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In the heart of B.C.'s beautiful Okanagan, an ugly jobs enigma

The riddle

In the heart of British Columbia’s Okanagan Valley lies Canada’s fastest-growing city, a beautiful town with a suddenly ugly puzzle to solve.

By some accounts, Kelowna is coming on strong. The wine is tasty, the tourists eager. Building permits are flying out the door at city hall, and, according to civic officials, businesses are begging for qualified workers.

But by Statistics Canada’s account, unemployment is a blight.

The federal agency’s latest numbers show Kelowna’s jobless rate spiking, unrelentingly, from a low 3 per cent in January, 2015, to 4.6 per cent by midyear, and then to a sharp 7.6 per cent last month.

The employment rate – that’s the number of workers expressed as a percentage of the 15-and-older population – ran above 60 per cent for the first eight months of 2015. But then it dipped below and stayed there, right through last month, when it sat at about 59.5 per cent, according to the federal agency.

The latest report from Robert Kavcic, a BMO Nesbitt Burns senior economist who tracks city jobless numbers based on Statistics Canada’s measures, puts Kelowna at the second-to-worst showing for labour markets across the country.

Corie Griffiths, manager of the Central Okanagan Economic Development Commission, is wary.

Her group tracks 12 economic indicators, looking at trends over three, six and 12 months, and has found no jobs issue like the one Statistics Canada is suggesting, she said.

Building permits and business licences have been rising, while personal bankruptcies have declined.

In fact, over the last year the group has interviewed more than 500 companies that cite employee recruitment and retention as their biggest problem.

Ms. Griffiths said she believes Kelowna’s jobless rate has been running at about 5.2 per cent over the past year, which would be just about the same as 2014.

That’s certainly at odds with Statistics Canada’s January report released earlier this month.

Kelowna’s labour force, which includes those who are working and those looking for a job, has increased by about 2,500 workers over the past year, in line with the population growth, said Statscan analyst Andrew Fields.

But about 2,100 fewer people were working, which amounts to a decline in employment levels of about 2 per cent. The ranks of the unemployed swelled over the same period by 4,600 people, a hefty increase bringing the jobless total to 7,500.

There is, of course, a standard error measure in Statistics Canada’s reports, of about one percentage point up or down, Mr. Fields said.

That means that, at best, unemployment in Kelowna could have climbed from 4 per cent a year ago to 6.6 per cent now, according to Statscan, still a marked increase and still well above what Ms. Griffiths and her group estimate.

The city’s manufacturing and health care sectors, among others, have lost work, Mr. Fields said, while education, retail and accommodation and food services have gained.

According to Statscan’s latest population estimates, Kelowna tops the list for population growth in percentage terms.

Workers fleeing oil-shocked Alberta could account for at least some of that. Indeed, Ms. Griffiths said anecdotal evidence suggests that local companies involved in the energy sector are now having an easier time finding qualified staff.

And while a big city like Vancouver can handle it, smaller regions can’t, BMO’s Mr. Kavcic said. At least not as quickly.

Note that British Columbia’s jobless rate is now up to 6.6 per cent, which Mr. Kavcic said may be more a reflection of the influx rather than the health of the province’s jobs market.

There’s also the fact that Kelowna is a pretty nice place to retire to, and Mr. Kavcic said demographics are at partly at play here, too.

All of which doesn’t help solve the riddle of how unemployment can leap by 2.6 percentage points, at best, and 4.6, at worst.

Editor's note: An earlier version of this item incorrectly attributed a comment by Ms. Griffiths to Mr. Fields.

A scene I'd love to see ...

Photo illustration

“I rest my case, your honour.”

Producers agree to freeze

Four of the world’s major oil producers have agreed to freeze production levels where they stand, dashing some hopes of a cut that would boost crude prices.

The oil ministers of Saudi Arabia, Russia, Venezuela and Qatar met today, and decided on the freeze on the condition that other countries take the same action.

Crude prices climbed, but then fell back again.

“Quite frankly, a production cut was never going to happen, with the recent Saudi-Iran dispute meaning it would be political suicide for either to concede market share,” said IG analyst Joshua Mahony.

Factory sales rise

Canadian manufacturers have scored their second consecutive month of rising sales.

Factory shipments climbed 1.2 per cent in December, Statistics Canada said today, which was better than some economists had forecast and slower than others had projected.

Vehicle sales climbed 3.6 per cent for their fourth up month, while shipments of wood products gained 5.5 per cent.

“Wood product manufacturers typically shut down in December,” the agency said.

“Despite the shutdowns, sales were at their highest level since December, 2006.”

Ontario to unveil budget

Ontario’s budget will land next Thursday, Feb. 25, more than a month before the end of the fiscal year and more than two months earlier than Finance Minister Charles Sousa’s three previous budgets.

The government will delay the start of its signature Ontario Retirement Pension Plan by a year, The Globe and Mail’s Adrian Morrow reports.

Mr. Sousa made these twin announcements today at an Empire Club luncheon in Toronto.

What to watch for today

Amid the controversy over Vancouver’s hot housing market, British Columbia is expected to unveil a budget that, among other things, is aimed at collecting numbers on home sales.

As The Globe and Mail’s Sunny Dhillon and Justine Hunter report, Finance Minister Mike de Jong plans to then share the data with the Canada Revenue Agency.

He’ll also outline a new “prosperity fund” that was part of the Liberal election campaign in 2013.

Unlike many other provinces, B.C. is prospering, according to economists.

Along with Ontario, it’s expected to lead the provinces in economic growth this year.

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