In a new report out today, CIBC says that “even if house prices land softly, the impact on the economy in general, and construction jobs in particular, will be far from gentle.”
CIBC still reiterates that a housing market crash is not foreseen, but they believe that it’s likely that that real estate activity will level off soon.
Real estate has been an important engine of economic activity, with the number of high quality construction jobs rising by 3.5% in 2011. That is more than double the pace of employment gains seen in the economy as a whole. That momentum will be lost when the housing market levels off.
In terms of job creation and job quality, Alberta remains the bright spot in Canada.
The impact of a softening pace of job creation is exacerbated by a worsening level of job quality in the Canadian labour market…While our index is well above the level seen during the recession, it is down by more than one point over the past year.
By province, the largest drop was observed in Ontario, followed by British Columbia. In contrast, Alberta continues to generate high quality jobs at a rapid pace. (see chart below)
With both quantity and quality of employment falling in tandem, it is hardly a surprise that real disposable income was unchanged in the first three quarters of 2011—the worst showing in fifteen years.
Calgary’s labour market in particular continues to buck the national trend. In the most recent City of Calgary Labour Review, the report stated:
Looking back in 2011, Calgary and Alberta’s job markets outperformed the rest of Canada (chart 1), thanks to the continuous strength in crude oil prices and increasing importance of oil sands as a safe source of oil.