Full time jobs support incomes and home buying
By Phil Soper
A solid gain in full time employment bodes well for Canadian home sales. Full time employment continues to rise, and that is the measure most closely correlated to the Canadian housing market. Headlines that focus on total job loss in April are missing the point – this is a positive employment report. Although important to the economy overall, the job losses related to a shrinking retail workforce, especially as that industry uses a significant level of part-time workers, will have a muted effect on big purchases such as cars and investing in homes.
My remarks are in response to today’s release of the Labour Force Survey from Statistics Canada. In April of this year, overall Canadian employment numbers dipped by 20,000 as 67,000 part-time positions were lost, primarily in retail. The unemployment rate held steady at 6.8 percent as full-time employment grew by 47,000 in April and nearly 166,000 over the twelve months.
Full time jobs are what support housing, and over the past year the hours worked by Canadians rose by 0.9 percent. Full time employment gains mean that incomes are also rising, a key determinant in home buying.
Full-time jobs dipped in Alberta, as expected, since employers in the Alberta energy sector were quick to trim workforces early this year, in the wake of a collapse in oil prices. From a jobs’ perspective, the worst may be skewed to the first half. We do expect continued softness in home prices through mid-year, although April saw a rally in the value of oil and we enter summer with prices up 35% from the early 2015 bottom. I would not be surprised to see a surge in the number of bargain hunters cruising Calgary open-houses in May and June.
We are confident that policy makers, including the newly elected government in the province, understand the importance of the housing industry to the Alberta economy and will take steps to support it.
I applaud the Bank of Canada’s recent moves to maintain a low interest rate environment. The Bank of Canada has shown us that they recognize the need to keep markets moving.