Rent Real EstateThe Reality Behind Job Growth Figures
National headlines proclaim "Job Growth Steams Ahead" in response to Statistics Canada report that employment surged by 59,000 jobs in August, continuing the upward trend that began at the start of the year. So far in 2002, employment has grown 2.6% -- an
increase of 386,000 jobs -- the fastest growth Canada has experienced in any eight-month period since 1994.
However, Canadian property owners and real estate buyers should still be cautious when contemplating a purchase or sale since the future is remains uncertain and good times have not hit Canadians uniformly. Further, government and media euphoria over Canada"s surge ahead of US job creation may be giving Canadians a false sense of security.
Despite the increase in employment, the unemployment rate edged down only 0.1 percentage point to 7.5% as a large number of people entered the labour market.
Employment in Ontario rose by 44,000, a much stronger showing than the average monthly gains of 10,000 from January to July, however, employment in other regions was not as encouraging. British Columbia recovered from its 2001 job losses to a net of only about 20,000 new jobs while Quebec employment declined that amount due to car plant closings and other economic declines. Nova Scotia and Prince Edward Island had slight job increases that left their high unemployment relatively unchanged.
The job surge was largely confined to two industries -- manufacturing and construction --typically responsible for about 21% of the Canadian job market. In manufacturing, employment for 2002 is up 6.7% with about 149,000 new jobs created, largely in automotive and computer manufacturing. Real estate construction has added more than 45,000 jobs in 2002, but this employment was mainly centred in Ontario, Quebec, British Columbia and Alberta, and is seasonal at best. Employment in industries like transportation and health care was down in August after higher numbers earlier in the year.
Government is still growing at the taxpayers expense. Public sector employment has grown 4% this year, compared to 2% growth in the private sector. With more than 113,000 new government employees added to the payroll and continued hiring, will our property and income tax costs ever decrease?
While the reported surge in jobs smacks of good times ahead, take note that only 42% of the 59,000 new jobs added in August were full-time. What type of rent and mortgage payments can 34,000 part-time, no-benefits jobs support?
Statistics Canada reports that "Economic growth in Canada remained strong in the second quarter, driven by domestic demand and a build-up of inventories by manufacturers, wholesalers and retail outlets. The current account - the country"s broadest measure of international trade - and investment in residential construction also remained strong."
In view of this strong government optimism, the Bank of Canada"s failure to raise the bank rate came as a great surprise to many. This move, or lack of one, may be the first hint of greater uncertainty to come as our neighbour to the south continues to struggle to reach economic solid ground.
The events of the past 12 months and rumblings of war in the Middle East have taught us that statistics and projections are dangerous things to base our real estate and other decisions on. We must also finally acknowledge that no one knows what the future holds, except perhaps that continued strong, if skewed, employment figures may lead us into interest rate hikes and a fall federal budget. How"s that for a rosy outlook?