In our quest to understand Canada’s economy and its housing market, we monitor many different statistics and indicators. Beyond interest rates, the one factor we believe is most closely correlated to housing market strength is full-time employment. With that in mind, we took a good look at how full-time jobs have changed this year across Canada’s provinces. What we found is a Canadian economy that displays quite different economic strengths and weaknesses. The patterns tell much about what has gone on in Canada’s housing market this year, and provide clues as to what we might see next.
At the national level, Canadian full-time job creation has been solid in 2015. From January to September, the economy created 111,000 jobs nationally, or an average of 12,400 a month. That is similar to the 12,600 monthly average for the expansionary period 2012 through 2014. While full-time employment was off by 61,000 in September, the month-to-month pattern of full-time job creation can be quite erratic, so it is important to look at cumulative growth over a series of months rather than a single one.
The lion’s share of job growth this year has been in Ontario and Quebec. That makes sense when you consider that those are the provinces that have benefited most from the buoyant economy in the United States. Ontario’s 67,800 gain in full-time jobs (an increase of 1.2 per cent since December) explains in part the recently robust housing market activity we have seen this year, not just in the Greater Toronto Area, but in many smaller centres as well. Quebec’s 39,400 increase in full–time jobs year-to-date is actually about the same as Ontario’s in percentage terms, and speaks to an economy that is also benefitting from the broader trends.
The other province to benefit from new full-time jobs this year is British Columbia. As of September, full-time employment has grown by 30,800 or 1.7 per cent. As we have previously noted, growth in the B.C. housing market – the strongest market in the nation – has been outpacing the gains in jobs. That suggests that housing here may be getting support from something in addition to the employed population in the province, possibly from foreign buyers.
The experience in the other western provinces clearly reflects the current state of the energy sector. Full-time jobs have fallen in Alberta and Saskatchewan, and the pace of decline has recently accelerated. In Alberta, full-time employment has contracted by 19,000 or about 1 per cent this year, as of September. That the housing market continues to hold up so well (our recent House Price Survey showed Calgary housing prices up 0.8 per cent year-over-year as of the third quarter) is encouraging, although further correction may lie ahead. A similar situation exists in commodity-dependent Saskatchewan, where year-to-date employment has fallen by 10,400 (2.2 per cent).
The other provinces – Manitoba as well as those in Atlantic Canada – have seen less dramatic changes, all gaining or losing less than 1 per cent in terms of full-time jobs. The exception is energy-rich Newfoundland, where full-time jobs have declined by 3,700 or 1.8 per cent. As well, given that Statistics Canada’s Labour Force Survey tracks people at their permanent addresses, not their workplaces, this could well reflect a decline in employment of those who live in Newfoundland but who had been working in the west.
The divided fortunes of the provinces have been a challenge to the Bank of Canada (BOC) which twice this year cut interest rates in an attempt to offset the economic impact of the slump in oil prices. While this has supported the housing markets in oil price-impacted regions, it has stoked activity in the Greater Toronto Area and B.C. Lower Mainland housing markets, which were already running hot, stimulated by employment gains and very low mortgage rates.
As October drew to a close, the Bank of Canada held firm, and did not drop the target rate for a third time this year, as some had predicted. Will the next move by the central bank be up or down? The bank will only say that it will be intently studying the economic tea leaves. At Royal LePage we will be watching the process very closely, and providing our insight into how that may impact you.