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December 2007

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Most Employers Get Good Grades - December 20, 2007

Nobody knows more than BC's construction and landscaping companies about how important it is to maintain a satisfied staff of employees in this busy and competitive environment. Working Canadians have given their employers a passing grade in a year-end performance review that netted out four times as many B's and C's than it did As. This is according to a new workplace study from RBC which shows that while Canadians are just as satisfied with their jobs as they were in 1998, the percentage of "very satisfied" working Canadians has dropped substantially.

The RBC Survey, conducted by Ipsos Reid and titled The Competition for Canadian Talent, shows when it comes to grading their employers overall as a place to work, Canadians are stingy with the marks, with fewer than one in five workers (18 per cent) handing out an "A" grade. Forty-three per cent handed out "B" grades while 28 per cent think their employers are simply average "C"s. Fewer than one in ten (8 per cent) think their workplaces are worthy of no more than a "D" overall, while three per cent offered up a failing grade.

"A report card full of Bs and Cs generally indicates a need for improvement and this one isn't any different," said Christianne Paris, RBC's vice-president, recruitment and Learning. "Employers committed to being successful are going to have to work harder and do better to attract and retain valued employees in the current competitive landscape."

According to the survey, almost nine in ten (86 per cent) Canadians are satisfied with their jobs, but only one-third (36 per cent) say they are very satisfied. This is a significant change from 1998 when RBC last checked the pulse of the Canadian workplace and half (49 per cent) the working population said they were very satisfied with their jobs.

Those workers who tend to be most satisfied with their jobs are older workers, those in senior management and those earning more than $40,000 a year.

A good number of Canadians are less than happy about their jobs. Only half (51 per cent) of the survey respondents find their work to be challenging and interesting, with 15 per cent going so far as to say they find their jobs extremely boring. Just under half (47 per cent) feel it is getting increasingly difficult to make ends meet and 38 per cent consider their jobs as just a way to make money rather than a career. One-third (32 per cent) simply think there are a lot of good jobs, but no great jobs out there while 28 per cent describe themselves as being in a dead-end job.

Three-quarters (74 per cent) of Canada's working population say it's important to work for an employer whose values are in line with their own, demonstrating that how a company conducts its business also plays a huge role in how people feel about their work and their employer. Also noteworthy is that almost all (87 per cent) agree it is important to love and value the type of work they do and more than half (63 per cent) agree they need to be constantly challenged.

When it comes to personal relationships with their employers, 59 per cent agree they respect their employer, but only half (48 per cent) trust their employers or have a strong sense of loyalty (52 per cent) to them. In fact, if offered a comparable job with more pay somewhere else, 28 per cent would stay where they are. The same percentage (23 per cent) that consider the atmosphere at their workplace to be depressing also think their employers care only about shareholders. Fourteen per cent are concerned about losing their job.

"The competition for working Canadians is already fierce and it will continue to be even more so in the coming years as the baby boomers get closer to retirement age," noted Paris. "Creating inclusive working environments where people of all generations want to work and feel good about their jobs and their workplace is paramount to keeping this country's economy moving ahead at full-steam."

Housing Prices Expected to Moderate - December 17, 2007

After experiencing an exceptional year characterized by strong average house price appreciation and record breaking unit sales, the momentum from 2007 is anticipated to carry over and position Canada's real estate market for steady, yet moderate growth in 2008, according to the Royal LePage 2008 Market Survey Forecast released today.

Nationally, average house prices are forecast to rise by 3.5 per cent to $317,288 in 2008, while transactions are projected to fall slightly from this year's record high unit sales to 500,927 (-4.0 %) unit sales in 2008. Despite the year-over-year reduction in unit sales, the number of homes trading hands in 2008 is expected to remain higher than in all years prior to 2007.

"Canada's housing market in 2008 should continue to thrive on a balanced diet of strong economic fundamentals, including high levels of employment, resilient consumer confidence, modest levels of inflation and the relatively low cost of borrowing money," said Phil Soper, president and chief executive of Royal LePage Real Estate Services. "Canada is currently enjoying one of the longest housing market expansions in history; however, as we move into 2008 it is anticipated that slowly eroding affordability will cause demand to ease, allowing the market to move toward balanced conditions, with lower levels of price appreciation, and fewer homes trading hands."

With the most affordable major market homes in Canada, residents of Regina and Winnipeg are forecast to drive the greatest increases in house prices in 2008, as job opportunities and in-migration continue to soar in each city. While Calgary and Edmonton will continue to boast healthy economies and high levels of home sale activity, the excessively fast run-up of home values in 2006 and the first half of 2007 priced people out of the market, causing inventory levels to rise late in the year. Alberta home price increases will be much more moderate in 2008 as the regional market continues to adjust to the new house value reality.

With the country's highest home prices, Vancouver's steadfast market will continue to expand on the back of a strong provincial economy. As the city readies itself for the 2010 Olympic Games, there will be an abundance of new jobs created.

Ontario and Quebec markets are anticipated to maintain their relative strength and vibrancy throughout next year, weathering stormy financial markets and adjusting well to the high value of the Canadian dollar. The services based industries that have become the backbone of the Toronto and Montreal economies have tolerated the rise of Canada's dollar to parity very well, despite increasingly price competitive offering from overseas markets.

In Atlantic Canada, a slight depletion of inventory coupled with high immigration levels will see the housing market growing at a strong and steady pace - Halifax is expected to have higher than national average growth in 2008.

The frenzied pace of price inflation that has characterized the real estate market over the past two years in the resource rich west were unsustainable and should ease substantially in 2008. In Central Canada, price increases peaked in late 2005, and have been moderating since. From coast-to-coast, the homebuyer demographic is anticipated to swell with first-time purchasers, as many flock to take advantage of recently reduced lending rates, longer amortization periods and the resultant manageable mortgage payments.

Added Soper: "The year ahead presents opportunities for those people who have shied away from the frenetic real estate market of the past few years, with its bidding wars and unconditional offers; while prices should continue to rise, they are expected to do so at a more reasonable pace. Canada's economy is strong, and the desire for home ownership remains a vibrant and attainable goal - real estate remains a solid long term investment."

The move by the Bank of Canada to reduce its overnight target-lending rate by a quarter of a percent in December 2007 will bode well for first-time buyers planning to enter the market in 2008. The relatively low current interest rates, and the possibility that rates could fall even lower in response to moderating inflation and lower rates in the U.S., will continue to attract new buyers to the housing market.

"No Vacancy" in British Columbia - December 13, 2007

The average rental apartment vacancy rate in Canada's 34 major centres1 remained unchanged at 2.6 per cent in October 2007 compared to October 2006, according to the Rental Market Survey released today by Canada Mortgage and Housing Corporation (CMHC).

"Strong employment growth, solid income gains, and high immigration levels continued to support strong demand for both ownership and rental housing,” said Bob Dugan, Chief Economist at CMHC's Market Analysis Centre. The rising gap between the cost of home ownership and renting also kept demand strong for rental accommodation.”

“However, modest rental construction and increased competition from the condominium market offset the strong rental demand, keeping the rental apartment vacancy rate unchanged from a year earlier.” Condominiums are a relatively inexpensive type of housing for renters moving to home ownership. Also, some condominium apartments are owned by investors who rent them out. Therefore, high levels of condominium completions have created competition for the rental market and have put upward pressure on vacancy rates.

In British Columbia, vacancy rates remained unchanged in Vancouver (0.7 per cent) and Victoria (0.5 per cent), but rose marginally in Abbotsford (up 0.1 of a percentage point to 2.1 per cent) between October 2006 and October 2007. British Columbia’s newest Census Metropolitan Area, Kelowna, saw its vacancy rate decline from 0.6 to 0.0 per cent. Increased job opportunities, the rising cost of home ownership, a high level of immigration and longer completion times on new multiple-unit projects kept rental demand strong. On the supply side, there have been very few new rental projects built in B.C. during the last year. Some renters are turning to the secondary rental market, which includes accessory suites and investor-owned condominiums, to meet their housing needs.

In October 2007, provincial vacancy rates were lowest in British Columbia (1.0 per cent), Saskatchewan (1.2 per cent), Manitoba (1.5 per cent), and Alberta (1.6 per cent). The strong economic expansion in western provinces continued to attract workers from the rest of Canada. Many of these newly arrived migrants initially settled in rental housing, keeping rental demand strong in the West.

The centres with the highest vacancy rates in 2007 were Windsor (12.8 per cent), Saint John (5.2 per cent), and Moncton (4.3 per cent). On the other hand, the major urban centres with the lowest vacancy rates were Kelowna (0.0 per cent), Victoria (0.5 per cent), Greater Sudbury (0.6 per cent) and Saskatoon (0.6 per cent).

Housing Starts Up in BC - December 10, 2007

The seasonally adjusted annual rate of housing starts was 227,900 units in November, essentially unchanged from 227,600 units in October, according to Canada Mortgage and Housing Corporation (CMHC).

“Housing starts remained strong in November and are consistent with our new home construction forecast for 2007,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “The strength in November is attributable to the good performance of single-detached home starts, which reached their highest level since March 2006.”

The seasonally adjusted annual rate of urban starts increased 0.2 per cent to 192,000 in November, compared to October. Urban singles were up 12.8 per cent to 95,400 units in November, while multiple starts decreased 9.8 per cent to 96,600 units.

In November, the seasonally adjusted annual rate of urban starts increased in two of Canada’s five regions. Urban starts registered an increase of 12.7 per cent in Ontario and 16.9 per cent in British Columbia. The Atlantic region, the Prairies and Quebec all recorded an easing of activity in November (-8.0 per cent, -11.6 per cent, and -20.6 per cent respectively). Urban single starts were up in all regions except the Prairies. Only the Atlantic region and British Columbia saw increases in urban multiple starts.

Rural starts were estimated at a seasonally adjusted annual rate of 35,900 units in November.

Actual starts, in rural and urban areas combined, were up an estimated 2.7 per cent in the first 11 months of 2007 compared to the same period in 2006. In urban areas, actual total starts grew by an estimated 0.1 per cent year-to-date. Actual urban single starts from January to November 2007 were down 4.2 per cent compared to the same period in 2006, while multiple starts grew by approximately 4.2 per cent over the same period.

Condo Construction Outpacing Single Family Dwelling - December 6, 2007

The value of building permits remained above the $6-billion mark for the sixth month in a row in October, thanks to marked gains in commercial and institutional intentions and strong demand for multi-family units according to a Statistics Canada report issued today. Municipalities issued building permits worth $6.7 billion, up 6.8% from September. This level was slightly below the peak of $6.9 billion observed in both May and June.

In the non-residential sector, intentions rose 19.3% to $2.6 billion. A decline in industrial intentions was insufficient to offset the strong increases in the commercial and institutional components.

In contrast, intentions in the residential sector remained stable at $4.0 billion. Strong growth in multiple housing was offset by the drop in the single-family component.

On a year-to-date basis, municipalities issued $62.1 billion worth of permits from January to October, up 14.2% from the same period in 2006. This was only $4.2 billion short of the record for an entire year, set in 2006.

Housing sector: Strong demand for units in multi-family

The value of permits for multi-family dwellings surged 21.8% in October to $1.6 billion, the second highest level since December 2005. The number of multiple-family units approved rose 17.7% to 10,850. The value of single-family permits fell 10.6% to $2.4 billion. The number of single-family units authorized declined by 6.6% to 9,782.

The gain in the number of approved multi-family units, combined with the decline in single-family units, is consistent with the recently observed shift in demand. Since the beginning of 2007, multi-family units have accounted for 51.1% of the total, compared with 48.9% for the whole year 2006.

Strength in employment, growth in disposable income, tight apartment vacancy rates in certain centres and attractive financing options continued to stimulate the demand for housing. However, this demand could be eroded by the deterioration of housing affordability due to rapidly growing prices for new housing and recent increases in mortgage rates.

Provincially, the largest increase (in dollars) occurred in British Columbia, where the value of housing permits rose 38.0% to $848 million. This gain originated from a 70.0% increase in multiple residential units approved. However, it should be noted that totals in previous months were smaller, partly because of a municipal strike in Vancouver.

In Quebec, strength in the multi-family component led to increases in the total value of residential permits (+13.6% to $807 million). The largest decline (in dollars) in residential permits occurred in Ontario (-10.9%), the result of a substantial decline in single-family permits. Residential intentions in Alberta fell 19.0% to $640 million.

Non-residential sector: Strong demand for commercial space in Calgary

The value of non-residential permits surged in October, thanks to the strong demand for commercial space in the Calgary census metropolitan area. Excluding Calgary, the total value of non-residential permits nationally would have increased by only 3.9% instead of 19.3%. A large part of the overall gain in the non-residential sector came from commercial construction intentions. The value of commercial permits totalled $1.6 billion, up 23.1% from September. Despite the big gain, October's level fell short of the record reached in May ($2.1 billion).

The value of commercial permits in October was 14.0% above the average monthly level recorded between January and September 2007. In addition to various construction projects for hotels and for buildings in the retail sector and in the recreation category, large construction projects in Calgary for office buildings and warehouses contributed significantly to the strong showing.

In the institutional component, the value of permits increased 29.8% to $672 million in October following a 15.8% decline in September. In 2007, this level has only been surpassed by June's level ($713 million). The growth in October came mainly from construction projects for hospitals and education buildings. The value of institutional permits has been on a general upward trend since the end of 2006.

In the industrial component, the value of permits issued in October declined 9.7% to $326 million, a third consecutive monthly decline. This was the second lowest level in the last 18 months; only February 2007 results were lower ($307 million). The decline in industrial permits came from a drop in utility buildings.

Provincially, the largest gain (in dollars) by far in October occurred in Alberta, where the value of non-residential permits hit its second highest level on record ($751 million). The gain came solely from the commercial component as declines occurred in both institutional and industrial permits. British Columbia and Quebec also posted sizeable gains, with increases in commercial and institutional permits for both provinces.

Among the provinces, Saskatchewan and Newfoundland and Labrador posted the most important retreats.

The non-residential sector has been very healthy since the beginning year. Between January and October, municipalities have issued $24.4 billion worth of non-residential permits, up 19.5% from the same period in 2006. Marked increases occurred in all three components: commercial (+23.6%), industrial (+18.2%) and institutional (+11.2%).

Among the factors contributing to this strong growth are vigorous retail and wholesale sectors, low office vacancy rates in several centres, strong corporate profits, and increasing demand for health and nursing facilities.

Toronto and three major western metropolitan areas lead the pack

On a year-to-date basis, 24 out of the 34 census metropolitan areas recorded gains in the total value of building permits between January and October compared with the same period in 2006.

The most important gains (in dollars) were recorded in Toronto and Calgary, where construction intentions for non-residential buildings increased drastically. Vancouver and Edmonton were far behind, but showed strong gains in the residential component.

In contrast, Windsor and Oshawa showed the largest declines. Except for Sherbrooke and Abbotsford, all metropolitan areas showing losses were in Ontario.

Bank of Canada Lowers Interest Rate - December 4, 2007

The Bank of Canada today announced that it is lowering its target for the overnight rate by one-quarter of one percentage point to 4 1/4 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 4 1/2 per cent.

Since the October Monetary Policy Report (MPR), there have been a number of economic and financial developments that have a bearing on the prospects for output and inflation in Canada.

Consistent with the outlook in the MPR, the global economic expansion has remained robust and commodity prices have continued to be strong. The Canadian
economy has been growing broadly in line with the Bank's expectations, reflecting in large part underlying strength in domestic demand. However, both total CPI inflation and core inflation in October, at 2.4 per cent and 1.8 per cent respectively, were below the Bank's expectations, reflecting increased competitive pressures related to the level of the Canadian dollar.

The Bank now expects inflation over the next several months to be lower than was projected in the MPR. In the context of exceptional volatility in global financial markets, the Canadian dollar spiked well above parity with the U.S. dollar in November, but it has recently traded closer to the 98-cent-U.S. level assumed in the October MPR.

Overall, the Canadian economy continues to operate above its production capacity. Given the strength of domestic demand and weak productivity growth, there continue to be upside risks to the Bank's inflation projection. However, other developments since October suggest that the downside risks to the Bank's inflation projection have increased. Global financial market difficulties related to the valuation of structured products and anticipated losses on U.S. sub-prime mortgages have worsened since mid-October, and are expected to persist for a longer period of time. In these circumstances, bank funding costs have increased globally and in Canada, and credit conditions have tightened further. There is an increased risk to the prospects for demand for Canadian exports as the outlook for the U.S. economy, and in particular the U.S. housing sector, has weakened.

All these factors considered, the Bank judges that there has been a shift to the downside in the balance of risks around its October projection for inflation through 2009. In light of this shift, the Bank has decided to lower the target for the overnight rate. At its next interest rate decision in January, the Bank will assess all economic and financial developments and the balance of risks. A full projection for the economy and inflation will be published in the Monetary Policy Report Update on 24 January 2008.

Following on the Bank's announcement, all of the major banks also announced a quarter per cent drop in the prime lending rates and variable mortage rates will also drop by a like percentage.

New Record Set in Residential Construction - December 3, 2007

Residential construction investment achieved a new record in the third quarter of 2007, reaching $24.3 billion, an increase of 9.0% over the same quarter in 2006. Increases were seen in new housing (+10.1%), renovations (+8.4%) and acquisition costs (+5.7%) according to a report released this morning by Statistics Canada.

Spending for new residential construction climbed to $12.4 billion, a 10.1% increase over the third quarter of 2006. Single-family home investment made the most significant contribution to the growth in this component, increasing 10.9% to $7.9 billion. Apartment/condominium construction increased by 6.2% to $2.6 billion. Investment in double and row housing also rose significantly, with respective gains of 18.4% and 16.2%.

The rising levels of investments for new housing were largely brought about by significant cost increases over the third quarter of 2006. In constant dollars, spending for the construction of new single-family housing rose 2.2% over the third quarter of 2006. Semi-detached and row housing saw respective increases of 7.9% and 7.2%, while spending for apartment/condominium housing fell by 3.2%.

The demand for housing continued to be supported by the encouraging employment situation, growing disposable incomes, appealing financing possibilities and Western Canada's dynamic economy. However, the decreasing affordability of housing, due to rapidly increasing prices for new housing and to recent mortgage rate increases, could adversely affect demand.

Renovation spending grew 8.4% from the third quarter of 2006 to $9.8 billion. This accounted for 40.3% of total residential investment. Acquisition costs increased 5.7% to $2.1 billion.

Increases were recorded in all the provinces and territories. The largest increase (in dollars) occurred in Alberta (+17.4% for a total of $3.9 billion), in large part due to increased spending for the construction of new housing.

Quebec followed with an investment increase of 9.2% to $5.4 billion. This is mainly due to new construction and renovations.

British Columbia also saw a sharp increase (+11.2%) for a total of $3.8 billion.

Vigorous renovation spending led investment growth in Ontario (+2.3% to $8.4 billion).

The total value of residential construction investments for the first three quarters of 2007 was $65.4 billion, up 7.5% over the same period in 2006.

 

 

 

 

 

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