RBC's comments on Provincial Current Trends

PROVINCIAL CURRENT TRENDS

September 2007

Western provinces powering Canada's jobs bonanza

August's employment report showed that overall job gains for the first eight months

of the year were up an estimated 232,000. The unemployment rate held at its lowest

level since 1974 and wage growth continued to firm. The average hourly wage rate

for permanent workers was up 3.8% year-over-year in August, marking the fastest

pace of increase in a year and the fifth consecutive month of solid gains.

Tight labour markets provide yet another piece of evidence that Canada's domestic

economy is still on firm footing despite some weakness in job markets now evident

in the United States (chart 1). Healthy job growth, an historically low unemployment

rate and the recent acceleration in wage growth highlights the fact that Canada's

economy is operating above its capacity limits.

The strength in Canada's headline national number is largely the result of the ongoing

strength in western job markets. Alberta, British Columbia and Saskatchewan —

in that order — are the clear leaders on the labour market front (chart 2), clocking in

the strongest pace of job gains, the lowest unemployment rates and the fastestgrowing

labour forces.

There is also notable strength coming from Quebec's labour market, which has

added 71,000 jobs since the start of the year. Ontario's job growth is slowing relative

to the national average and its unemployment rate has edged up from last year's 6%

low but, overall, still remains healthy. Job conditions are mixed in Atlantic Canada.

Prince Edward Island and Newfoundland are tracking decent job growth. Nova

Scotia's job growth has recently slowed down, while New Brunswick started 2007 on

a slow note, but its job growth has recently started to pick up.

British Columbia —Labour markets in the province are still tight,

with the year-over-year pace of job growth setting a healthy 3.2% pace

and the unemployment rate holding just above 4%. Wage growth

slowed down earlier in the year but has recently firmed, with two consecutive

months of decent gains. The province accounted for roughly 20% of

Canada's total job gains reported in the first eight months of the year. Jobs were split

roughly equally between the goods sector and the service sector. The construction,

finance, insurance, real estate, and leasing sectors have been the biggest contributors

to provincial employment so far in 2007.

Alberta —The province still leads all provinces in all key job market

indicators, including job gains, unemployment rate, labour force growth

and wage gains. Hourly wages in Alberta are running at a healthy clip

but are down from last year's 7% pace and are now tracking at about

5.3% so far in 2007 — a pace that continues to significantly skew the national rate.

Alberta's labour force continues to expand to accommodate the growing demand for

workers. Net interprovincial migration, although down from last year's third-quarter

peak at 24,535 migrants, is still the strongest in the country and continues to

attract workers from right across Canada. Despite accounting for only 13% of

national GDP, the province has been the single biggest contributor to job gains

this year, with 96,000 jobs created in the first eight months of the year compared

to the same period last year.

Saskatchewan — Job markets picked up momentum in the latter

part of 2006 and early in 2007, but have since started to cool off.

The provincial unemployment rate is still one of the lowest in the

country but has been trending upward in the last six months. The

unemployment rate bottomed out in March at 3.8% but has since climbed just

over a full percent to reach 4.9% in August. Wages, however, are still growing

at a healthy clip. The recent softness showing up in job markets is coming from

the service sector, while the goods sector has actually picked up momentum. In

fact, the construction sector was the only major contributor to job gains in

August, adding roughly 3,800 jobs. Housing shortages are fuelling this recent

surge in construction employment.

Manitoba —The pace of annual job growth in Manitoba has been

holding just above 1% so far this year and unemployment is tracking

at 4.5%. Hourly wages in Manitoba have accelerated for the

last five consecutive months and ran at a 5% pace in the first eight

months of the year compared to a year ago. With inflation at 2.2%, this has left

room for solid real wage gains to be realized in the province. Job growth so far

this year has been largely concentrated in the construction sector and some

service sector industries, including finance, insurance, real estate, education

services, and public administration.

Ontario —Job markets in Ontario are lagging the national average

but still remain in healthy territory. The goods sector is still in

decline as the agriculture, forestry and manufacturing sectors continue

to shed jobs. Service-sector strength, however, still trumps

the losses in the goods sector. Wage growth decelerated substantially in the

early part of 2007 but has since picked up in the last four months. But, wages are

still dragging on the national average, with Ontario and Quebec being the only

two provinces where wage growth is below the national rate. With inflation

running at a mild 1.6% this year, real wage gains are still being realized but only

by a slim margin.

Quebec — Job growth picked up in the early part of 2007 and the

unemployment rate dropped from 8% last year to a record low of

6.9% in July. The gains so far this year have been concentrated in

the service sector. The tightness evident in Quebec's labour market,

however, has not flowed into wage growth. Like Ontario, wages are growing

at a pace below the national average. Average hourly earnings were up 2%

in the first eight months of the year compared to the same period a year ago,

while the national pace is a full percentage point higher at 3%.

New Brunswick — After a slow start in the first quarter of 2007,

the province's labour markets picked up, reaching a healthy 3.7%

year-over-year pace in August. Its unemployment rate has also

been trending down. Wage growth has speeded up substantially

in the last few months and New Brunswick has the third fastest pace among

Source: Statistics Canada, Canada Mortgage and Housing Corporation, Canadian Real Estate Association, RBC Economics Research

Provincial current economic indicators

Latest month available, year-over-year % change, not seasonally adjusted unless marked S.A.

the provinces this year. The goods sector has led the gains, with

the utilities, construction and manufacturing sectors accounting

for 90% of the job growth in the sector in the first eight months of

the year. The service sector has shed roughly 3,000 jobs during

this period.

Nova Scotia —Labour markets in the province are

tighter than they were last year when it experienced

an outright contraction in jobs. However, this year

there have been consecutive monthly declines in

overall employment since April. The unemployment rate has risen

a full percentage point, reaching 8.9% in August. Wages, however,

are still running at a healthy clip. Employment in the goods sector

has been mixed. Forestry sector employment remains in decline,

while manufacturing employment appears to have stabilized. The

service sector contributed 70% of the job growth in the first eight

months of the year compared to a year ago, but has recently softened

as trade sector employment has weakened.

Prince Edward Island — The support in the Island's

job market so far this year has emanated chiefly

from the service sector. A broad range of industries contributed to

this gain, including finance, insurance and real estate, healthcare

and the accommodation sector. Jobs in the goods sector are down

so far this year, with noted weakness in agriculture and construction.

More declines in construction sector employment are anticipated as

the construction industry continues to wind down after a strong run.

The unemployment rate is just above 10%, one percentage point

below last year's rate, and wage growth is coming in at a 4% pace so

far this year compared to the same period a year ago.

Newfoundland — The unemployment rate appeared

to be on a downward trajectory in the early part of 2007

as job gains picked up — it dropped from its January

high of 15.4% down to a low of 12.9% in May. It has

since ticked up a few notches as job growth has eased but is still

signalling a tighter market than in 2006. Wages are growing at a

healthy clip in line with the nationwide pace and are running at more

than double the rate of inflation, translating into real wage gains.

Healthy wage growth has proved to be a decent support for the

province's retail sector, which is tracking at a 10% pace in 2007 compared

to last year.

Courtesy of RBC Economics

Local Trends in Real Estate

Search the MLS or read more about Interest Rates, Power of Sale Properties, Price Trends and more at my website.

Thank you for reading my blog and if there is anything else I can help you with please don't hesitate to contact me,

Mark

A. Mark Argentino
P. Eng. Broker
Specializing in Residential & Investment Real Estate

Thinking of Selling? Best Mortgage Rates Current Home Prices Search MLS
RE/MAX Realty Specialists Inc.

Providing Full-Time Professional Real Estate Services since 1987
( BUS 905-828-3434
2 FAX 905-828-2829 ÈCELL 416-520-1577
› E-MAIL : mark@mississauga4sale.com
8 Website : Mississauga4Sale.com

• Thinking of selling in the next 3 to 6 months? Would you like a Complimentary & Quick Over-The-Net Home Evaluation ?
• On-Line Real Estate Newsletter sign up
• See seasonal housing patterns