Based on the latest economic statistics, British Columbia’s Lower Mainland economy is not yet out of the woods in terms of exhibiting positive economic growth. However, there are clear signs that it is approaching the edge of the forest.

For example, although unemployment in the region continued to edge higher, from 7.2% in May to 7.3% in June, the region has added 34,800 jobs over the past three months. Furthermore, over 75% of the new jobs were full-time. Key sectors which contributed to this job growth included wholesale and retail trade (+19,300), health services (+10,500), agriculture (+5,800) and information services (+4,900).

The recent rebound in job growth appears to have had a positive impact on both consumer spending and housing demand. Although retail sales in Vancouver are still well below year ago levels (-7.8%), they have increased by 2.2% over the past two months.

The pick-up in employment, together with a significant improvement in home price affordability, as reported in a recent Royal Bank report, appears to be reviving the region’s moribund housing market. In June, the volume of existing home sales was up by 74.3% year over year following a lower increase in May (+16.4%) and a decline in April (-9.3%). Stronger demand for existing homes appears to have had a modest positive impact on new residential construction, with housing starts up by 8.6% month to month in June, their strongest monthly increase since April of 2008.

Having said this, and in spite of the recent start of construction on the Hudson Residential Development and the Foothills at Burke Mountain Residential Project, the value of residential construction permits issued was down by 64% year to date in June 2009 compared to first-half 2008.

Looking forward, although residential construction should gradually strengthen through the second half of 2009 and into 2010, the outlook for non-residential building construction is quite guarded. This prognosis is based on the fact that the year-to-date value of non-residential building permits is down by over 45%,

In the case of commercial construction, a steady decline in the growth of office-based employment over the past five months has (according to Cushman & Wakefield) caused the office vacancy rate to jump to 6.9% in 2009’s second quarter, a three-year high. There are two bright spots on the non-residential construction horizon, institutional and engineering construction, due in part to the Gateway Program to improve the Port Mann Bridge and Highway as well as the plan to upgrade the Surrey Memorial Hospital.