Here is more good news on the job front that we are not seeing as headlines (as a matter of fact I saw the story on page 6 of business section... I wonder where it would be if it was bad news?
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This is RBC`s take on the big jump in job creation in the country:
RBC ECONOMICS RESEARCH - DAILY ECONOMIC UPDATE - September 9, 2008
Canadian housing starts soar; back up above 200,00 mark
Although housing starts were expected to retrace some of the 13.6% drop in July, this morning’s numbers indicated almost a full reversal, with starts rising 13.1% to an annualized 211,000 units. Expectations had been for a more modest 2.4% rise to an annualized 191,000. CMHC, which compiles the data, indicated that the volatility during the last three months largely reflected swings in the multiples component in Ontario.
The urban multiples component surged much more that expected, rising 25.2% to an annualized 114,700 units, which more than reversed the 20.2% drop recorded in July. CMHC indicated that this largely reflected activity in Ontario and likely reflects the impact of large condominium projects getting under way. Urban singles also rose in the month though by a more modest 2.0% to an annualized 71,200 units.
The strength in the multiples component contributed to overall starts in Ontario almost doubling, climbing 81% to an annualized 86,500 from 47,800 in July. This increase was in stark contrast to declines in all other major provinces/regions, led by a 22.5% drop in the Prairie region that has seen the greatest deterioration in affordability in the face of soaring housing prices. Declines were also recorded in the Atlantic region (down 11.5%), Quebec (down 8.7%) and British Columbia (down 8.2%).
The jump in August starts provides some optimism, along with last Friday’s August employment report, that the economic picture may not be as bleak as the GDP numbers implied in the first half of this year when the economy recorded essentially no growth. However, this optimism needs to be tempered with respect to the housing numbers by the fact that the strength in today’s report was narrowly based in the volatile multiples component in Ontario. As well, the earlier deterioration in affordability will likely reassert a downward trend in the starts data going forward for the remainder of this year and through 2009.
Thus, despite the upward surprise in the August starts data, we still expect starts to average a little above 180,000 next year, down from a recent annual peak in 2006 of 229,000. However, the pace of decline is modest compared to the meltdown in the United States where the current level of starts of 965,000 units represents less than one-half of the recent annual peak in 2005 of 2.073 million units. However, to provide some insurance that any slowing in housing markets is measured, the Bank of Canada will likely keep the policy interest rate on hold, maintaining a still-stimulative 3.00% overnight rate through the end of this year.
Paul Ferley, Assistant Chief Economist, RBC Economics Research