.C. job counts steadied in December according to Statistics Canada’s latest Survey of Employers, Payroll and Hours. Total payroll counts in the province increased by 0.2 per cent or by more than 4,100 positions, pushing total payroll employment to 2.56 million. The increase owed almost entirely to B.C.’s services-producing industries. StatCan’s Labour Force Survey, meanwhile, reported a 0.5-per-cent increase in employment and a 0.7-per-cent expansion in the province’s labour force on a month-to-month basis.
B.C.’s job vacancy rate held at 3.6 per cent in December, with total vacancies falling to around 89,200—reversing the previous month’s increase. Nevertheless, the job vacancy rate has remained low since the second half of 2023—a trend that points to mild hiring.
Within goods-producing industries, manufacturing posted a modest headcount increase (up 0.3 per cent). Growth on the services side was driven by a large rebound in transportation and warehousing (up 3.5 per cent or by nearly 4,600 positions) following the end of the Canada Post strike. Other services-producing industries saw modest decreases in payroll counts during the same month, including the information and cultural category, which reported a 3.6-per-cent payroll decline (or around 2,200 fewer positions).
On the wage front, seasonally adjusted average weekly earnings in B.C. fell 0.2 per cent to just below $1,300 in December. On a year-over-year basis, average weekly earnings in B.C. were 4.4 per cent higher.
The Canadian Federation of Independent Business (CFIB) Monthly Business Barometer survey showed declining optimism in February among small and medium-sized enterprises (SMEs) as U.S. tariff threats led to increased uncertainty. The long-term, 12-month confidence index fell for a third month, decreasing five points to 49.5—10 points below the historical average. The short-term index declined by two points to 46.8. SMEs that import showed a 5.6-point drop in optimism since September, while those that export have seen a notable 23.3-point drop. Canada’s manufacturing sector, which would be one of the industries most exposed to U.S. tariffs, saw confidence weaken by 7.8 points. Confidence fell by 6.8 points in the wholesale sector.
B.C. recorded the sharpest decline in long-term confidence among provinces, falling by 3.7 points to 49.2—the lowest level in the country. The short-term index also dropped by 1.7 points to 41.8, a level well below the historical average. That said, B.C.’s export market is more sheltered from U.S. tariffs given less trade exposure to the country. The United States’ share of B.C. international goods exports is about 52 per cent, compared to 75 per cent nationally.
Only a small proportion of B.C. businesses continue to report a good state of business health, with 24 per cent of B.C. SMEs reporting in February that they were in a good state of business health, with staffing plans unchanged. Insufficient demand and shortages of skilled labour were the most-noted constraints to sales or production growth for businesses in the province. Limited working capital and physical space also held back growth. Taxes and regulatory costs, along with insurance and wage costs, were cited as the top input cost constraints. Fuel, occupancy and product input costs also made the list.
The general state of business health reported by most SMEs in Canada was “satisfactory,” similar to the prior month’s report. However, more businesses noted insufficient demand as the main limitation of sales growth.
Bryan Yu is chief economist at Central 1.