Entering 2008, the Thunder Bay economy has considerable momentum. Over the past six months, the city has been one of Canada's six fastest-growing Census Metropolitan Areas (CMAs), according to year-over-year employment growth. Thunder Bay is currently registering a significant increase in new jobs in public administration (+40.0% year over year), health services (+29.1%) and educational services (+25.0%). This growth has been due, in part, to expansion of the Thunder Bay Regional Hospital, the development of the first university-affiliated Paleo-DNA Laboratory and the Cancer Research Institute addition at Lakehead University.

Other contributors to the strong employment growth have included information services (+21.9%), construction (+15.4%) and trade (+5.8%). However, partly as a result of layoffs at Buchanan Forest Products and Northern Hardwood, employment in manufacturing is down by -27.8% and other job losses have come in transportation services (-20.5%) and professional services (-19.4%). Staffing levels in managerial services have also fallen significantly (-17.9%).

The solid growth of total employment over the past six months caused housing demand in Thunder Bay to escalate in the final quarter of 2007. October-through-December sales of existing homes recorded a six-year quarterly high, while construction of single-detached dwellings managed their strongest showing since 2004.

In 2007, total non-residential building construction (-39.5%) in Thunder Bay fell mainly due to a sharp decline (-93.8%) in industrial work, although there was also a modest slowdown in commercial building. Spending on institutional construction projects, primarily related to the expansion of the Regional Hospital, increased by just over 6%.

Looking forward, despite a further softening in manufacturing activity as a result of the U.S. slowdown, the recent solid growth of employment in the metro area will help to sustain housing demand throughout most of 2008. It is important to remember that many of the new jobs in the region are relatively cycle-proof because they are in such public service areas as health care and educational services and government employment.

According to Canada Mortgage and Housing Corporation (CMHC), housing starts should increase in the range of 5% to 7% in 2008, following a 14% gain in 2007. At the same time, sales of existing homes (according to CMHC) will increase by 1%, following a 7% rise in 2007.