2017 marked by boom, says accountants’ report
Good news tempered by high levels of consumer debt
The economy is booming, but we’re buried in a pile of consumer debt.
The Thompson-Okanagan had a stellar year in 2017, according to the Chartered Professional Accountants of B.C.’s Regional Check-Up report released this week.
A separate survey conducted by Ipsos on behalf of MNP Accountants indicates many British Columbians are overwhelmed by consumer debt.
The accountants’ report notes a loss of jobs in mining and oil and gas and an unemployment rate of 7.4 per cent, which is two percentage points above the provincial average.
The high unemployment rate is partially explained by the fact that 10,300 people entered the regional workforce last year, including the re-entry of 4,800 people who had previously opted out of the labour market.
The influx is an indication of optimism of finding a job in a vibrant economy.
However, such activity can temporarily push the jobless rate up as some of those entering the workforce are counted as unemployed until they land a position.
“Employment in 2017 reached an all-time high of 259,000 positions,” said Kelowna-based Karen Christiansen, a partner at MNP Accountants and a fellow of the Chartered Professional Accountants of B.C.
“Almost all of the jobs created last year were in the service sector, as seven of 11 service industries recorded job gains.”
In total, the service sector added 10,400 new positions in 2017, offsetting the 5,400 service jobs lost in 2016, and put service-sector employment in the region at its highest level since 2012.
The service industry can be associated with lower-paying jobs in the retail, tourism and hospitality industries, but it can also include higher-paying jobs in the professional services, trades and computer sectors.
“This (service jobs growth) is not surprising, given the population growth, real estate demand and tourism activity we experienced,” said Christiansen.
“For example, over half of the 12,000 new residents settled in the Okanagan-Similkameen regional district, which led to increased service demand and tremendous growth in their real estate market. In Penticton, sales transactions were up 16 per cent to reach $544 million and the average price for a singlefamily detached home jumped 19.4 per cent to $545,000 in 2017.”
Meanwhile, in Kelowna in 2017, the average selling price of a single-family detached home hit a record high of $720,000.
The housing boom helped create 4,000 new jobs in construction and 3,400 new positions in finance, insurance, real estate and leasing last year.
Public administration added 2,500 jobs; retail trade, 1,800; business, building and support services, 1,500; forestry, 800; and agriculture, 400.
Eight hundred jobs were lost by workers who live in the Okanagan and commute to jobs up north in mining and oil and gas.
Things are a bit up in the air so far in 2018. Tougher mortgage qualification rules and a proposed speculation tax could cool the housing market. Possible flooding and forest fires could impact tourism and agriculture.
“We have yet to see our region’s seasonal surge in the spring and summer months as tourists and agriculture activity pick up,” said Christiansen.
“With the long winter we just had and the flooding threat we are under right now, seasonal employment activity may be further delayed.”
The separate MNP survey shows half of British Columbians with non-mortgage consumer debt now believe they would need a 35 per cent increase in household income in order to live debt free.
Such a big increase in household income doesn’t happen unless a non-working spouse starts working, someone goes from part-time to full-time work or someone finds a much better paying job.
Generally, household incomes go up only two or three per cent a year as workers get wages that barely keep up with the increase in the cost of living.
“It used to be people would save for big purchases and have some money tucked away for emergencies,” said Grant Bazian, president of MNP Ltd., which is Canada’s largest insolvency practice.
“Now, Canadians look straight to home-equity lines of credit or credit cards or other forms of debt when it comes to paying for unexpected car repairs, home maintenance and even basic household expenses.”
Forty-five per cent of British Columbians blame themselves for the hefty amount of non-mortgage consumer debt they’ve racked up. However, 18 per cent blame others, including their spouse, at 12 per cent, and government taxation, at seven per cent.
“The shame and guilt prevents them from taking action or asking for the help they might desperately need,” said Bazian.
“Confronting debt can be a depressing reality at first, but with the numerous options available to Canadians, debt relief is possible. If in doubt, speak to a professional.”