What do we need to keep the housing market strong? Well, adding jobs, especially full-time jobs, is a good start. Keeping interest rates low is another positive. Today’s Labour Force Survey from Statistics Canada shows that the first condition is being met, and the Bank of Canada seems to be on top of the second. That’s great news for Canada’s housing outlook.

Statistics Canada reported that in May of this year Canada added a stunning 59,000 jobs nationally and the unemployment rate remained stable at 6.8 per cent. Even better, Canada seems to be continuing a trend of creating full-time jobs: up by 31,000 in the month and by 233,000 over the past year. Those are the jobs that support good household incomes and give consumers the confidence to buy homes, so it is significant that they continue to rise.

As expected, the largest job gains were in Ontario and in British Columbia. Ontario employment was up by 44,000, which was enough to push the unemployment rate down 0.3 percentage points to 6.5 per cent: well below the national rate. Although, like everyone else, we are watching the west to see whether the fortunes of the energy sector are taking their toll, we are not really seeing a lot of impact as yet. Alberta employment was close to unchanged in May, and although it has increased a little since the beginning of this year, we are not seeing a loss of jobs either.

Still, to be sure, the energy sector is going to be drag on the Canadian economy for a while. In a report last week, Statistics Canada noted that a huge drop in energy sector activity weighed on Canadian economic output in the first quarter, and that investment by the sector has plunged. In the face of that reality, we need to see other sectors in Canada pick up the slack – and in particular we need to see the housing market stay strong.

Our figures show that housing sales remain robust throughout the country. That’s a huge positive for the Canadian economy and one that we would not want to see put at risk because of a hike to interest rates. We were glad to see the Bank of Canada cut rates in January (taking the benchmark rate from 0.75 percent from 1.0 percent) and leave things on hold last month. The last thing that the Canadian economy needs now is a hike to rates.

This is a great news employment report for the Canadian economy, and we are encouraged by what it indicates. Strong jobs and strong confidence drive home buying and we look for a robust year ahead.

By:  Phil Soper