Although July 2019 saw an increased rate of unemployment reaching 5.7%, and a substantial drop of over 24 000 jobs, unemployment rates remain historically low in Canada. More specifically, the real estate market and the financial and insurance sectors (FIRE) are driving the economy and achieving consistent growth. The real estate and construction industry added over 30,000 jobs just last month, and the FIRE sector as a whole employed 1,199,100 people (0.45% monthly increase).
Statistics Canada numbers also show the corresponding increase in wages that reached an all time high in the last decade, increasing by 5.1% in Ontario last month. TD senior economist Brian DePratto comments on the situation in a report to clients, emphasising the need for a shift in either our “healthy domestic conditions”, or “worsening external backdrop” for the Bank of Canada to endure involvement.
TD Economics: https://economics.td.com/bridging-the-digital-divide
As technology involves, big cities are profiting with the highest paying jobs pooling in Canada’s largest cities (Toronto, Montreal, Vancouver, Calgary). According to the TD, Toronto specifically has one of the highest levels of immigration at 33%, and now the finance, insurance, real estate industry (FIRE) ranks as the fastest growing sector within the city.
Whilst the technology industry is growing at an extreme level, the FIRE industry in Canada joins some of the fastest growing jobs. This is an important influence on the regional equality of the job market, which is substantially more divided in other countries including the US, where higher and lower skilled workers are on opposite ends of the spectrum. Some of Canada’s other positive distinctions include:
-Stable divergence in income and employment between cities.
-60% of the population resides within 200km radius to each of the 5 emerging superstar central metropolitan areas
Will this remain sustainable?
In the last decade, we have unquestionably seen a decrease in housing supply, and an increase in prices. However, as discussed in our previous article (above) there has correspondingly been an erosion of incomes, which will be increasingly important. Other suggested measures include an increase in computer literacy courses in primary education, education partnerships for training for in demand skills, and infrastructure investments to better integrate cities in the border.
BMO senior economist Sal Guatieri comments on Canada’s housing market, explaining we are in a good position to expect moderate gains in sales and prices for the year ahead. Last year’s regulatory measures on mortgages did result in some hesitation and a decline in numbers. Greater Toronto has bounced back significantly, with a rapidly growing population, solid job growth and lower interest rates. We can now expect a level of stabilisation and firming moving forward.
Canadian Real Association reported that national sales climbed 12.6% in July from a year earlier, which is the fifth straight month of gains. Average prices also climbed 3.9% from a year earlier to approximately $499 000. The Vancouver and Toronto areas led these gains, with downside risks to home prices considerably reduced.