As it heads into the second half of 2008, the British Columbia economy clearly has plenty of momentum.

Over the past 12 months, the economy has added 53,300 jobs and 93.1% of these were full time.

Across major sectors, the largest share of new jobs were in the construction industry (+20,300), followed by accommodation and food services (+15,500), public administration (+14,000), education services (+6,100), health services (+5,100) and transportation and utilities (+4,600).

As has happened in other provinces, employment in British Columbia's manufacturing sector declined (-18,200 jobs), due to weakness in forest-products exports.

Over the past four years, strong sustained employment growth has not only pushed the unemployment rate to a 43-year low, it has also pushed the employment rate (the percentage of the population 15 years of age and older with a job) to an all-time high. Despite the combination of sustained growth of employment, lower mortgage rates and lower taxes (GST and income), British Columbia home sales are suffering.

According to the Canadian Real Estate Association, sales of existing homes in British Columbia are down 13% year to date, while listings have risen by 29.8% year over year.

As a result, the sales-to-listing ratio fell to an eight-year low of 43.2. This drop in sales is entirely the result of a deterioration in affordability brought on by a steady escalation in house prices.

Given that affordability continues to be a major barrier to first-time home-buyers, housing demand is likely to retreat further during the second half of this year and into 2009. This weakness will probably be exacerbated by higher prices for oil and natural gas and higher property taxes.

According to the B.C. Ministry of Economic Development, the estimated capital cost of major projects in British Columbia increased by 10% quarter over quarter in first-quarter 2008. However, most of these projects are in the proposal phase of development and may or may not proceed to construction.

Specifically, spending on residential and infrastructure projects was up in the first quarter, while spending on commercial projects fell by 3.4%.