Although its unemployment rate at 8.3% (July) is a full percentage point above the national average, there are clear signs that the Toronto economy is picking up some momentum as it approaches 2013.
This observation is based on the fact that over the first seven months of 2012, total employment in the Toronto census metropolitan area has increased by 68,200 compared to a decline of 25,800 during the same period in 2011.
The more significant development relates to the fact that, while the part-time employment fell by 32,200, the CMA added 95,400 full-time jobs.
This substitution of full-time jobs for part-time positions suggests that firms are operating closer to capacity, making it necessary for them to substitute full-time staff for part-timers.
Across the major industrial categories, virtually all of the gain in total employment year to date was the result of a very strong (62,800) increase in employment in the services sector.
While employment in goods-producing industries was essentially unchanged since the beginning of the year, it is worth noting that, against the headwind of the relatively strong currency, employment in manufacturing increased by 12,500. Unfortunately this gain in manufacturing jobs was offset by weakness in construction (-7,600), forestry (-3,600) and utilities (-1,800).
Fuelled by the above-noted strong year-to-date increase in full-time employment, persisting low interest rates and sustained net migration, both existing home sales and housing starts in the Greater Toronto Area will likely reach record levels this year.
For the year, Canada Mortgage and Housing projects that existing home sales in the GTA will total 95,000, a 6.6% increase over the 2011 total of 89,102. Driven almost exclusively by strong growth in condominium construction, the total number of housing starts in the GTA is up by 16.7%, taking housing starts year-to-date to a record 49,000, which is 16.7% above the first seven months of 2011.
Looking forward, the very strong (175%) year-over-year increase in total residential building permits in June caused by a combination of an 81% y/y gain in applications to build single-family units and a 321% y/y gain in multiple units suggests that new residential construction in the GTA should remain quite strong over the remainder of the year.
However, given the recent slowdown in pre-sales of condominiums and the concomitant increase in the inventory of unsold high-rise condo units in pre-construction, it appears likely that the volume of new residential construction will slow in 2013 despite persisting strong demand for single-family units, the supply of which is likely to continue to be restricted by a scarcity of low-density zoned land and lack of infrastructure.
Despite the fact that year-over-year growth of office-based employment in the GTA has slowed since the beginning of the year, according to Cushman Wakefield, demand for vacant office space, reflected by the overall office vacancy rate, increased in the second quarter due to a solid gain in leasing activity.
In the second quarter, the overall office vacancy rate declined from 5.3% to 4.8%, its lowest point since the first quarter of 2009, largely due to a solid gain in absorption of vacant space in the downtown core. Looking forward, the outlook for office construction in the GTA remains positive due in part to the recently-announced start of the 31-storey Bremner Tower by British Columbia Investment Management Corporation (bcIMC) and the Bay Adelaide Centre East by Brookfield Management.
Full-time employment year-over-year per cent change – Toronto vs. Canada