Victoria’s economy is definitely on steroids. For the past three months, its year-over-year rate of employment growth of 7%+ has been faster than any of the other census metropolitan areas (CMAs) in the country. Moreover, this strong pace of job creation has driven Victoria’s unemployment rate down to 3%, the lowest in Canada.

Over the past year, Victoria has added 16,000 jobs in service-producing industries. This increase more than offset a loss of 2,400 jobs in goods production, where both construction (-2,500) and manufacturing (-800) were in decline.

According to Statistics Canada, professional, scientific and technical service firms in Victoria added 4,600 new jobs, followed by accommodation and food services (+4,100), public administration (+4,100), wholesale and retail trade (+2,900) and business, building and support service firms (+1,200).

During the remainder of 2008, employment growth in Victoria will probably slow to a more sustainable pace. However, the effect of the strong year-to-date increase in jobs should support retail spending into 2009.

Despite strong job growth and lower mortgage rates, sales of existing homes are, according to the Victoria Real Estate Board, down by 22.4% year to date, due to deterioration in affordability brought on by higher prices for single-family houses and condos.

As a result, a growing number of potential buyers have decided to rent. Based on CMHC’s Rental Market Survey, apartment vacancy rates in Victoria have fallen from 0.8% to 0.3% over the past 12 months, the lowest for a CMA in Canada.

Looking forward, the drop in home sales is likely to cause house prices to slow further and possibly decline. At the same time, extremely low rental vacancy rates should put increased pressure on rents and contribute to a pickup in rental apartment construction next year.

In addition, the recent strong year-over-year growth of industrial and commercial building permits plus sustained growth of office-based employment since the beginning of the year should support non-residential construction well into 2009.

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