While the effects of the U.S. housing-market meltdown and record-high oil prices are clearly causing economic pain in Central Canada, economic conditions on The Rock appear to be pretty solid (pun intended).

It was generally expected that economic activity in Newfoundland and Labrador would take a breather in 2008, following the unsustainably strong gross domestic product (GDP) growth of 9% year over year in 2007.

However, employment in the first five months of 2008 rose by 5,900 jobs, buoyed by the escalation of oil prices and advance preparations for the recently approved $5.6-billion Hebron offshore oil project. By comparison, employment dropped by 600 jobs during the same period in 2007.

The breather seems to have been postponed — for now anyway. The construction industry alone added 3,500 new jobs. That figure represents 60% of the net increase in employment in the province.

Four other sectors also added a significant number of new jobs: public administration (+2,600); wholesale and retail trade (+1,300); transportation services (+1,100); and educational services (+1,100).

The strength in these sectors helped to offset weakness in accommodation and food services (-2,400) and information services (-1,400).

The improvement in Newfoundland and Labrador's economic health in general and in its job market in particular, appears to have stemmed the steady pattern of net out-migration that has plagued the province for the past 40 years.

As a result of this stronger employment growth and positive net migration, housing demand in Newfoundland continues to strengthen, in contrast to the weakening pattern in the rest of the country.

According to the Canadian Real Estate Association's national report on residential home sales in May, Newfoundland was the only province in the country to record a year-over-year increase in house prices and a decline in new listings.

In addition to the strength of housing demand, the latest building permit data indicates that industrial construction on a year-to-date basis is up by 46%.

In light of these developments, overall growth in Newfoundland and Labrador should be the strongest of the four Atlantic provinces in 2008. This strength should persist through 2009.