Strategic Thoughts

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July 10, 2004

Rebound or Slowdown?

Part of the Campbell government's response to their collapse in the polls is to push the message "the economy is on the rebound". The Vancouver Sun dutifully helped by displaying that message in a headline that spread across the page under a graphic which misrepresented unemployment in BC. The chart displayed BC's seasonally unadjusted unemployment rate from January 1994 through June 2004 with highlights added at October 1997 and September 2001.

Graph of BC Unemployment RateThe seasonally adjusted unemployment rate in BC was 6.8% in May 2001, and 7.5% in June 2004. Employment growth rates peaked in the period 1992-1995, reaching a high of 5.1%. June 2004 employment was 3.5% higher than June 2003 (seasonally adjusted). The graph displayed here, made using data from Statistics Canada, removes the distortions in the Sun's artistic rendition. The dotted line is seasonally unadjusted; the solid is seasonally adjusted. It shows that there was a decline in the unemployment rate from January 1991 through May 2001. Unemployment increased following the election of the Campbell government, and has now finally reached a level only slighter higher than when they took office.

The Sun article noted that since January 2004, BC employment has increased by 0.4% compared to 0.9% for the Canadian average over that period. The story went on to say that BC achieved a much higher growth rate relative to Canada over the previous 12 months. Going from a higher growth rate to a lower rate is usually called a slowdown, not a rebound.

The increase of 27,200 in employment between May and June is unusual, but not unprecedented. Between January and February, BC lost 36,400 jobs. Statistics Canada provides details by industry on changes in employment and this shows that of 16 industrial categories, BC lost jobs in 8 categories in June. Most, 11,800, of June's job gains were in the category labeled "information, culture and recreation". Information does not refer to information technology; it refers to newspaper publishers, radio stations and similar media. Recreation includes casinos. BC opened a new 24-7 casino in June, and allowed the existing casino in Burnaby to go to a 24-7 operation. Labour Minister Graham Bruce has claimed that the June employment numbers are related to a recovery in tourism but they could be nothing more than a reflection of the government's policy to expand gambling. The classification of "information, culture and recreation" showed no growth since May 2001. It will take a few more months to determine whether June was an abnormality or a real change.

 

 

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