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Economic Development Update - January 2014

Monthly Highlights

  • Employment. The Canadian labour force grew for a third consecutive month in November 2013, adding 21,600 jobs. In keeping with the national trend, both Ottawa and Ontario posted gains in employment (+1,500 and +13,800, respectively). Ottawa’s professional services, science and technology sector led local employment growth (+4,300 new jobs in November).
  • Unemployment. Job creation helped to lower the unemployment rate in Ottawa to a 22-month low of 5.7 per cent. The jobless rates at the national and provincial levels continued to sit at the lowest levels since before the 2008 recession (6.9 per cent and 7.2 per cent, respectively).
  • Economic growth. Canada’s (and Ottawa’s) inflation rate continued to hold at 0.9 per cent in November, prompting the Bank of Canada to maintain its overnight target rate at 1 per cent. Canada’s economic output exceeded expectations in October as a result of increased demand for Canadian exports from a resurgent U.S. economy.
  • Real estate – residential. No new condominium starts were recorded in November, supporting predictions that the condo market in Ottawa is reaching saturation. New home construction is nevertheless trending above last year (+8.8 per cent) with most new starts occurring in the downtown.
  • Real estate – commercial. A sharp rise in Ottawa’s office vacancy rates in the fourth quarter of 2013 has resulted in more competitive rental rates as landlords attempt to retain and attract tenants.
  • Construction. The value of building permits issued by the City of Ottawa reached a 12-month high, sitting at $261 million in October. In contrast to the national and provincial trend, construction intentions in Ottawa continue to outpace the value of permits issued at this time last year (+8.9 per cent).

New and Noteworthy

  • Ottawa City Council recently approved a plan that will see the establishment of a non-profit corporation to oversee the development of a new Innovation Centre to be located at Bayview Yards in downtown Ottawa.
  • The Province of Ontario and Cisco Canada announced a 10-year plan that will see 1,700 new jobs created province-wide, a high proportion of which are expected to be created in Ottawa.
  • Ottawa-based Shopify Inc. recently became the recipient of $100 million in venture capital funding, which is one of the largest rounds of funding for a Canadian company issued this year. 

Labour Market

The Canadian labour force added 21,600 jobs in November 2013, maintaining the national unemployment rate at the recent historical low of 6.9 per cent for a third consecutive month. At the provincial level, Ontario saw its unemployment rate drop to a five-year low of 7.2 per cent, thanks to the addition of 13,800 new jobs. In keeping with the national and provincial trend, Ottawa also grew the size of its workforce, adding 1,500 new jobs in November. The increase in employment in Ottawa resulted in a jobless rate of 5.7 per cent, a 22-month low.

“The drop in the region’s unemployment rate was entirely due to an increase in the number of jobs ... rather than to a decline in the number of people looking for work.”  - Ottawa Citizen (December 6, 2013)

Ottawa’s professional services, science and technology sector continued to expand in November, leading overall employment growth with the creation of 4,300 new jobs. Year-over-year, the job growth in this sector is up by 12,400, which is second only to growth in the education sector (+12,600 jobs since November 2012).

The gains in the professional services, sciences and technology sector helped to offset continued losses in the public administration sector, which shed an additional 2,600 jobs in November. The federal budget reduction measures are expected to exert ongoing pressure on public administration employment in Ottawa throughout 2014, as the Government of Canada’s downsizing program enters its second year.  

Sources: Statistics Canada’s Labour Force Survey results for the Ontario portion of the Ottawa-Gatineau CMA for November 2013 (custom data extraction, three-month moving average, seasonally adjusted). The data for individual economic sectors are not adjusted for seasonality. 

The Economy

For the second consecutive month, and for the seventh time in the past 13 months, Canada’s Consumer Price Index (CPI) rose less than 1 per cent on a year-over-year basis (0.9 per cent).  Consumer prices in Ottawa followed a similar trend (also rising 0.9 per cent over the same timeframe), whereas the increase in annual inflation was slightly higher at the provincial level, rising 1.1 per cent since November 2012.

With the national rate of inflation continuing to remain below market expectations, the Bank of Canada once again held its overnight target rate at 1 per cent.

“Although economic activity in Canada has now fully recovered, and moved well beyond its pre-crisis peak, our economy is in the midst of a difficult rebalancing process and has yet to achieve self-sustaining growth unassisted by exceptionally accommodative monetary policy.” - John Murray, Deputy Governor of the Bank of Canada (December 2013)

There are more positive signs elsewhere in the economy. Canada’s gross domestic product (GDP) exceeded expectations at the start of the third quarter of 2013, rising 0.3 percent in October. The stronger performance in Canada’s economic output is being linked to growing demand for products and services from the United States, Canada’s largest trading partner.

Sources: Statistics Canada Consumer Price Index results for the Ontario portion of the Ottawa-Gatineau CMA for November 2013. Bank of Canada Press Release for December 4, 2013.

Real Estate

The Canada Mortgage and Housing Corporation (CMHC) reports that housing construction in Ottawa continued to moderate in November, with the number of starts declining for a fourth consecutive month (-20.5 per cent). The absence of any new condominium apartment construction is primarily responsible for the drop in November starts, and lends support to the theory that the condo market in Ottawa is reaching saturation.

The year-to-date pace, however, is more encouraging, with 6,143 starts in the first 11 months of 2013, compared to 5,644 units at the same time in 2012 (+8.8 per cent year-over-year). By submarket, Ottawa’s downtown core has had the most construction to date (+2,182 units), followed by Kanata (+1,089). The average selling price for homes in Ottawa also continues to surpass last year’s rates, with newly constructed single-detached units selling for an average of $514,467 in November 2013, nearly 10 per cent higher than the average selling price in November 2012.

On the commercial front, Colliers International is reporting that office vacancy rates in Ottawa sat at 10.7 per cent in the last quarter of 2013, up from 8.5 per cent earlier this year. Vacancy rates are even higher in the downtown core (11.1 per cent), due largely to the addition of several new buildings. Correspondingly, rental rates have begun to drop across the city as landlords attempt to attract new tenants.

“[Commercial] vacancy rates have increased considerably across all markets within Ottawa, excluding Kanata.”   - Colliers International (January 8, 2014)


Sources: New housing data from CMHC, “Starts and Completions Survey” and “Market Absorption Survey” results for the Ontario portion of the Ottawa-Gatineau CMA for November 2013. Commercial real estate data adapted from Collier’s International Office Market Report for Ottawa (Q4 2013).

Construction

According to the most recent data from Statistics Canada, the City of Ottawa issued building permits totalling more than $261 million in October 2013, representing a 12-month high. Year-to-date, building intentions continued to outpace last year’s levels (+8.9 per cent), which is in contrast to the provincial and national trend (-5.8 per cent and -2.1 per cent respectively).

The value of residential permits ($138 million in October) increased significantly month-over-month (+62.2 per cent over September). This increase was led by an 85 per cent jump in the value of permits taken out for single-family homes. To date, permits for this type of dwelling are up 46 per cent over 2012, while permits for condominium housing have decreased by 4.3 per cent over the same timeframe.

“In October, construction intentions were up in 19 of Canada's 34 census metropolitan areas. In Ottawa, the increase came from residential and commercial construction.” - Statistics Canada (December 5, 2013)

The value of non-residential building permits ($123 million in October) also increased on a month-over-month basis, though to a much lesser extent (+10.9 per cent over September 2013). Commercial construction intentions accounted for the vast majority of non-residential permits issued in October ($120 million). 

Sources: Statistics Canada, Building Permits Survey results for the Ontario portion of the Ottawa-Gatineau CMA for October 2013 (seasonally adjusted). Please note that these figures may differ from City of Ottawa data on this topic. The data from Statistics Canada allows for comparison to provincial and national figures.

Tables: Monthly Key Economic Indicators for Ottawa

Labour Force

Indicator Nov. 2012 Oct. 2013 Nov. 2013 Change from last period Year-over-year change 12-month trend
Labour force (‘000) 580.5 559.3 557.1 -2.2 -23.4 Down
Employed (‘000) 541.7 524.1 525.6 1.5 -16.1 Down
Unemployed (‘000) 38.8 35.2 31.6 -3.6 -7.2 Down
Unemployment rate (%) 6.7 6.3 5.7 -0.6 -1.0 Down
Participation rate 73.2 69.6 69.2 -0.4 -4.0 Down

Economy

Indicator Nov. 2012 Oct. 2013 Nov. 2013 Change from last period Year-over-year change 12-month trend
Inflation Rate 0.7 0.8 0.9 0.1 0.2 Up
Avg. Weekly Earnings ($) 1,014 1,071 1,073 2 59 Up

Housing

Indicator Nov. 2012 Oct. 2013 Nov. 2013 Change from last period Year-over-year change 12-month trend
Monthly starts (total # units) 366 572 455 -117 89 Up
Average price - new homes ($) 470,263 577,297 514,467 -62,830 44,204 Up
Average price - resale market ($) 352,821 365,374 361,320 -4,054 8,499 Up

Construction

Indicator Oct. 2012 Sep. 2013 Oct. 2013 Change from last period Year-over-year change 12-month trend
Residential permits ($'000) 134,968 84,933 137,739 52,806 2,771 Up
Non-Residential permits ($000) 61,887 111,278 123,367 12,089 61,480 Up
Industrial ($000) 1,104 1,282 2,172 890 1,068 Up
Commercial ($000)  27,845 96,121 120,172 24,051 92,327 Up
Institutional/Gov’t ($000) 32,938 13,875 1,023 -12,852 -31,915 Down

Economic development update - February 2014

Monthly Highlights

  • Employment. After holding steady for three months, the Canadian economy dropped 45,900 jobs in December 2013, the majority of which were lost in Ontario (-39,300). In contrast to the trend at the national and provincial level, the Ottawa labour market expanded in December, adding 1,300 jobs.
  • Unemployment. Significant job losses pushed the provincial and national unemployment rates up in December to 7.9 and 7.2 per cent, respectively. Despite the addition of new jobs to the local labour market, the unemployment rate in Ottawa also increased (+0.2 per cent to 5.9 per cent) as a result of a rise in the number of job-seekers entering the market.
  • Economic growth. Even with the recent uptick in inflation (1.2 per cent nationally in December), the Bank of Canada maintained its benchmark interest rate at 1 per cent. A sustained lower Canadian dollar is expected to boost demand for exports, in turn increasing business confidence and investment throughout 2014.
  • Real estate. Despite outpacing all other dwelling types in 2013, condominium starts are expected to slow in 2014, allowing for the accumulated inventory to be sold. This downturn is expected to be temporary, however, as large demographic segments of the population such as the baby boomers will be looking to downsize their homes in the coming years.
  • Construction. Overall building permits issued by the City of Ottawa continue to trend higher year-to-date compared to 2012. Although there was a significant drop in non-residential construction in November 2013 (-59.8 per cent), construction on major commercial projects in Ottawa such as the LRT is expected to sustain growth in the coming years.

New and Noteworthy

  • Mayor Jim Watson highlighted the City of Ottawa’s commitment to economic development and prosperity in his State of the City address during this year’s first Council meeting on January 22, 2014. 
  • The Honourable Gary Goodyear, Minister of State for the Federal Economic Development Agency of Southern Ontario (FedDev Ontario), launched the Southern Ontario Prosperity Initiatives (SOPIs) on December 6, 2013. The SOPIs are a new suite of initiatives designed to support and develop a stronger, more vibrant economy in communities in Southern Ontario, including Ottawa.

Labour Market

The Canadian economy lost 45,900 jobs in December 2013, pushing the unemployment rate to 7.2 per cent. Across the country, the Ontario labour market lost the most jobs (-39,300) and saw its unemployment rate rise to 7.9 per cent (+0.7 per cent over November). According to Statistics Canada, 2013 marked the weakest year for job growth in Canada since 2009.

In contrast to the trend at the national and provincial level, the Ottawa labour market expanded in December (+1,300 jobs). On a sector-by-sector basis, the health care and social assistance segment of the Ottawa labour force saw the greatest increase (+3,200 jobs). Despite the growth in employment, the size of the Ottawa labour force also increased, causing the unemployment rate to edge up slightly (+0.2 per cent to 5.9 per cent).

While the recent monthly trends lean positive, it is important to remember that there has been a downturn in employment in Ottawa over the past year (-18,000 jobs since December 2012), due primarily to cuts to the federal public service. That said, economists are forecasting a rebound in employment in Ottawa over the next three years, as restraints on federal government spending begin easing. 

 “Fortunately, the lull in employment is expected to be relatively brief, and Ottawa’s labour market should be able to add about 16,000 jobs through 2016, holding the jobless rate below 6 per cent and staying near the low end of Canada’s major cities.” ? BMO Capital Markets

Sources: Statistics Canada’s Labour Force Survey results for the Ontario portion of the Ottawa-Gatineau CMA for December 2013 (custom data extraction, three-month moving average, seasonally adjusted). Employment forecast from BMO Capital Markets, “Regional Close-Up” from January 30, 2014. 

The Economy

After holding below 1 per cent for two consecutive months, the Consumer Price Index (CPI) in Canada rose 1.2 per cent in the 12 months to December 2013. Consumer prices in Ottawa followed a similar trend (+1.3 per cent over the same time frame), whereas the increase in inflation was slightly higher at the provincial level, rising 1.5 per cent since December 2012.

Even with the recent uptick in inflation, the Bank of Canada is predicting that inflation will remain below the 1-to-3 per cent target for most of 2014 due to excess supply in the economy and heightened price competition among retailers. As a result, the Bank once again maintained the overnight target interest rate at 1 per cent.  

Elsewhere in the economy, the Canadian dollar began to show signs of erosion, trading in the 93-to-94-cent range in December 2013. Economists are predicting the dollar to decline further in 2014, before stabilizing somewhere between $US 0.90 and $US 0.92. While depreciation of the loonie means that Canadian consumers will be paying more for imported goods, experts are saying that it should also result in an acceleration of Canada’s exports, leading to stronger economic growth.

“The effect [of the lower Canadian dollar] is mixed but, overall, it should give a bit of an economic boost to Canada because we really do need stronger export growth to drive our growth higher here.”
? TD Economics

Sources: Statistics Canada Consumer Price Index results for the Ontario portion of the Ottawa-Gatineau CMA for December 2013. Other sources cited in this section include a Bank of Canada Press Release from January 22, 2014 and a TD Economics report from January 23, 2014.  

Real Estate

New home construction retreated slightly at the close of 2013, with housing starts in Ottawa totalling 417 units (-38 units from November 2013). Despite the month-over-month decline, 2013 was a strong year for housing starts in Ottawa (6,560 units in total vs. 6,026 units in 2012).

Apartment construction outpaced all other dwelling types in Ottawa in 2013, with a total of 2,760 new units added to the inventory, the majority of which are located in the downtown core (1,996 units). Looking ahead to 2014, the Canada Mortgage and Housing Corporation (CMHC) is predicting that condominium starts will begin to dissipate, as the accumulated inventory of condominium units is liquidated. Over the longer term, however, the trend towards smaller, apartment-style dwellings is expected to rebound as baby boomers look to downsize. 

"Ottawa's resale market will remain balanced while new construction will temper in 2014, as current apartment inventory gets absorbed ... In the long-run, Ottawa's housing demand will be led by echo and baby boomers' preferences towards smaller dwellings.” ? Canada Mortgage and Housing Corporation

On the resale market, annual sales dropped by 3.1 per cent compared to 2012, driven primarily by a decline in the condominium segment. Total sales for 2013 (14,049 units), however, remained within range of the annual average, which is indicative of market stability in the region.  

Sources: New housing data from CMHC, “Starts and Completions Survey” and “Market Absorption Survey” results for the Ontario portion of the Ottawa-Gatineau CMA for December 2013. Other sources cited in this section include a forecast from the CMHC Housing Outlook Conference.

Construction

According to the most recent data from Statistics Canada, the City of Ottawa issued building permits totalling more than $200 million in November 2013, which represents a 24.4 per cent decline from October. Despite the monthly decrease, the year-to-date pace continues to be higher than at this time in 2012 (+6.4 per cent). By comparison, the year-to-date pace at the national and provincial levels continues to retreat (-1.5 per cent and -3.6 per cent, respectively).

The value of residential permits issued in Ottawa reached almost $150 million in November, which represents a 12-month high and marks a fourth consecutive monthly increase (+8.5 per cent over October). Residential construction intentions were up 60.9 per cent in the first 11 months of 2013, led primarily by permits for apartment dwellings.

The value of non-residential building permits ($51.3 million in November) decreased significantly on a month-over-month basis (-59.8 per cent), led by a decline in commercial construction. Despite the monthly downturn, numerous multimillion-dollar projects, including the LRT, are expected to sustain the city's growth over the coming years.

“Construction of the rail system is likely to fuel further investment by the private sector near major stops on the rail line, generating higher levels of non-residential construction in the mid-to-late-decade.”
? Ottawa Chamber of Commerce

Sources: Statistics Canada, Building Permits Survey results for the Ontario portion of the Ottawa-Gatineau CMA for November 2013 (seasonally adjusted). Please note that these figures may differ from City of Ottawa data on this topic. The data from Statistics Canada allows for comparison to provincial and national figures. Other sources cited in this section include the Ottawa Chamber of Commerce’s “Regional Economic Outlook 2014.”

Tables: Monthly Key Economic Indicators for Ottawa

Labour Force

Indicator Dec. 2012 Nov. 2013 Dec. 2013 Change from last period Year-over-year change 12-month trend
Labour force (‘000) 583.5 557.1 560.1 3.0 -23.4 Down
Employed (‘000) 544.9 525.6 526.9 1.3 -18.0 Down
Unemployed (‘000) 38.5 31.6 33.2 1.6 -5.3 Down
Unemployment rate (%) 6.6 5.7 5.9 0.2 -0.7 Down
Participation rate 73.5 69.2 69.5 0.3 -4.0 Down

Economy

Indicator Dec. 2012 Nov. 2013 Dec. 2013 Change from last period Year-over-year change 12-month trend
Inflation Rate 0.7 0.9 1.3 0.4 0.6 Up
Avg. Weekly Earnings ($) 1,006 1,073 1,063 -10 57 Up

Housing

Indicator Dec. 2012 Nov. 2013 Dec. 2013 Change from last period Year-over-year change 12-month trend
Monthly starts (total # units) 382 455 417 -38 35 Up
Average price - new homes ($) 520,397 514,467  448,233 -66,234 -72,164 Down
Average price - resale market ($) 350,635 360,436 356,434 -4,002 5,799 Up

Construction

Indicator Nov.  2012 Oct. 2013 Nov. 2013 Change from last period Year-over-year change 12-month trend
Residential permits ($'000)  92,914 137,804  149,465 11,661 56,551 Up
Non-Residential permits ($000) 136,115 127,620  51,326 -76,294 -84,789 Down
Industrial ($000) 5,378 2,172  742 -1,430 -4,636 Down
Commercial ($000)  123,680 124,425  48,783 -75,642 -74,897 Down
Institutional/Gov’t ($000) 7,057 1,023  1,801 778 -5,256 Down

Economic development update - March 2014

Monthly Highlights

  • Employment. Canada added almost 30,000 jobs to its employed labour force to start off the year, helping to recover from the loss of more than 40,000 jobs in December 2013. Ontario and Ottawa also added new jobs in January (+6,000 and 3,200 jobs, respectively).

  • Unemployment. The addition of new jobs at both the national and provincial levels in January resulted in a drop in the unemployment rates to 7.0 per cent across Canada and 7.5 per cent in Ontario. Despite also adding new employment to the local labour market, Ottawa saw a rise in the number of job seekers in January, which led to a slight increase in the overall rate of unemployment (+0.3 per cent to 6.3 per cent).

  • Inflation. The inflation rate in Ottawa rose 1.4 per cent in the 12 months to January 2014, in keeping with national and provincial trends. This is the third consecutive monthly increase in the local rate of inflation.

  • Economic Growth. Canada's economy exceeded expectations in 2013, posting gains of 2.0 per cent annually. In contrast, economic growth in Ottawa in 2013 was held back in part by budget reduction measures in the federal government. Ottawa's economic performance is expected to pick-up in 2014 and 2015, thanks in large part to the continued strong performance of the business services sector (especially in the area of information and communication technology).

  • Real estate. Housing starts in Ottawa declined in nearly every category in January, with the exception of single-family units (which saw a slight increase over 2013 figures). In contrast to recent trends, the bulk of new home construction has been occurring outside of the downtown core (in Nepean and Gloucester).

  • Construction. While the number of building permits issued declined significantly in January, the construction sector in Ottawa remains extremely robust, with more than $3.5 billion in public and private sector funded projects currently underway and expected to continue for the next couple of years.

New and Noteworthy

  • The Federal Finance Minister, Jim Flaherty, delivered the Government of Canada's annual budget in the House of Commons on February 11, 2014. Titled "The Road to Balance: Creating Jobs and Opportunities," Budget 2014 is expected to allow the Government of Canada to eliminate the federal deficit and realize a surplus of $6.4 billion by 2015-16.

Labour Market

After the significant drop in employment at the close of 2013 (-45,900 jobs in December), the Canadian economy added 29,400 jobs in January 2014, led by gains in Quebec (+12,700 jobs) and British Columbia (+7,100 jobs). While Ontario also added in January (+6,000), the province still has a way to go before recovering from the loss of 39,300 jobs in December. The addition of new jobs at both the national and provincial levels resulted in a drop in unemployment to 7.0 per cent across Canada and 7.5 per cent in Ontario.

At the local level, the Ottawa labour market added 3,200 jobs in January, the largest monthly increase in employment since April 2012. Despite the addition of new jobs, however, the number of people looking for employment in Ottawa also increased, resulting in a rise in the unemployment rate (+0.3 per cent to 6.3 per cent).

This month the Economic Development Update takes a closer look at Ottawa's labour market five years after the global recession. While the city was not untouched by the effects of the economic downturn – for instance, Ottawa's largest employer, the federal government, eliminated approximately 12,000 positions in 2013 and the goods-producing sector has shed more than 20,000 jobs since 2009 – there is evidence to suggest that other areas of the local economy have picked up, helping offset some of these losses.

"I don't think we were hit as hard by the public sector cuts as they thought we'd be." – Labour Market Ottawa

Over the past five years, the city has seen considerable growth in a number of service sectors (+37,000 jobs). In particular, the health and social assistance sector, which includes among other areas the growth industry of nursing and residential care, increased by 43 per cent (+21,000 jobs). Likewise, the professional, scientific and technical services sector, which includes many high tech positions, grew by 27 per cent (an increase of 15,600 jobs). Ottawa's accommodation and food services sector also expanded (+14 per cent), adding 3,700 jobs to the local market over this period.  

Sources: Statistics Canada's Labour Force Survey results for the Ontario portion of the Ottawa-Gatineau CMA for January 2014 (custom data extraction, three-month moving average, seasonally adjusted).Sector data not adjusted for seasonality. Labour Market Ottawa is an Ottawa-based organization studying the City's labour market needs.

The Economy

The Consumer Price Index (CPI) in Canada rose 1.5 per cent in the 12 months to January 2014, the highest rate of inflation recorded in the past 18 months. Consumer prices in Ottawa followed a similar trend (+1.4 per cent over the same time frame), whereas the increase in inflation was slightly higher at the provincial level, rising 1.6 per cent since January 2013.

According to Statistics Canada's most recent assessment of gross domestic product (GDP) data, the Canadian economy grew 2.0 per cent overall in 2013, exceeding the Bank of Canada's prediction of 1.8 per cent growth (and up from 1.7 per cent growth in 2012). As a result, the Bank of Canada has revised its outlook slightly, and is now predicting that the Canadian economy will "gradually return to full production capacity," with growth reaching 2.5 per cent in 2014 and 2015. These predictions put the Canadian economy ahead of most European countries, but behind the United States in terms of expected growth over the next two years.

At the local level, the Conference Board of Canada is reporting that Ottawa's economic growth was just 0.3 per cent in 2013, well below national growth rate. Not surprisingly, these results are being linked to belt-tightening in the public sector. That said, Ottawa's real GDP is forecast to pick-up significantly in 2014 and 2015 (+1.4 per cent and 2.1 per cent, respectively), thanks in large part to the continued strong performance of the business services sector and the information and communication technology industry in particular.

"The business services sector [in Ottawa], which includes high-tech services, struggled over 2008-10, just like the manufacturing industry. But business services output growth has been steady since, averaging 2.6 per cent per year from 2011 to 2013." – Conference Board of Canada

Sources: Statistics Canada Consumer Price Index results for the Ontario portion of the Ottawa-Gatineau CMA for January 2014.GDP results taken from Statistic's Canada's quarterly release, "Canadian economic accounts, fourth quarter 2013 and December 2013". Other sources cited in this section include the Conference Board of Canada's "Metropolitan Outlook – Winter 2014" for Ottawa-Gatineau and the Bank of Canada's Monetary Policy Report for January 2014.

Real Estate

The Canada Mortgage and Housing Corporation (CMHC) reported that housing starts in Ottawa totalled 221 units in January 2014, down from 512 units at this time last year – a decrease of more than 50 per cent. Declines were noted in almost all building types, with condominium units experiencing the sharpest decline year-over-year (-295 units, or -97.4 per cent). The only exception to this trend was in single-family units, which increased over the same period (+49 units over January 2013).

In contrast to previous months, Ottawa's new home market activity was concentrated outside of the Greenbelt (62.4 per cent of all starts in January 2014 were in Nepean and Gloucester). This contrasts with January 2013 when 62.8 per cent of all new housing starts were in the downtown core.

The average selling price for a newly constructed single-detached residential property in Ottawa in January 2014 was $552,318. By comparison, the average price of a single-detached home on the resale market was $353,888. In both cases, the value of homes sold this month increased over this time last year (+9.4 per cent and +1.5 per cent, respectively).

While rising real estate values are good for those in a position to sell their homes, they also raise questions about the affordability of home ownership, especially for first-time buyers. According to RBC, which calculates the average proportion of household income that is required to own a home, Ottawa has historically ranked as more affordable relative to other large municipalities in Canada, including Toronto, Montreal and Vancouver.

"At this stage, housing affordability in the Ottawa area continues to be at, or close to, its long-run averages, thereby implying little undue stress on local homebuyers." – RBC Economics

Sources: New housing data from CMHC, "Starts and Completions Survey" and "Market Absorption Survey" results for the Ontario portion of the Ottawa-Gatineau CMA for January 2014. Other sources cited in this section include RBC Economics' "Housing Trends and Affordability" report (February 2014).

Construction

According to the most recent figures published by Statistics Canada, the City of Ottawa issued building permits totalling more than $89 million in December 2013, which represents a 55.5 per cent decline from the previous month and a 36.4 per cent decline from December 2012. The total value of building permits issued in Ottawa in 2013, however, increased by 4 per cent over 2012.

Totalling $71.5 million, residential building permits comprised nearly 80 per cent of all permits issued in Ottawa in December. While the value of these permits decreased month-over-month (-55 per cent from November 2013), the total value of residential construction permits increased in 2013 (+18.4 per cent over 2012).

The value of non-residential building permits ($18.2 million in December) decreased significantly for a second consecutive month (-66.0 per cent from November 2013), with the commercial segment experiencing the largest monthly decline (-72.3 per cent from 2012). The value of non-residential construction permits also declined substantially year-over-year (-74.7 per cent).

By their nature, building permit figures do not take into account ongoing activity in the construction sector, which at the moment is very robust in Ottawa. In fact, it is estimated that there is more than $3.5 billion worth of public and private-sector-funded projects currently underway and expected to continue for the next couple of years.

"The municipal government is behind the redevelopment of Lansdowne Park and a $2.1 billion first phase of light rail construction. The private sector is also busy. Rideau Centre and Bayshore Shopping Centre are expanding, and Tanger outlets and a Bass Pro Shop will soon be erected in Kanata." – CBC Ottawa

Sources: Statistics Canada, Building Permits Survey results for the Ontario portion of the Ottawa-Gatineau CMA for December 2013 (seasonally adjusted). Please note that these figures may differ from City of Ottawa data on this topic. The data from Statistics Canada allows for comparison to provincial and national figures. Other sources cited in this section include CBC Ottawa's "Work Shift" series (March 3-7, 2014).

Tables: Monthly Key Economic Indicators for Ottawa

Labour Force

Indicator Jan. 2013 Dec. 2013 Jan.  2014 Change from last period Year-over-year change 12-month trend
Labour force (‘000) 578.7 560.6 565.8 5.2 -12.9 Down
Employed (‘000) 542.4 527.0 530.2 3.2 -12.2 Down
Unemployed (‘000) 36.3 33.6 35.6 2.0 -0.7 Down
Unemployment rate (%) 6.3 6.0 6.3 0.3 0.0 No change
Participation rate 72.8 69.6 70.2 0.6 -2.6 Down

Economy

Indicator Jan. 2013 Dec. 2013 Jan. 2014 Change from last period Year-over-year change 12-month trend
Inflation Rate 0.6 1.3 1.4 0.1 0.8 Up
Avg. Weekly Earnings ($) 1,014 1,063 1,058 -5 44 Up

Housing

Indicator Jan. 2013 Dec. 2013 Jan. 2014 Change from last period Year-over-year change 12-month trend
Monthly starts (total # units) 512 417 221 -196 -291 Down
Average price - new homes ($) 505,002 448,233 552,318 104,085 47,316 Up
Average price - resale market ($) 348,587 355,756 353,888 -1,868 5,301 Up

Construction

Indicator Dec.  2012 Nov.  2013 Dec. 2013 Change from last period Year-over-year change 12-month trend
Residential permits ($'000) 68,942 148,240 71,533 -76,707 2,591 Up
Non-Residential permits ($000) 72,050 53,471 18,195 -35,276 -53,855 Down
Industrial ($000) 199 742 1,020 278 821 Up
Commercial ($000)  71,168 50,928 14,112 -36,816 -57,056 Down
Institutional/Gov’t ($000) 683 1,801 3,063 1,262 2,380 Up

Economic development update - April 2014

Monthly Highlights

  • Employment. The Canadian economy lost 7,000 jobs in February due to a sharp decline in part-time employment. The Ontario job market gained 6,100 jobs while Ottawa lost 3,700 jobs. Despite the decline, the local information, culture and recreation sector showed continued signs of strength, posting gains of 3,900 jobs. 
  • Unemployment. The jobless rate in Canada and in Ontario held steady in February for a second consecutive month (7.0 per cent and 7.5 per cent, respectively). In contrast, the job losses in Ottawa pushed unemployment up to 6.5 per cent.
  • Inflation. Consumer prices in Ottawa rose on average 1.2 per cent in the 12 months to February 2014, which is more than the average price growth at the national level (1.1 per cent), but less than in Ontario (1.5 per cent). The Bank of Canada once again cited the persistently low inflation rate at the national level as a reason for holding its overnight rate at 1 per cent.
  • Real estate. The resale housing market in Ottawa weakened in February 2014 compared to this time last year. According to the Canadian Real Estate Association, lower levels of resale activity across Canada can be partially explained by exceptionally poor winter weather conditions. 
  • Construction. The City of Ottawa issued building permits valued at $144.6 million in January 2014, more than half of which were for commercial buildings. Ottawa’s robust construction industry is expected to fuel growth at the local level in 2014.

New and Noteworthy

  • Ottawa was named best place to live for new immigrants according to MoneySense Magazine's Canada's Best Places to Live 2014 rankings. Ottawa came in second place in the "Best Large Cities" and "Best Places to Retire" categories.

Labour Market

Estimates of employment and unemployment are among the most timely and important measures of economic performance. Given the recent modest economic growth in Canada, there is heightened interest in monitoring trends in these measures.

After starting the year on a high note, the Canadian economy lost 7,000 jobs in February 2014. The job loss was relatively small in comparison to the overall size of the Canadian labour force and therefore did not affect the unemployment rate, which held steady at 7 per cent for a second consecutive month. This month’s job losses are being entirely attributed to a sharp decline in part-time employment.

“Details of the Canadian report weren’t as weak as the headline, as full-time jobs were up 18,900, with all of the decline in part-time positions (-25,900)…” – BMO Capital Markets

At the provincial level, Quebec and British Columbia led the drop in employment (-26,000 and -10,000, respectively) after experiencing the largest growth last month. Ontario added 6,100 jobs this February, slowly making up for the nearly 40,000 jobs lost in December 2013. As was the case at the national level, the growth in employment in Ontario did not affect the unemployment rate, which remained at 7.5 per cent.

At the local level, the Ottawa job market shed 3,700 jobs, offsetting gains in January and pushing the unemployment rate up to 6.5 per cent (+0.2 per cent from last month). While employment in most sectors of the Ottawa economy declined this month, the information, culture and recreation segment, which includes high-tech services such as telecommunications and software development, showed continued signs of strength, adding 3,900 jobs.

Sources: Statistics Canada’s Labour Force Survey results for the Ontario portion of the Ottawa-Gatineau CMA for February 2014 (custom data extraction, three-month moving average, seasonally adjusted).Sector data not adjusted for seasonality. Other sources cited in this section include BMO Capital Markets’ “EconoFacts” report, March 7, 2014. 

The Economy

The Consumer Price Index (CPI) measures changes in the price of consumer goods and services purchased by households. By calculating the annual percentage change in CPI, we can get a sense of the average price change (also known as the rate of inflation) in a given market over a period of time.

In Canada, consumer prices rose 1.1 per cent in the 12 months to February 2014. Canadians paid more on average for shelter and food than at this time last year, while gasoline prices fell over the same period. At the provincial level, the rate of inflation was highest in Prince Edward Island (2.7 per cent), followed by Alberta (2.4 per cent). Quebec saw the lowest inflation (0.4 per cent), while prices deflated in British Columbia (-0.3 per cent).

In Ottawa, prices rose 1.2 per cent in the 12 months to February 2014, which is lower than the average price change reported in Ontario (1.5 per cent). On average, prices advanced at relatively the same pace as in February 2013 when the local rate of inflation stood at 1.1 per cent.

The Bank of Canada considers the CPI to be the most relevant indicator of the cost of living and typically aims to keep inflation within the inflation-control target range of between 1 and 3 per cent. The persistently low rate of inflation at the national level is again cited as a reason the Bank continues to hold its key interest rate at the historically low rate of 1 per cent.

“The degree of uncertainty around the inflation forecast, and the range of weaker-than-projected outcomes in particular, are important considerations for policy in light of the low level of inflation and the recent series of downside surprises” – Bank of Canada

Sources: Statistics Canada Consumer Price Index results for the Ontario portion of the Ottawa-Gatineau CMA for February 2014. Other sources cited in this section include the Bank of Canada’s “Monetary Policy Report” for January 2014.

Real Estate

Housing starts in Ottawa totalled 126 units in February 2014, down from 172 units started at this time last year (a decrease of 26.7 per cent). In terms of dwelling types, the number of single-detached units being built was up from February 2013 (+7.9 per cent), whereas construction of all other dwelling types declined (semi-detached, row and condominium).

The average selling price for a newly constructed single-detached residential property in Ottawa in February was $562,868, a significant increase (+22.5 per cent) over the average price of this type of home twelve months earlier.

In terms of the resale market, the total number of homes sold this month was 1,118, slightly fewer than the 1,180 homes sold in February of last year. On the other hand, the average price of a home on the resale market increased, albeit at a slower pace than the price of a new home, rising 1.8 per cent in the last twelve months to $356,715.

Ottawa is not alone in experiencing weaker demand for homes on the resale market at the outset of 2014. According to the Canadian Real Estate Association (CREA), lower levels of resale housing activity Canada-wide are being linked to “an exceptionally tough winter in many parts of the country.” That said, the CREA predicts that housing activity will pick-up in 2014 as the Canadian economy improves.

“ …home sales are expected to trend higher heading into the spring, and be further supported over the second half of 2014 by a widely anticipated pick-up in Canadian economy growth.” – Canadian Real Estate Association

Sources: New housing data from CMHC, “Starts and Completions Survey” and “Market Absorption Survey” results for the Ontario portion of the Ottawa-Gatineau CMA for February 2014. Other sources cited in this section include the Canadian Real Estate Association’s resale housing forecast (March 17, 2014). 

Construction

Building permits are an early indicator of the health of the construction industry at the municipal level as contractors are required to obtain a permit as a first step for any major project. According to the most recent data from Statistics Canada, the City of Ottawa issued building permits totalling $144.6 million in January: $64.4 million in residential permits and $80.2 million in non-residential permits. Commercial permits accounted for more than half of all permits issued this month ($73.5 million).

Month-over-month, the value of permits issued in Ottawa increased significantly (+59.5 per cent). Similarly, the value of building permits increased over January across Canada and in Ontario, albeit at a more modest pace (8.5 per cent and 9.3 per cent, respectively).

Construction activity in Canada is typically closely related to economic growth. For example, investment in infrastructure was a key component of the Government of Canada’s economic stimulus package and supported the creation of construction jobs that helped Canada through the 2008-2009 economic recession. Unsurprisingly, the Conference Board of Canada predicts that ongoing robust construction activity in Ottawa, led by projects such as Ottawa Light Rail (estimated at $2.1 billion), will continue to fuel growth locally in 2014. 

“In addition, the economy will continue to benefit from robust non-residential construction activity, thanks to several major ongoing projects. According, real GDP growth is forecast to improve in 2014 …” – Conference Board of Canada

Sources: Statistics Canada, Building Permits Survey results for the Ontario portion of the Ottawa-Gatineau CMA for January 2014 (seasonally adjusted). Please note that these figures may differ from City of Ottawa data on this topic. The data from Statistics Canada allows for comparison to provincial and national figures. Other sources cited in this section include the Conference Board of Canada’s Metropolitan Outlook for Ottawa Gatineau (Winter 2014).

Tables: Monthly Key Economic Indicators for Ottawa

Labour Force

Indicator Feb. 2013 Jan. 2014 Feb.  2014 Change from last period Year-over-year change 12-month trend
Labour force (‘000) 576.1 565.8  562.9  -2.9  -13.2  Down
Employed (‘000)  540.6  530.2  526.5  -3.7  -14.1  Down
Unemployed (‘000)  35.6  35.6  36.4  0.8  0.8  Up
Unemployment rate (%)  6.2  6.3  6.5  0.2  0.3  Up
Participation rate  72.4  70.2  69.7  -0.5  -2.7  Down

Economy

Indicator Feb. 2013 Jan. 2014 Feb. 2014 Change from last period Year-over-year change 12-month trend
Inflation Rate 1.1 1.4 1.2 -0.2 0.1 Up
Avg. Weekly Earnings ($) 1,019 1,058 1,057 -1 38 Up

 Housing

Indicator Feb. 2013 Jan. 2014 Feb. 2014 Change from last period Year-over-year change 12-month trend
Monthly starts (total # units)  172  221  126  -95  -46  Down
Average price - new homes ($)  459,555  552,318  562,868  10,550  103,313  Up
Average price - resale market ($)  350,282  353,842  356,715  2,873  6,433  Up

Construction

Indicator Jan.  2013 Dec.  2013 Jan. 2014 Change from last period Year-over-year change 12-month trend
Residential permits ($'000)  54,281  71,102  64,425  -6,677  10,144  Up
Non-Residential permits ($000)  84,083  19,522  80,164  60,642  -3,919  Down
Industrial ($000)  1,049  1,020  5,757  4,737  4,708  Up
Commercial ($000)   79,860  15,439  73,495  58,056  -6,365  Down
Institutional/Gov’t ($000)  3,174  3,063  912  -2,151  -2,262  Down

Economic Development Update - May 2014

Monthly Highlights

  • Employment. The Canadian economy added 42,900 jobs, while Ontario added 13,400 jobs in March 2014. At the local level, Ottawa’s economy added 900 jobs in March, the bulk of which occurred in the information, culture and recreation sector.
  • Unemployment. The unemployment rate declined at the national and provincial level (-0.1 per cent and -0.2 per cent, respectively), while remaining steady in Ottawa at 6.5 per cent. A recent report by the Parliamentary Budget Office cautions that a further 9,000 federal government jobs could be cut by 2017. Given the concentration of the federal public service in Ottawa, further cuts are likely to continue to disproportionately affect the local labour market.
  • Economic growth. The International Monetary Fund (IMF) expects Canada’s economy to grow by 2.3 per cent in 2014. The IMF cautions, however, against relying on consumers for long-term economic growth, urging the Federal government to balance its goals of budgetary surplus with the need to further stimulate the economy.
  • Real estate. The Canada Mortgage and Housing Corporation (CMHC) reported that housing starts in Ottawa totalled 427 units in March 2014, up from 397 units at this time last year. The average selling price for a newly constructed single-detached home increased to $527,983 over the same period. The average price for a single-detached home on the resale market held steady year-over-year, while the average selling price of a condominium unit declined due to an excess of available units for sale according to local brokerage firm Royal Lepage.
  • Construction. The City of Ottawa issued building permits totalling $242 million in February 2014. Year-to-date, building permits were up significantly compared to the same time in 2013 (+43.3 per cent) and are expected to continue on this upward trend into the summer construction season.

New and Noteworthy

  • The Province of Ontario has partnered with Open Text Corporation, contributing $120 million to the technology giant’s $2-billion investment project that will see as many as 1,200 new jobs created in the next seven years in key locations across the Province, including Ottawa.
  • In a recent speech to the Economic Club of Canada, Mayor Jim Watson set out an ambitious goal of attracting 1.75 million more visitors to Ottawa in 2017 for the 150th anniversary of Confederation – a 20-per-cent increase over the annual average.

Labour Market

The Canadian economy added 42,900 jobs in March 2014, pushing the unemployment rate below 7 per cent for the first time since November 2013 (-0.1 per cent from February to 6.9 per cent). The bulk of jobs created this month were part-time (+30,100 jobs) corresponding to an almost identical increase in the number of jobs created for youth 15-to-24 years of age (+32,500 jobs). A similar trend was observed in Ontario where the rise in employment (+13,400 jobs) was led entirely by gains in part-time positions, resulting in a slight drop in the unemployment rate (-0.2 per cent to 7.3 per cent).

In Ottawa, the local labour market added 900 jobs keeping the unemployment rate on par with last month (6.5 per cent).  Gains were concentrated in the information, culture and recreation sector which includes jobs in telecommunications, data hosting and processing, publishing and broadcasting.

The Economic Development Update recently reported that employment in Ottawa is forecasted to rebound over the next three years as restraints on federal government spending begin to ease. The Parliamentary Budget Office (PBO), however, suggests that a further 9,000 federal public service jobs could be eliminated by 2017 in addition to the nearly 20,000 jobs shed since March 2010. Given the size of the federal public service in Ottawa, it is likely that these cuts will continue to disproportionately affect the local labour market for some time.

“The 2014-15 Reports on Plans and Priorities also suggests that staff levels in the Federal Public Service will decline by a further 8,900 between 2014-15 and 2016-17, indicating further downward pressure in this area of spending. In sum, these planned reductions would reduce the total population of the Federal Public Service to levels last seen in 2006-07.” – Parliamentary Budget Office

Source: Statistics Canada’s Labour Force Survey results for the Ontario portion of the Ottawa-Gatineau CMA for March 2014 (custom data extraction, three-month moving average, seasonally adjusted). The data for individual economic sectors are not adjusted for seasonality. Other sources cited in this section include the Parliamentary Budget Office’s “Expenditure Monitor” report released on April 11, 2014.

The Economy

annual rate of inflation in Ottawa sat at 1.3 per cent in March 2014, which is slightly lower than the average price change reported at the provincial and national level (1.5 per cent). Across Canada, the rise in consumer prices was led by a 4.6 per cent increase in energy prices. Consumers also paid more on average for shelter, transportation and food, while prices for clothing and footwear, and health and personal care decreased compared with the same month a year earlier.

The Bank of Canada took a slightly more optimistic stance towards inflation in its most recent monetary policy update, stating that higher consumer energy prices and the lower Canadian dollar will “exert upward pressure on total CPI inflation,” leading overall inflation to stabilize near the Bank’s 2 per cent target in the coming months. Despite these encouraging signs, the Bank of Canada continues to be cautious, holding the overnight interest rate at 1 per cent.

According to the International Monetary Fund (IMF), Canada’s economy is expected to grow 2.3 per cent in 2014, slightly lower than the Bank of Canada’s prediction for the same period (+2.5 per cent). The IMF cautions, however, against relying on consumers for long-term economic growth, urging the Federal government to balance its goals of budgetary surplus with the need to further stimulate the economy.

“Fiscal policy needs to strike the right balance between supporting growth and rebuilding fiscal buffers, especially at the federal government level…” – International Monetary Fund

Source: Statistics Canada Consumer Price Index results for the Ontario portion of the Ottawa-Gatineau CMA for March 2014. Other sources cited in this section include the Bank of Canada’s “Monetary Policy Report” for April 2014 and the International Monetary Fund “World Economic Outlook” for April 2014.

Real Estate

The Canada Mortgage and Housing Corporation (CMHC) reported that housing starts in Ottawa totalled 427 units in March 2014, up from 397 units at this time last year – an increase of 7.6 per cent. The year-over-year rise can be attributed to gains in row and rental housing (+52 units each) while construction of single-family homes and condominium apartments declined (-54 units and -22 units, respectively). Housing starts for the first three months of 2014 (774 units), on the other hand, are lagging behind this time in 2013 when starts sat at 1,081.

The average selling price for a newly constructed single-detached residential property in Ottawa increased in the 12 months to March 2014 to $527,983 (+5.1 per cent over last year). By comparison, the average price of a single-detached home on the resale market remained relatively constant at $353,286 (-0.1 per cent from 2013).

Looking at the resale market more closely, local brokerage firm Royal Lepage reports that the average selling price of a detached bungalow and standard two-storey home increased in the first quarter of 2014 compared to Q1 2013 (+2.2 per cent and +2.0 per cent, respectively).  In contrast, the average selling price of a condominium unit on the resale market declined over the same period (-1.4 per cent), which according to the brokerage firm is due to an excess of available units for sale.

“The Ottawa market has witnessed fairly balanced inventory across all housing types except for condos where there is an excess of available units. Not surprisingly, there was a small dip in the average price for condos when compared to this time last year due to the lingering surplus of units.” – Royal Lepage Real Estate Services

Source: New housing data from CMHC, “Starts and Completions Survey” and “Market Absorption Survey” results for the Ontario portion of the Ottawa-Gatineau CMA for March 2014. Other sources cited in this section include Royal Lepage “House Price Survey” for Q1 2014. 

Construction

According to the most recent data from Statistics Canada, the City of Ottawa issued building permits totalling $242 million in February 2014: $162 million in residential permits and $80 million in non-residential permits.

On a month-over-month basis, the value of these permits increased 68.2 per cent overall, with residential permits accounting for most of the rise. Year-to-date, building permits are up significantly over February 2013 (+43.3 per cent) and are expected to continue on this upward trend as we approach the summer construction season.

“A hot construction season could be in the forecast for Ottawa. For the first two months of 2014 permit values are up by 44 per cent, pointing to strong activity in coming months.” – Ottawa Citizen (April 9, 2014)

Construction activity in Ottawa, especially in the non-residential sector, is expected to fuel local economic growth in 2014. In addition to a number of major projects (e.g., Ottawa Light Rail, Rideau Centre expansion), figures released by the City of Ottawa’s Building Code Service Branch underscore the strength of the local construction industry. For example, applications were issued in February for several major residential projects including the construction of a 20-storey condominium tower at Lansdowne Park, and a five-storey retirement complex in the south end of the city. In terms of non-residential projects, big ticket items include a Target store on St-Laurent Boulevard and a six-storey Hampton Inn hotel near the Ottawa International Airport.

Source: Statistics Canada, Building Permits Survey results for the Ontario portion of the Ottawa-Gatineau CMA for February 2014 (seasonally adjusted). Please note that these figures may differ from City of Ottawa data on this topic. The data from Statistics Canada allows for comparison to provincial and national figures. Other sources cited in this section include the City of Ottawa Building Code Services Branch’s “Construction, demolition, pool enclosure permits” monthly open data report for February 2014.

Tables: Monthly Key Economic Indicators for Ottawa

Labour Force

Indicator Mar. 2013 Feb. 2014 Mar.  2014 Change from last period Year-over-year change 12-month trend
Labour force (‘000) 568.1 562.9  564.2 1.3  -3.9  Down
Employed (‘000)  533.2 526.5 527.4 0.9  -5.8  Down
Unemployed (‘000)  34.9  36.4  36.8  0.4  1.9  Up
Unemployment rate (%)  6.1  6.5  6.5  0.0  0.4  Up
Participation rate  71.3  69.7  69.8 0.1  -1.5  Down
 

Economy

Indicator Mar. 2013 Feb. 2014 Mar. 2014 Change from last period Year-over-year change 12-month trend
Inflation Rate 0.9 1.2 1.3 0.1 0.4 Up
Avg. Weekly Earnings ($) 1,032 1,057 1,063 6 31 Up

 Housing

Indicator Mar. 2013 Feb. 2014 Mar. 2014 Change from last period Year-over-year change 12-month trend
Monthly starts (total # units)  397  126  427 301  30  Up
Average price - new homes ($)  502,434 562,868  527,983  -34,885  25,549  Up
Average price - resale market ($)  353,464  355,643  353,286  -2,357 -178  Down

Construction

Indicator Feb.  2013 Jan.  2014 Feb. 2014 Change from last period Year-over-year change 12-month trend
Residential permits ($'000) 103,341  64,418  161,953 97,535  58,612  Up
Non-Residential permits ($000) 25,996  79,315  79,750  435  53,754  Up
Industrial ($000)  208  5,757  1,785  -3,972 1,577  Up
Commercial ($000)   16,447  72,646  52,710  -19,936  36,263  Up
Institutional/Gov’t ($000)  9,341  912  25,255  24,343  15,914  Up

Economic Development Update - June 2014

Monthly Highlights

  • Employment. Canada’s economy lost 28,900 jobs in April 2014, while Ontario posted gains of 17,600 jobs. At the local level, Ottawa lost 1,500 jobs. On a more positive note, there are certain sectors of Ottawa’s economy, such as the high-tech sector, that have shown signs of strength over the past few years and are well-positioned to post job gains moving forward.
  • Unemployment. The unemployment rate in Ottawa reached 6.9 per cent in April (+0.4 per cent from March 2014), on par with the unemployment rate at the national level, but well below the provincial rate of 7.4 per cent.
  • Economic growth. Canada’s economy grew a modest 0.3 per cent in the first quarter of 2014, the lowest growth per quarter since Q4 2012. That said, Canada’s economy outpaced that of the United States, which contracted in Q1 of 2014.
  • Real estate. Both housing starts and resale market activity softened in April compared to this time last year. Although harsh winter conditions are being linked to a slower start to 2014, the Canada Mortgage and Housing Corporation (CMHC) has suggested that speculation about further cuts to the federal public service might also have contributed to the year-over-year decline.
  • Construction. The City of Ottawa issued building permits totalling more than $219 million in March 2014. Despite dropping from the previous month (-9.1 per cent), building permits are up considerably over this time last year (+25.2 per cent).

New and Noteworthy

  • VENUS Cybersecurity Corporation – a not-for-profit organization designed to make Canada a leader in cybersecurity – officially opened its doors during an open house event on May 29, 2014.
  • Invest Ottawa has partnered with Welcoming Ottawa Week (WOW) to offer a learning seminar to newcomers to Ottawa on how to do business in Canada. Click here for more information on this and the many interesting events lined up for WOW.

Labour Market

Canada’s economy lost 28,900 jobs in April 2014, reversing gains experienced in the previous month. On an annual basis, Canada’s workforce grew by 0.8 per cent (149,200 jobs), reducing the unemployment rate to 6.9 per cent from 7.2 per cent one year before. Ontario added 17,600 jobs month-over-month and 73,500 jobs year-over-year, pushing the provincial unemployment rate down to 7.4 per cent (-0.2 per cent from April 2013).

Last month, the Economic Development Update reported on a recent release by the Parliamentary Budget Officer warning of further cuts to the federal public service, above the 20,000 jobs initially identified in Budget 2012. Given that a significant proportion of federal government jobs are located in Ottawa, there is renewed concern that looming cuts will disproportionately affect the local labour market. On a more positive note, other industry sectors are showing signs of strength (discussed in more detail below).

The local economy shed 1,500 jobs this April, edging up the unemployment rate to 6.9 per cent (+0.4 per cent from March). Year-over-year, there were 1,500 fewer jobs in April than in April 2013, while the unemployment rate is up from 6.1 per cent from the same time last year. Bucking the trend, the information and communication technology sector, which includes many high-tech jobs, posted gains of 11,400 jobs in the 12 months to April. Other sectors experiencing gains include health care and social assistance (+7,900 jobs) and professional, scientific and technical services (+1,300 jobs).

“One of the few bright spots in Ottawa-Gatineau’s economy over the past few years has been the information and communication technology (ICT) services sector. Employment in this sector, which includes software publishers and wired and wireless telecommunications carriers, has risen by over 8 per cent per year over the past three years…”
– Conference Board of Canada

Source: Statistics Canada’s Labour Force Survey results for the Ontario portion of the Ottawa-Gatineau CMA for April 2014 (custom data extraction, three-month moving average, seasonally adjusted). The data for individual economic sectors are not adjusted for seasonality. Other sources cited in this section include the Conference Board of Canada’s Metropolitan Outlook for Ottawa Gatineau (Spring 2014).   

The Economy

Consumer prices in Canada rose 2 per cent in the 12 months to April 2014, on par with the Bank of Canada’s inflation target for the first time since April 2012. The rate of inflation in Ottawa also sat at 2 per cent, while prices increased 2.4 per cent in Ontario. The larger increase at the provincial level is attributed to price increases for natural gas and gasoline (+39.3 per cent and +7.1 per cent, respectively).

In terms of economic growth, Canada’s economy grew a modest 0.3 per cent in the first quarter of 2014, the lowest growth per quarter since Q4 2012. That said, Canada’s economy outpaced that of the United States, which contracted in Q1 (-0.25 per cent). As was explained in previous months, weaker performance in both countries continues to be linked to harsh winter conditions, leading economists to forecast an uptick in economic activity for both countries in the second quarter.

In its most recent global outlook, the Organization of Economic Co-operation and Development (OECD) predicts that Canada’s economic growth will accelerate to 2.5 per cent in 2014 and reach 2.75 per cent in 2015 as exports and business investments pick up. Moreover, the OECD expects Canada to outpace average growth rates for all member countries this year (+2.2 per cent), while stabilizing near the forecasted overall average in 2015 (+2.8 per cent).

“Economic growth is projected to accelerate to 2¾ per cent by 2015, along with a desirable rebalancing towards exports and business investment. Exports are set to gain momentum, supported by stronger foreign-market growth, the recent currency depreciation and continuing energy-sector expansion. Business investment should also accelerate, boosting capacity and cost competitiveness.” – OECD

Source: Statistics Canada Consumer Price Index results for the Ontario portion of the Ottawa-Gatineau CMA for April 2014. Other sources cited in this section include the Organization for Economic Cooperation and Development’s (OECD) Economic Outlook published in May 2014.

Real Estate

According to the Canada Mortgage and Housing Corporation’s (CMHC) latest market predictions, housing activity in Ottawa is expected to soften in 2014. The most recent figures for housing starts – 253 units in April, down from 515 at the same time last year (-50.9 per cent) – would seem to support this prediction.

By segment, condominium construction experienced the largest drop over the past 12 months, declining to only 18 new units in April compared to 298 in April 2013. The construction of semi-detached units also declined (-24 units), while all other segments (i.e., single, row and rental) posted modest gains.

On the resale market, figures from the Ottawa Real Estate Board (OREB) also point to softer market conditions in 2014. The total number of homes sold through the Board’s Multiple Listing System (MLS) in April 2014 was 1,420, down from 1,569 homes sold at the same time last year (-9.5 per cent).

Sales activity in the new home and resale markets is often linked to weather conditions. Previous updates reported that harsh winter conditions were partially responsible for the softer real estate market in Ottawa in the early part of 2014. For April, the CMHC suggests that speculation about further cuts to the federal public service might have also contributed to the decline in activity observed from last year. On the upside, the outlook for 2015 tends to be more positive, as other sectors, including high-tech and construction, are expected pick up the slack in the local labour market.

“Weaker employment conditions and uncertainty with regard to continued public administration job cuts have dampened both the construction of new homes and demand in the resale market.” – CMHC

Source: New housing data from CMHC, “Starts and Completions Survey” and “Market Absorption Survey” results for the Ontario portion of the Ottawa-Gatineau CMA for April 2014. Resale data adapted from the Canadian Real Estate Association (CREA) monthly report for the Ontario portion of the Ottawa-Gatineau CMA for April 2014. Other sources cited in this section include CMHC’s spring 2014 housing market outlook for Ottawa. 

Construction

According to the most recent data from Statistics Canada, the City of Ottawa issued building permits totalling more than $219 million in March 2014 ? $166.3 million in residential permits and $53.1 million in non-residential permits. Despite dropping from the previous month (-9.1 per cent), building permits were up considerably over the same time last year (+25.2 per cent).

Looking at figures released by the City’s Building Code Services Branch, 975 building permits were issued in March, up from 403 permits issued in February. Construction intentions in Kanata and Stittsville led in terms of value, accounting for nearly 42 per cent of the city-wide total, followed closely by Barrhaven/South Nepean (36.9 per cent). The value of permits issued for the downtown core came in at less than 7 per cent of the total.

At a national level, Statistics Canada reported that the construction industry in Canada took out nearly $6 billion worth of building permits in March, down 3 per cent from February. Ontario experienced the sharpest decline, led by a drop in permits issued in Kingston, Kitchener-Cambridge-Waterloo and London. Across the country, Edmonton, Oshawa and Québec City experienced the largest gains.

“The largest decrease was in Kingston, followed by Kitchener–Cambridge–Waterloo and London. In Kingston, the decrease was largely attributable to drops in institutional buildings. Lower intentions for multi-family dwellings explained the decline in Kitchener–Cambridge–Waterloo, while in London, non-residential building and single-family dwelling construction intentions were behind the decrease.”
– Statistics Canada

Source: Statistics Canada, Building Permits Survey results for the Ontario portion of the Ottawa-Gatineau CMA for March 2014 (seasonally adjusted). Please note that these figures may differ from City of Ottawa data on this topic. The data from Statistics Canada allows for comparison to provincial and national figures. Other sources cited in this section include the City of Ottawa Building Code Services Branch’s “Construction, demolition, pool enclosure permits” monthly open data report for March 2014.

Tables: Monthly Key Economic Indicators for Ottawa

Labour Force

Indicator Apr. 2013 Mar. 2014 Apr.  2014 Change from last period Year-over-year change 12-month trend
Labour force (‘000) 562.0 564.2  564.5 0.3  2.5  Up
Employed (‘000)  527.4 527.4 525.9 -1.5  -1.5  Down
Unemployed (‘000)  34.5  36.8  38.7 1.9  4.2  Up
Unemployment rate (%)  6.1  6.5  6.9  0.4  0.8  Up
Participation rate  70.4  69.8  69.8 0.0  -0.6  Down
 

Economy

Indicator Apr. 2013 Mar. 2014 Apr. 2014 Change from last period Year-over-year change 12-month trend
Inflation Rate 0.3 1.3 2.0 0.7 1.7 Up
Avg. Weekly Earnings ($) 1,040 1,063 1,068 5 28 Up

 Housing

Indicator Apr. 2013 Mar. 2014 Apr. 2014 Change from last period Year-over-year change 12-month trend
Monthly starts (total # units)  515  427  253 -174  -262  Down
Average price - new homes ($)  549,414 527,983  508,813  -19,170  -40,601  Down
Average price - resale market ($)  358,015  354,598  358,767  4,169 752  Up

Construction

Indicator Mar.  2013 Feb.  2014 Mar. 2014 Change from last period Year-over-year change 12-month trend
Residential permits ($'000) 128,148  161,554  166,301 4,747  38,153  Up
Non-Residential permits ($000) 47,097  79,762  53,104  -26,658  6,007  Up
Industrial ($000)  3,663  1,785  492  -1,293 -3,171  Down
Commercial ($000)   35,141  52,722  48,228  -4,494  13,087  Up
Institutional/Gov’t ($000)  8,293  25,255  4,384  -20,871  -3,909  Down

Economic Development Update - July 2014

Monthly Highlights

  • Employment. Canada’s economy created 25,800 jobs in May 2014, more than half of which occurred in Ontario (14,800 jobs). In keeping with the trend at the national and provincial level, Ottawa’s labour market added 4,500 new jobs this month. In all three cases, year-over-year gains can be attributed to the addition of new part-time jobs.
  • Unemployment. The national unemployment rate edged up slightly month over month (+0.1 per cent from April to 7.0 per cent), while both the provincial and local rates dropped 0.1 per cent to 7.3 per cent and 6.8 per cent, respectively.
  • Economic growth. Ontario’s economy is expected to grow by 2.3 per cent in 2014, well above the 1.3 per cent growth the province achieved last year, due to an increase in exports to the United States. At the local level, the Conference Board of Canada predicts that Ottawa’s economy will grow a modest 0.9 per cent in 2014 before strengthening in 2015 (+1.9 per cent).
  • Real estate – residential. After a harsh winter, new home construction rebounded in May 2014 with 906 starts, the highest monthly level since July 2013. The condominium dwelling segment experienced the largest increase. On the other hand, condominium sales on the resale market fell 7.1 per cent year over year.
  • Real estate – commercial. Office vacancy rates in Ottawa sat at 9.7 per cent in the first quarter of 2014, up from 8.6 per cent at the same time last year. Correspondingly, rental rates continue to drop across the city as property owners attempt to attract new tenants.
  • Construction. Ottawa issued building permits totalling more than $175 million in April 2014. Despite retreating on a monthly basis, the value of permits issued year-to-date is trending well above this time last year (+20.7 per cent).

New and Noteworthy

  • Ottawa’s preparation for Canada’s 150th anniversary of Confederation is in full swing. Residents can now submit their ideas on how to celebrate this once-in-a-lifetime occasion in person by visiting the Ottawa 2017 suggestion box at City Hall. 

Labour Market

The Canadian labour market added 25,800 jobs in May 2014, while the national unemployment rate edged up slightly month over month to 7.0 per cent, due to more people entering the job market. At the provincial level, Ontario saw its unemployment rate dip to 7.3 per cent (-0.1 per cent), thanks to the addition of 14,800 new jobs. In keeping with the national and provincial trend, Ottawa also grew the size of its workforce, adding 4,500 new jobs over the same period. The increase in employment in Ottawa resulted in a 0.1 per cent monthly decline in the jobless rate to 6.8 per cent in May.

At first glance, this month’s employment gains seem encouraging; a review of the past 12 months, however, suggests that job creation has been rather flat across Canada. While the national job market added 85,500 jobs in the 12 months to May 2014, this represents an increase of only 0.5 per cent. Similarly, Ontario added 39,400 jobs year over year, an increase of only 0.6 per cent. Moreover, most of the jobs created at the national and provincial level over this time period were for part-time employment, whereas more secure full-time employment declined.

“Canadian employment rebounded by 25,800 in May, but the details of the report were uninspiring and employment growth over the past year remains sluggish.” BMO Capital Markets

In Ottawa, the annual rate of growth in employment sat at 1.1 per cent in May, above both the national and provincial levels. That said, most (nearly 80 per cent) of jobs created since May 2013 were also in part-time work. The 15-to-24 age cohort benefited most from the gains in part-time employment (+8,600 jobs over the last year).

Source: Statistics Canada’s Labour Force Survey results for the Ontario portion of the Ottawa-Gatineau CMA for May 2014 (custom data extraction, three-month moving average, seasonally adjusted). The data for individual age cohorts are not adjusted for seasonality. Other sources cited in this section include BMO Capital Markets’ Regional Labour Market Report Card released on June 6, 2014.

The Economy

For a second consecutive month – and for the first time in more than two years – Canada’s consumer price index (CPI) rose more than 2 per cent (+2.3 per cent) in May 2014. Consumer prices followed a similar trend in Ottawa (+2.4 per cent), while price growth in Ontario sat just shy of 3 per cent (+2.8 per cent). Gains in price inflation across the board are being attributed to highly volatile energy prices (i.e., gasoline, natural gas and electricity). Subtracting energy, the core CPI in Canada grew 1.7 per cent, slightly below the Bank of Canada’s target for inflation of 2 per cent.

Looking at economic growth, the Royal Bank of Canada’s most recent outlook estimates that Canada’s economy is well poised to rebound from harsh winter conditions in the first quarter of this year. Led by Alberta, Canadian provinces are expected to benefit in 2014 from expanded trade with the United States largely due to a lower Canadian dollar. Ontario’s economy in particular is expected to grow by 2.3 per cent in 2014, well above the 1.3 per cent growth the province achieved last year.

“We expect the province to benefit disproportionately from a strengthening US economy (and lower Canadian dollar) thanks to Ontario’s close ties with that market. The lift from abroad will be even greater in 2015, when we anticipate a red-hot US economy to contribute to a quickening of the pace in Ontario’s real GDP growth to 2.8%.” – RBC Economics

At the local level, the latest figures released by the Conference Board of Canada predict that Ottawa’s economy will grow at a rate of 0.9 per cent in 2014, the lowest growth rate of Canada’s 13 largest metropolitan areas. The outlook for 2015, however, is more encouraging, with overall economic growth in Ottawa averaging 1.9 per cent for the year.

Source: Statistics Canada Consumer Price Index results for the Ontario portion of the Ottawa-Gatineau CMA for May 2014. Other sources cited in this section include the Conference Board of Canada’s Metropolitan Outlook for Ottawa Gatineau (Spring 2014) and RBC Economics’ Provincial Outlook (June 2014).

Real Estate

After a slow start to 2014, the market for new homes rebounded in May with housing starts surging to 906 units, up from 253 units in April, the highest monthly increase since July 2013. According to the Canada Mortgage and Housing Corporation’s (CMHC) most recent figures, the month-over-month gain was reflected across all housing types with the exception of rental starts. Condominium dwellings experienced the largest growth at 411 units, up from only 18 units last month.

Taking a closer look at the market for resale homes, the Ottawa Real Estate Board (OREB) reports that sales for residential properties, which don’t include condominium units, are up 1.2 per cent from last year. Condominium sales, on the other hand, dropped 7.1 per cent year over year, while the number of new listings is up 19 per cent over the same period, suggesting a buyer’s market.

“Although the residential property class is performing as anticipated, the market for condos has been a bit sluggish. We’re seeing a 19-per-cent increase in the amount of inventory on hand over this time last year and unit sales are down 7.1 per cent. If you are looking to buy and hold, the selection and prices are attractive.” OREB

On the commercial front, Colliers International is reporting that office vacancy rates in Ottawa sat at 9.7 per cent in the first quarter of 2014, up from 8.6 per cent at the same time last year. Vacancy rates in the downtown core experienced a larger increase (+1.9 per cent to 8.8 per cent) in Q1, largely as a result of the addition of nearly 360,000 square feet of inventory at 150 Elgin Street. Correspondingly, rental rates continue to drop across the city as property managers attempt to attract new tenants.

Source: New housing data from CMHC, “Starts and Completions Survey” and “Market Absorption Survey” results for the Ontario portion of the Ottawa-Gatineau CMA for May 2014. Commercial real estate data adapted from Collier’s International Office Market Report for Ottawa (Q1 2014). Other sources cited in this section include the Ottawa Real Estate Board’s news release on May 2014 sales figures (June 4, 2014).

Construction

According to the most recent data from Statistics Canada, the City of Ottawa issued building permits totalling more than $175 million in April 2014: $127.4 million in residential permits and $48.1 million in non-residential permits. Despite retreating month over month, the value of permits issued year-to-date is trending well above this time last year (+20.7 per cent). By area, Barrhaven-South Nepean led construction intentions this month, accounting for just over half of the total value of permits issued (57.4 per cent).

As was reported in previous months, major construction projects underway in the nation’s capital are expected to fuel economic growth in 2014, picking up the slack left by federal public service downsizing. For example, the Ottawa Light Rail Transit (OLRT) project – the largest infrastructure investment project in Ottawa to date ($2.1 billion) – is leading the way in terms of local spending and job creation. In a recent project update, Mayor Jim Watson announced that over $360 million in contracts related to the construction of the OLRT Confederation Line have been attributed to local firms. In terms of job growth, over 20,000 person-years of employment are expected to be created over the life of the construction project. Of these, approximately 4,200 person-years of employment will be created locally in high-paying engineering, technical and trades occupations.

“There are few things more important to Ottawa’s economy than our transportation system, that’s why we’re building the Confederation Line and planning for Stage 2 of light rail. Working together, we are building confidence in our local economy and ensuring Ottawa remains competitive in the years and decades ahead.”  - Mayor Jim Watson

Source: Statistics Canada, Building Permits Survey results for the Ontario portion of the Ottawa-Gatineau CMA for April 2014 (seasonally adjusted). Please note that these figures may differ from City of Ottawa data on this topic. The data from Statistics Canada allows for comparison to provincial and national figures. Other sources cited in this section include the City of Ottawa Building Code Services Branch’s “Construction, demolition, pool enclosure permits” monthly open data and Mayor Jim Watson’s Confederation Line economic update on June 26, 2014.

Tables: Monthly Key Economic Indicators for Ottawa

Labour Force

IndicatorMay 2013Apr. 2014May 2014Change from last periodYear-over-year change12-month trend
Labour force (‘000) 558.9564.5568.84.39.9Up
 Employed (‘000)524.5525.9530.44.55.9Up
 Unemployed (‘000)34.438.738.4-0.34.0Up
Unemployment rate (%)6.26.96.8-0.10.6Up
Participation rate70.069.870.20.40.2Up

The Economy

IndicatorMay 2013Apr. 2014May 2014Change from last periodYear-over-year change12-month trend
Inflation Rate0.52.02.40.41.9Up
Avg. Weekly Earnings ($)1,0531,0681,069116Up

Housing

IndicatorMay 2013Apr. 2014May 2014Change from last periodYear-over-year change12-month trend
Monthly starts (total # units)507253906653399Up
Average price - new homes ($)492,349508,813475,495-33,318-16,854Down
Average price - resale market ($)357,343359,680366,7907,1109,447Up

Construction

IndicatorApr. 2013Mar. 2014Apr. 2014Change from the last periodYear-over-year change12-month trend
Residential permits ($'000)121,613166,693127,351-39,3425,738Up
Non-Residential permits ($000)78,30053,05848,107-4,951-30,193Down
 Industrial ($000)546492908416362Up
 Commercial ($000)  49,54448,18243,083-5,099-6,461Down
 Institutional/Gov’t ($000)28,2104,3844,116-268-24,094Down

Economic Development Update - August 2014

Monthly Highlights

  • Employment. The Canadian economy lost 9,400 jobs in June 2014 after seeing positive growth in May, with Ontario leading the drop (-33,900 jobs). Taking a look at the broader picture, many economists agree that Canada’s labour market is showing signs of weakness with employment growing year-over-year by only 0.4 per cent. Within this context, Ottawa lost 1,100 jobs this month, partially reversing gains seen in May.
  • Unemployment. Job losses at the national level led to an increase in the June unemployment rate to 7.1 per cent (+0.1 per cent from May). Ottawa’s unemployment edged up at the same pace to 6.9 per cent.
  • Inflation. While inflation in Canada (and in Ottawa) sat above its 2 per cent target for a third consecutive month, the Bank of Canada warns that inflation remains at risk of drifting below this target if exports and business investment remain weak.
  • Real estate. In the first two quarters of this year, housing starts in Ottawa totalled 2,518, slightly below this time last year. The Canada Mortgage and Housing Corporation points to harsh winter conditions and uncertainty in the employment market as factors contributing to this year’s softer start.
  • Construction. Construction intentions in Ottawa declined significantly in May (-16.8 per cent), marking a second consecutive monthly drop. That said, year-to-date permits were valued at $931.7 million, which represents a 6.7-per-cent increase over the same period last year.

New and Noteworthy

  • The City of Ottawa’s Economic Development and Innovation department held its first “sold out” information sharing session on economic development indicators.
  • Ottawa successfully secured its bid to host the One Young World international youth conference in 2016. This international event is expected to result in a $2-million impact on the local economy and will showcase Ottawa on the international stage.
  • An Ottawa proposal was chosen to advance in the process to receive funding from the $100M Canada Accelerator and Incubator Program (CAIP). The joint project brings together a number of partners and will expand the delivery of accelerator and incubator services to early-stage companies in the region.

Labour Market

The Canadian economy lost 9,400 jobs in June 2014 after seeing positive growth in May (+25,800 jobs), edging the unemployment rate up to 7.1 per cent (+0.1 per cent month-over-month). Part-time employment was hardest hit (-43,000 jobs), while more secure full-time employment rebounded (+33,500 jobs) after two months of decline. Closer to home, Ontario shed 33,900 jobs in the month to June (-18,900 full-time jobs and -15,000 part-time jobs), offsetting gains in most other provinces except Nova Scotia and Newfoundland and Labrador (-100 jobs and -2,900 jobs, respectively).

Taking a look at the broader picture, many economists agree that Canada’s labour market is showing signs of weakness. Year-over-year, Canadian employment grew at the sluggish pace of 0.4 per cent (or by 72,300 jobs), the lowest annual growth rate since February 2010. The Province of Alberta, which continues to see strong economic growth, accounted for most of the jobs added to the labour force over the past 12 months, without which overall national employment for the period would have decreased.

“If Alberta is stripped out of the national total, there would have been no jobs growth in the past year” BMO Capital Markets

Within this context, Ottawa’s labour market lost 1,100 jobs in June, partially reversing last month’s gains (+4,500 jobs) and leading to a slight uptick in the unemployment rate (+0.1 per cent to 6.9 per cent). Year-over-year, local employment increased at a faster pace than the national level (+1.3 per cent or by a count of 7,000 jobs), despite pressure exerted by federal public service downsizing.

Source: Statistics Canada’s Labour Force Survey results for the Ontario portion of the Ottawa-Gatineau CMA for June 2014 (custom data extraction, three-month moving average, seasonally adjusted). Other sources cited in this section include BMO Capital Markets’ Regional Labour Market Report Card (published July 2014).

The Economy

Canada’s annual inflation rate peaked at 2.4 per cent in June, the highest level seen since February 2012 and above the Bank of Canada’s target rate of 2 per cent. Higher prices for shelter, food and transportation are responsible for most of the rise in overall consumer prices this month. Looking at prices by province, Ontario experienced the highest inflation (at 3 per cent over June 2013), followed by Newfoundland and Labrador (2.5 per cent), while Quebec came in with the lowest inflation (1.7 per cent). At the local level, Ottawa’s inflation rate increased to 2.7 per cent, up from 2.4 per cent in May.

Noting that the strength in price inflation over the past three months is mostly due to temporary factors such as the high cost of energy, the Bank of Canada continues to hold the overnight interest rate at 1 per cent. While it downgraded the level of risk to national inflation in its most recent monetary policy update, the Bank nevertheless warns that unless economic growth picks up on the back of higher exports and increased business investment, the price level remains at risk of drifting below the 2-per-cent target level as these temporary effects wear off.

“As the temporary effects pushing inflation up begin to dissipate during 2015, unless the economy’s slack is absorbed over a reasonable timeframe, inflation will drift back down well below target. This will require above-potential economic growth fuelled by rising exports, followed by investment in new capacity.” Bank of Canada

Source: Statistics Canada Consumer Price Index results for the Ontario portion of the Ottawa-Gatineau CMA for June 2014. Other sources cited in this section include the Bank of Canada Monetary Policy Report of July 16, 2014.

Real Estate

After coming out strong last month, the market for new homes in Ottawa retreated in June with housing starts dropping to 585 units (down from 906 units in May). According to the Canada Mortgage and Housing Corporation’s (CMHC) most recent figures, condominium dwellings accounted for the highest number of starts, followed closely by single-detached dwellings (200 units and 194 units, respectively).

In the first two quarters of this year, housing starts in Ottawa totalled 2,518 units compared to 2,759 units at this time in 2013, a decline of nearly 9 per cent. Experts agree that unusually harsh winter conditions are partly responsible for the slower start to the year. That said, the CMHC also points to uncertain employment conditions in the national capital, specifically in the federal public service (the largest single employer in the region) as another contributing factor to overall market softening.

“Although average income in Ottawa has been improving, continued uncertainty with regard to employment has dampened housing market activity in the capital.” Canada Mortgage and Housing Corporation

On the resale market, the Ottawa Real Estate Board (OREB) reports that June sales for residential properties, excluding condominiums, were down 9.5 per cent from month-over-month, while condominium sales were up 4.3 per cent for the same period. Nevertheless, stronger activity in May brought the year-to-date tally just shy of this time last year supporting the assertion that harsher winter conditions dampened housing market activity at the start of the year.

Source: New housing data from CMHC, “Starts and Completions Survey” and “Market Absorption Survey” results for the Ontario portion of the Ottawa-Gatineau CMA for June 2014. Other sources cited in this section include the Ottawa Real Estate Board’s news release on June 2014 sales figures (July 4, 2014).

Construction

According to the most recent data from Statistics Canada, the City of Ottawa issued building permits totalling more than $151 million in May 2014: $110.3 million in residential permits and $41.1 million in non-residential permits.

Construction intentions in Ottawa declined significantly in May (-16.8 per cent), marking a second consecutive monthly drop. Permits issued for non-residential construction were most impacted with permits issued for commercial buildings experiencing the single largest drop in value (falling from $43.4 to $32.3 million).

“A near-absence of large-scale commercial projects weighed down Ottawa’s construction sector for the second straight month…” Ottawa Business Journal

It is not unusual to see some volatility in the construction industry in Ottawa on a month-over-month basis. Keeping this in mind, it can be useful to look at building permits year-to-date to see how this year’s activity compares to the same time last year. Overall building permits issued from January to May 2013 totalled $872.9 million. Year-to-date in 2014, overall permits were valued at $931.7 million, a 6.7 per cent increase over the same period last year. As mentioned in previous months, significant investments in non-residential constructions (i.e., Ottawa Light Rail Transit, Rideau Centre expansion, etc.), are likely to keep supporting this trend well into 2015.

Source: Statistics Canada, Building Permits Survey results for the Ontario portion of the Ottawa-Gatineau CMA for May 2014 (seasonally adjusted). Please note that these figures may differ from City of Ottawa data on this topic. The data from Statistics Canada allows for comparison to provincial and national figures. Other sources cited in this section include the Ottawa Business Journal (July 8, 2014).

Tables: Monthly Key Economic Indicators for Ottawa

Labour Force

Indicator Jun. 2013 May 2014 Jun. 2014 Change from last period Year-over-year change 12-month trend
Labour force (‘000)  558.3 568.8 568.3 -0.5 10.0 Up
 Employed (‘000) 522.3 530.4 529.3 -1.1 7.0 Up
 Unemployed (‘000) 36.1 38.4 39.0 0.6 2.9 Up
Unemployment rate (%) 6.5 6.8 6.9 0.1 0.4 Up
Participation rate 69.8 70.2 70.0 -0.2 0.2 Up

The Economy

Indicator Jun. 2013 May 2014 Jun. 2014 Change from last period Year-over-year change 12-month trend
Inflation Rate 1.3 2.4 2.7 0.3 1.4 Up
Avg. Weekly Earnings ($) 1,061 1,069 1,071 2 10 Up

Housing

Indicator Jun. 2013 May 2014 Jun. 2014 Change from last period Year-over-year change 12-month trend
Monthly starts (total # units) 656 906 585 -321 -71 Down
Average price - new homes ($) 488,458 475,495 507,570  32,075 19,112 Up
Average price - resale market ($) 353,489 366,790 360,430  -6,360 6,941 Up

Construction

Indicator May 2013 Apr. 2014 May 2014 Change from the last period Year-over-year change 12-month trend
Residential permits ($'000) 139,674 131,781 110,294 -21,487 -29,380 Down
Non-Residential permits ($000) 84,337 50,297 41,145 -9,152 -43,192 Down
 Industrial ($000) 3,787 1,803 1,200 -603 -2,587 Down
 Commercial ($000)   30,173 43,390 32,280 -11,110 2,107 Up
 Institutional/Gov’t ($000) 50,377 5,104 7,665 2,561 -42,712 Down

Economic Development Update - October 2014

Monthly Highlights

  • Employment. Canada’s labour market shed a net of 11,000 jobs in August 2014, with Alberta and Ontario taking the hardest hit (-13,400 jobs and -7,900 jobs, respectively). Ottawa lost 1,100 jobs over the same period, reversing gains in July.
  • Unemployment. Job losses in August led to an increase in Ottawa’s unemployment rate (+0.3 per cent to 6.7 per cent), which continues to sit below rates at the national and provincial level (7 per cent and 7.4 per cent, respectively).
  • Economic growth. Canadian gross domestic product saw no increase in July 2014, following strong growth in June (+0.3 per cent). According to the Bank of Canada, the Canadian economy still has room to grow before it considers an increase in the overnight interest rate.
  • Real estate. The Canadian Mortgage and Housing Corporation (CMHC) recorded an uptick in Ottawa housing starts in August 2014, with 629 new units under construction (up from 396 units in July). On the resale market, year-to-date sales are on par with this time last year.
  • Construction. The City of Ottawa issued building permits totalling more than $265 million in July 2014 – a second consecutive monthly increase and a 12-month high. Notably, the value of residential construction permits issued more than tripled from July 2013.

New and Noteworthy

  • City Council has approved a preferred proponent to complete the Ottawa Art Gallery (OAG) Expansion and Arts Court Redevelopment Project. The consortium of EBC Inc., DevMcGill and Groupe Germain has been selected to lead the project which is the culmination of a longstanding vision for a municipal arts centre for the visual, performing, literary and media arts and for the revitalization of Ottawa's downtown.
  • The Canadian Tulip Festival, which occurs every spring in Ottawa, was named Canada’s “Top Event of the Year” for 2015 by the American Bus Association, whose members account for the bulk of motor coach tours to destinations in North America.

Labour Market

After posting gains of 41,700 jobs last month, Canada’s economy shed a net of 11,000 jobs in August 2014, while the unemployment rate remained at 7.0 per cent for a second consecutive month. Provincially, Alberta, which has experienced the strongest economic growth over the past 12 months, saw the largest dip in employment (-13,400 jobs), followed by Ontario (-7,900). Most other provinces remained relatively unchanged.

At first glance, this month’s job loss appears small relative to the overall size of the employed labour force in Canada. Canada’s private sector, however, dropped more than 111,000 jobs in August – the largest single monthly drop in this type of employment ever recorded by Statistics Canada – pointing to growing softness in labour market conditions.

“Yet more evidence that the Canadian economy is struggling to churn out meaningful job growth. The fact that private sector payrolls are unchanged from a year ago, and now even Alberta appears to be cooling a tad tells us all we need to know about the sluggish state of Canada’s job market.” – BMO Financial Group

Closer to home, Ottawa’s labour market shed 1,100 jobs in August, reversing gains in July, and leading to an increase in the unemployment rate to 6.7 per cent (+0.3 per cent month-over-month). Year-over-year, local employment increased by 7,200 jobs – the retail trade sector experiencing the most significant growth (+12,600 jobs) – while the unemployment rate dropped from 7.0 per cent in August 2013.

Source: Statistics Canada’s Labour Force Survey results for the Ontario portion of the Ottawa-Gatineau CMA for August 2014 (custom data extraction, three-month moving average, seasonally adjusted). The data for individual economic sectors are not adjusted for seasonality. Other sources cited in this section include BMO Financial Group’s “EconoFACTS” released on September 5, 2014.

Economy

Canada’s inflation rate sat at 2.1 per cent in the 12 months to August 2014, holding above the Bank of Canada’s inflation target of 2 per cent for a fifth consecutive month. At the local level, Ottawa’s inflation rate sat at 2.2 per cent, slightly above the national rate, but below the provincial rate (2.5 per cent).

While the national inflation rate has trended above 2 per cent since May, the Bank of Canada cautions that the stronger than expected pressure on prices is linked to a variety of “one-off” factors, such as higher exports on the back of a stronger Canadian dollar, as opposed to long-term shifts in the economy. In other words, the Bank maintains that Canada’s economy still has room to grow before it considers revising its neutral stance on monetary policy (i.e., increasing the overnight interest rate).

“So much of the uptick in inflation that we’ve seen over the last five or six months has been in what we call one-off categories. We know the Canadian economy has a significant amount of room to grow.” – Bank of Canada

Looking at economic growth, Canadian gross domestic product saw no increase in July 2014, following a healthy increase in June (+0.3 per cent). The energy sector was hardest hit, as demand for electricity and natural gas to fuel air conditioning units, for example, decreased due to cooler than average summer weather. On the flip side, manufacturing, construction and public sector activity increased over the same period.

Source: Statistics Canada Consumer Price Index results for the Ontario portion of the Ottawa-Gatineau CMA for August 2014, and Gross Domestic Product results for Canada for July 2014. Other sources cited in this section include Bank of Canada Governor Stephen Poloz’ remarks following a Group of 20 meeting in Cairns, Australia, as reported by Bloomberg on September 21, 2014.

Real Estate

After two consecutive months of decline, the Canadian Mortgage and Housing Corporation (CMHC) recorded an uptick in Ottawa housing starts in August 2014, with 629 new units under construction (up from 396 units in July). This month’s increase can be mainly attributed to a surge in starts for “row” units (+232 units).

On the resale market, the Ottawa Real Estate Board (OREB) reports that August sales for residential and condominium properties dipped 16.8 per cent from July. That said, OREB specifies that this month’s slowdown is not unusual for this time of year when sales tend to decline slightly as summer comes to a close. Further, year-to-date sales are on par with the trend at this time in 2013, indicating a certain level of market stability.

“As usual, we are seeing a typical end-of-summer slowdown, especially in comparison to July’s record sales. Although sales numbers are down slightly since last year, August sales are slightly higher than the five-year average, and continue to be on par with year to date sales compared to last year.” – OREB

In terms of pricing, the average selling price for a newly constructed single-detached residential property in Ottawa in August was $517,707, an increase from last year’s average price of $476,109 (+8.7 per cent). The price of a comparable home on the resale market also increased from last year, albeit at a slower pace, up 3.4 per cent to $366,312.

Source: New housing data from CMHC, “Starts and Completions Survey” and “Market Absorption Survey” results for the Ontario portion of the Ottawa-Gatineau CMA for August 2014. Other sources cited in this section include the OREB news release on August 2014 sales figures (September 4, 2014).

Construction

According to the most recent data from Statistics Canada, the City of Ottawa issued building permits totalling more than $265 million in July 2014 – $128.8 million in residential permits and $136.3 million in non-residential permits – a second consecutive monthly increase and a 12-month high. Notably, the value of residential construction permits issued more than tripled from this time last year (increasing from $46.3 million in July 2013).

Across the city, the majority of permits taken out in July were for projects within the Greenbelt, led by a significant investment for renovation work to the 12-storey Bank of Canada building at 234 Wellington Street ($116.3 million).

Construction activity in Canada is closely related to economic growth. For example, investment in infrastructure was a key component of the Government of Canada’s economic stimulus package that helped Canada through the 2008-2009 economic recession. Given the slow pace of economic growth so far this year, the Province of Ontario and the Province of Quebec – both of which have significant infrastructure investment plans for the coming years – came together to urge the Federal government to increase funding for infrastructure renewal to help accelerate their respective economies.

“Ontario and Québec consider that federal infrastructure funding should be increased in order to respond to the slower rate of economic recovery and job creation in Eastern Canada.” – Office of the Premier of Ontario

Source: Statistics Canada, Building Permits Survey results for the Ontario portion of the Ottawa-Gatineau CMA for July 2014 (seasonally adjusted). Please note that these figures may differ from City of Ottawa data on this topic. The data from Statistics Canada allows for comparison to provincial and national figures. Other sources cited in this section include the City of Ottawa Building Code Services Branch’s “Construction, demolition, pool enclosure permits” monthly open data report for July 2014, and the August 21, 2014 news release from the Office of the Premier of Ontario.

Tables: Monthly Key Economic Indicators for Ottawa

Labour Force

Indicator Aug. 2013 Jul. 2014 Aug. 2014 Change from last period Year-over-year change 12-month trend
Labour force (‘000)  564.5 569.4 570.6 1.2 6.1 Up
Employed (‘000) 524.8 533.1 532.0 -1.1 7.2 Up
Unemployed (‘000) 39.7 36.3 38.5 2.2 -1.2 Down
Unemployment rate (%) 7.0 6.4 6.7 0.3 -0.3 Down
Participation rate 70.4 70.1 70.2 0.1 -0.2 Down

Economy

Indicator Aug. 2013 Jul. 2014 Aug. 2014 Change from last period Year-over-year change 12-month trend
Inflation rate 1.2 2.1 2.2 0.1 1.0 Up
Avg. Weekly Earnings ($) 1,062 1,059 1,052 -7 -10 Down

Real Estate

Indicator Aug. 2013 Jul. 2014 Aug. 2014 Change from last period Year-over-year change 12-month trend
Monthly starts (total # units) 777  396  629  233 -148 Down
Average price - new homes ($) 476,109  512,940  517,707  4,767 41,598 Up
Average price - resale market ($) 354,262  361,233  366,312  5,079 12,050 Up

Construction

Indicator Jul. 2013 Jun. 2014 Jul. 2014 Change from last period Year-over-year change 12-month trend
Residential permits ($'000) 46,335 110,221 128,761 18,540 82,426 Up
Non-Residential permits ($000) 183,930 134,022 136,294 2,272 -47,636 Down
  Industrial ($000) 310 116 350 234 40 Up
  Commercial ($000)   176,587 107,155 127,972 20,817 -48,615 Down
  Institutional/Gov’t ($000) 7,033 26,751 7,972 -18,779 939 Up

Economic Development Update - November 2014

Monthly Highlights

  • Employment. Canada added 74,100 jobs in September 2014, most of which were in full-time positions. Provincially, Ontario saw the largest increase (+24,700 jobs), followed by Alberta (+21,200 jobs). At the local level, Ottawa’s labour market added 3,800 jobs month-over-month.
  • Unemployment. The national unemployment rate dipped 0.2 per cent to 6.8 per cent in September, which represents a nearly six-year low. Ottawa’s unemployment rate sat on par with Canada’s this month, despite job gains.
  • Inflation. While inflation in Canada has trended at, or above, its 2 per cent target since April 2014, the Bank of Canada continued to maintain its neutral stance towards monetary policy, citing a balance between upside and downside risks to inflation as the reason it continues to hold the overnight interest rate at 1 per cent.
  • Real estate. Year-to-date, Ottawa housing starts total 3,953 units, well below this time last year when starts totalled 5,116 units. On the other hand, the resale market is trending slightly above last year, with year-to-date sales sitting at 11,302 units this September, compared to 11,285 units over the same period last year.
  • Construction. Retail development in Ottawa is booming with several major projects underway including the Rideau Centre and Bayshore Shopping Centre expansions, as well as the new Tanger Factory Outlet Centre.

New and Noteworthy

  • The Ottawa Convention Centre has been renamed Shaw Centre after Shaw Communications Inc. announced a multi-year agreement on October 16, 2014.
  • Willis College, in partnership with Fortinet® (NASDAQ: FTNT), launched its new “Advanced Network Security Professional” employer-led training program during the first Ottawa Cyber Security Day on October 20, 2014.
  • L-SPARK, a new accelerator partnership between Invest Ottawa and Wesley Clover International, has been awarded $3.8 million in funding from the Canada Accelerator and Incubator Program delivered by the National Research Council of Canada Industrial Research Assistance Program.

Labour Market

Canada’s economy showed signs of growth in September 2014 with the addition of 74,100 jobs – the bulk of which were for full-time positions (69,300 jobs) – resulting in a drop in the national unemployment rate to 6.8 per cent, its lowest level in nearly six years. By province, Ontario posted the most gains in employment, followed by Alberta (+24,700 jobs and +21,200 jobs, respectively).

Looking past the headlines, details of Statistics Canada’s Labour Force Survey are also encouraging. Private sector employment in Canada experienced a significant drop in August (-98,000 jobs) but bounced back in September, with the addition of 123,600 jobs. That said, BMO Capital Markets Chief Economist, Douglas Porter, cautions that global economic uncertainty may mean that this month’s uptick “may not have much lasting impact.”

The job market in Ottawa, on the other hand, added 3,800 jobs in September, with the unemployment rate sitting on par with Canada’s at 6.8 per cent. Year-over-year, Ottawa’s economy added 9,900 jobs, suggesting that the effect of public sector spending restraints may be easing.

“Jobs are opening in Ottawa again after a 2-year lull, which was at least partly due to federal fiscal restraint. Ottawa’s finances appear to be improving by the week, so this turnaround could be for real.” – BMO Capital Markets

Source: Statistics Canada’s Labour Force Survey results for the Ontario portion of the Ottawa-Gatineau CMA for September 2014 (custom data extraction, three-month moving average, seasonally adjusted). The data for individual economic sectors are not adjusted for seasonality. Other sources cited in this section include BMO Capital Markets “Regional Labour Market Report Card” released on October 10, 2014.

The Economy

Canada’s Consumer Price Index (CPI) rose 2.0 per cent in the 12 months to September 2014, slightly below the year-over-year increase in August 2014 (+2.1 per cent). Ottawa’s CPI increased at a faster clip over the same period (+2.3 per cent), but remains below price inflation at the provincial level (+2.6 per cent). Canadians paid more on average for all major components of the index, with higher prices for shelter and food contributing the most to the overall increase in the CPI.

While inflation in Canada has trended at, or above, its 2 per cent target since April 2014, the Bank of Canada continues to maintain its neutral stance towards monetary policy. Citing a balance between upside risks such as surging demand from the U.S. for Canadian goods, and downside risk – such as higher household spending and lower business investment, the central bank continues to hold the overnight interest rate at 1 per cent, where it has been since September 2010.

“Household spending still represents more than its long-run sustainable share of growth, and a rotation away from household spending toward business investment and exports is essential. Exports have been gaining traction, in line with the growing momentum in the U.S. economy, but investment remains weak.” – Bank of Canada

Source: Statistics Canada Consumer Price Index results for the Ontario portion of the Ottawa-Gatineau CMA for September 2014. Other sources cited in this section include the Bank of Canada’s “Monetary Policy Report” for October 2014.

Real Estate

The Canada Mortgage and Housing Corporation (CMHC) reported that housing starts in Ottawa totalled 410 units in September 2014, down from 642 units this time last year. Year-to-date, Ottawa’s housing market added 3,953 starts, significantly below year-to-date figures for 2013 (when starts totalled 5,116 units).

By dwelling type, condominium starts experienced the largest decline year-to-date in September 2014, down 43.9 per cent. With a higher inventory of condominium units that have been completed but haven’t yet been sold, builders are holding back on new construction until market conditions improve. Looking ahead, the CMHC expects demand for row dwellings to increase as they offer a close alternative to single-detached homes at a fraction of the cost.

“Rows are becoming more popular as they offer the closest alternative to a single-detached home but remain lower priced. The expectation is for rows to maintain their market prominence as the demographic makeup of Ottawa households continues to favour multifamily dwellings.” – CMHC

In contrast to the market for newly built homes, the year-to-date trend on the resale market is slightly higher than this time last year. According to the Ottawa Real Estate Board (OREB), Ottawa area real estate agents sold 11,302 homes in the nine months to September 2014, compared to 11,285 homes over the same period in 2013.

Source: New housing data from CMHC, “Starts and Completions Survey” and “Market Absorption Survey” results for the Ontario portion of the Ottawa-Gatineau CMA for September 2014. Other sources cited in this section include the OREB news release on September 2014 sales figures (October 3, 2014).

Construction

According to the most recent data from Statistics Canada, the City of Ottawa issued building permits totalling more than $234 million in August 2014 – $148.8 million in residential permits and $85.9 million in non-residential permits – a year-over-year increase of 79.8 per cent.

In contrast to July, the majority of permits taken out this month were for projects outside of the Greenbelt, with significant investment occurring in Barrhaven/South Nepean.

By their nature, building permit figures do not take into account ongoing activity in the construction sector, which at the moment is very robust in Ottawa. For example, major public infrastructure investments, such as the $2.1 billion Light Rail Transit project and the $200 million widening of the Queensway, are not considered in the monthly tally of building permits, but which have a large impact on Ottawa’s economy.

Another area that Ottawa is doing well is in retail development. Both the Rideau Centre and Bayshore Shopping Centre are currently undergoing significant expansion at a cost of more than $560 million. Outside the Greenbelt, the Tanger Factory Outlet Centre adds 350,000 square feet of retail space and represents an investment of $120 million.

“… the non-residential sector is humming along.” – Conference Board of Canada

Source: Statistics Canada, Building Permits Survey results for the Ontario portion of the Ottawa-Gatineau CMA for August 2014 (seasonally adjusted). Please note that these figures may differ from City of Ottawa data on this topic. The data from Statistics Canada allows for comparison to provincial and national figures. Other sources cited in this section include the Conference Board of Canada’s “Metropolitan Outlook” for Fall 2014.

Tables: Monthly Key Economic Indicators for Ottawa

Labour Force

Indicator Sep. 2013 Aug. 2014 Sep. 2014 Change from last period Year-over-year change 12-month trend
Labour force (‘000)  563.1 570.6 574.9 4.3 11.8 Up
  Employed (‘000) 525.9 532.0 535.8 3.8 9.9 Up
  Unemployed (‘000) 37.2 38.5 39.1 0.6 1.9 Up
Unemployment rate (%) 6.6 6.7 6.8 0.1 0.2 Up
Participation rate (%) 70.1 70.2 70.6 0.4 0.5 Up

Economy

Indicator Sep. 2013 Aug. 2014 Sep. 2014 Change from last period Year-over-year change 12-month trend
Inflation rate (%) 1.1 2.2 2.3 0.1 1.2 Up
Avg. weekly earnings ($) 1,064 1,052 1,037 -15 -27 Down

Real Estate

Indicator Sep. 2013 Aug. 2014 Sep. 2014 Change from last period Year-over-year change 12-month trend
Monthly starts (total # units)  642   629   410  -219 -232 Down
Average price - new homes ($)  479,745   517,707   522,480  4,773 42,735 Up
Average price - resale market ($)  355,645   366,312   364,798  -1,514 9,153 Up

Construction

Indicator Aug. 2013 Jul. 2014 Aug. 2014 Change from last period Year-over-year change 12-month trend
Residential permits ($'000) 63,020 128,425 148,787 20,362 85,767 Up
Non-Residential permits ($000) 67,532 134,450 85,899 -48,551 18,367 Up
  Industrial ($000) 1,133 350 490 140 -643 Down
  Commercial ($000)   55,567 126,128 53,499 -72,629 -2,068 Down
  Institutional/Gov’t ($000) 10,832 7,972 31,910 23,938 21,078 Up

Economic Development Update - December 2014

Monthly Highlights

  • Employment. The Canadian economy added 43,100 jobs in October 2014, the bulk of which occurred in Ontario (+37,000 jobs). Ottawa added 1,500 jobs month-over-month, and 13,000 jobs year-over-year.
  • Unemployment. Canada’s unemployment rate dipped to 6.5 per cent, the lowest level since November 2008. Similarly, the unemployment rate at the local level dropped 0.4 per cent to 6.4 per cent month-over-month in October.
  • Economic growth. Canada’s economy grew by 2.8 per cent on an annualized basis in Q3 2014, following strong growth in Q2. At the local level, fiscal austerity at the federal government level is expected to dampen economic activity in the National Capital Region in 2014.
  • Inflation. Economists will monitor the Consumer Price Index with heightened interest in the weeks and months ahead as the shock of the recent drop in the price of crude oil is absorbed by other sectors of the economy.
  • Real estate. Year-to-date housing starts in Ottawa in October 2014 totalled 4,517 units, down from 5,688 units for the same period last year. The decrease in pace is mostly being attributed to a slowdown in newly built condominium units. The local resale market, on the other hand, is doing slightly better year-to-date in 2014 compared to 2013 (up 49 to 12,423 units).
  • Construction. The City of Ottawa issued building permits valued at more than $438 million in September 2014 – $408.2 million in residential permits and $29.8 million in non-residential permits. Most of this month’s spike can be attributed to the “rush” to beat the hike in development charges that came into effect on October 1, 2014.

New and Noteworthy

  • Following the Organization of the Petroleum Exporting Countries’ (OPEC) decision on November 27 to maintain oil production stable at 30 million barrels-a-day, the price of crude oil continued its downward trajectory, dropping to $72.26 according to the international benchmark, North Sea Brent, which peaked at $115 a barrel six months ago.
  • Windmill Development Group received final approval from the City of Gatineau to proceed with the redevelopment of Chaudière Island (formerly owned by Domtar). Construction is expected to begin in 2015 with the launch of the sales centre slated for next spring.

Labour Market

The Canadian economy added 43,100 jobs in October 2014 – a second consecutive monthly gain. As a result, the national unemployment rate dipped to 6.5 per cent, the lowest point since November 2008. Most of the gains were seen in Ontario (+37,000 jobs) as increased trade activity with the United States, due to the lower Canadian dollar, continues to benefit the province’s manufacturing base.

At the local level, Ottawa’s labour market created 1,500 jobs in October, leading to a drop of 0.4 per cent month-over-month in the unemployment rate, which sat at 6.4 per cent. Year-over-year, the local economy created 13,000 jobs, in large measure due to gains in the accommodation and food services, and trade sectors (+13,500 jobs and +12,000 jobs, respectively).

Taking a closer look at the public sector, Ottawa added 5,600 public administration jobs in the 12 months to October 2014. Despite ongoing budget cuts in the federal government, the Public Service Commission has found that federal public service hiring and staffing activity in the National Capital Region increased 29 per cent annually in fiscal year 2013-2014, which may partially explain gains in this sector at the local level.

“What we are now seeing in the data is that the demand by departments for new hires is starting to go up. So we do anticipate that we will turn the corner on this and start to hire new graduates into permanent jobs in the coming year.” Public Service Commission

Source: Statistics Canada’s Labour Force Survey results for the Ontario portion of the Ottawa-Gatineau CMA for October 2014 (custom data extraction, three-month moving average, seasonally adjusted). The data for individual economic sectors are not adjusted for seasonality. Other sources cited in this section include the Public Service Commission’s remarks to the Senate Finance Committee on October 29, 2014.

The Economy

Economic growth in Canada exceeded expectations in the third quarter of 2014, with gross domestic product (GDP) expanding by 2.8 per cent on an annualized basis on the back of stronger exports, mainly with the United States. After a slow start to the year due to harsh winter conditions, Canada’s economy seems to be back on track, with third quarter gains maintaining the momentum built up in Q2 (when GDP growth came in at 3.6 per cent, annualized).

Turning to Ottawa, continued spending restraint in the federal government is expected to subtract from Ottawa’s GDP growth in 2014. According to the Conference Board of Canada’s most recent forecast for Ottawa’s economy, fiscal austerity will dampen economic activity in the National Capital Region this year – GDP will grow by a meagre 0.7 per cent in 2014 before accelerating in 2015 and 2016 (+1.8 per cent and +2.2 per cent, respectively).

“Ottawa-Gatineau’s economy has seen little growth in recent years…Much of this weakness has resulted from significant cuts in the federal public service – the region’s biggest employer.” Conference Board of Canada

Looking at national price inflation, the national Consumer Price Index (CPI) rose 2.4 per cent in the year to October 2014, below the rate of inflation for Ontario (2.8 per cent), and on par with Ottawa. Given the recent drop in the price of gasoline worldwide, there is heightened interest in monitoring trends in the CPI in the weeks and months ahead as the shock of the price drop is absorbed by the economy.

Source: Statistics Canada Consumer Price Index results for the Ontario portion of the Ottawa-Gatineau CMA for October 2014. Other sources cited in this section include the Conference Board of Canada’s Metropolitan Outlook for Ottawa-Gatineau (Fall 2014).

Real Estate

Housing starts in Ottawa totalled 564 units in October 2014, up from 410 units the previous month. Year-to-date, however, the new housing market is growing at a slower pace than this time last year, with housing starts totalling 4,517 for the first 10 months of 2014 compared to 5,688 starts for the same period in 2013, a decline of more than 20 per cent.

The slowdown in the pace year-to-date is mostly being attributed to a drop in the number of condominium units under construction in 2014. Given a high number of completed and unabsorbed units currently on the market, builders have scaled back construction for this type of dwelling by 8 per cent so far this year. That said, the outlook for condominium apartments is more positive, with starts expected to increase in 2016 with demand driven by baby boomers seeking to downsize.

“Builders have been responding to market signals in the CMA, rebalancing construction to work off inventories. There were over three thousand condominium apartments under construction at the end of the third quarter this year.” CMHC

On the resale market, members of the Ottawa Real Estate Board (OREB) sold 1,121 homes in October 2014 927 residential properties and 194 condominium properties. Year-to-date, the resale market in Ottawa is slightly ahead of this time last year with 12,423 homes sold in the 10 months to October compared to 12,374 in 2013.

Source: New housing data from CMHC, “Starts and Completions Survey” and “Market Absorption Survey” results for the Ontario portion of the Ottawa-Gatineau CMA for October 2014. Resale market date from OREB news release on October 2014 sales figures (November 5, 2014) Other sources cited in this section include the CMHC’s Housing Market Outlook for Ottawa (Fall 2014).

Construction

According to Statistics Canada’s most recent release, building permits issued by the City of Ottawa surged to more than $438 million in September 2014 – $408.2 million in residential permits and $29.8 million in non-residential permits. September’s strong performance, led by an unprecedented level of residential activity, marks the highest monthly value of building permits ever issued in Ottawa.

“The gain in Ottawa was mainly the result of higher construction intentions for both multi-family and single-family dwellings...” - Statistics Canada

Most of the permits issued in September 2014 were for construction projects located outside the Greenbelt. As has been the case for some months now, development in Barrhaven / South Nepean continues in full force, accounting for more than a third of the total value of permits issued this month, followed closely by Ottawa’s west end.

While the level of construction intentions in September is strong, it does not necessarily imply an uptick in investor confidence. On the contrary, most of this month’s spike can be attributed to the “rush” to beat the hike in development charges – which are levied on property developers when they apply for a building permit – that came into effect on October 1, 2014.

Source: Statistics Canada, Building Permits Survey results for the Ontario portion of the Ottawa-Gatineau CMA for September 2014 (seasonally adjusted). Please note that these figures may differ from City of Ottawa data on this topic. The data from Statistics Canada allows for comparison to provincial and national figures. Other sources cited in this section include the City of Ottawa Building Code Services Branch’s “Construction, demolition, pool enclosure permits” monthly open data report for September 2014

Tables: Monthly Key Economic Indicators for Ottawa

Labour Force

Indicator Oct. 2013 Sep. 2014 Oct. 2014 Change from last period Year-over-year change 12-month trend
Labour force (‘000)  560.0 574.9 574.0 -0.9 14.0 Up
  Employed (‘000) 524.3 535.8 537.3 1.5 13.0 Up
  Unemployed (‘000) 35.7 39.1 36.7 -2.4 1.0 Up
Unemployment rate (%) 6.4 6.8 6.4 -0.4 0.0 --
Participation rate (%) 69.7 70.6 70.5 -0.1 0.8 Up

Economy

Indicator Oct. 2013 Sep. 2014 Oct. 2014 Change from last period Year-over-year change 12-month trend
Inflation rate (%) 0.8 2.3 2.4 0.1 1.6 Up
Avg. weekly earnings ($) 1,071 1,037 1,033 -4 -38 Down

Real Estate

Indicator Oct. 2013 Sep. 2014 Oct. 2014 Change from last period Year-over-year change 12-month trend
Monthly starts (total # units) 572 410 564 154 -8 Down
Average price - new homes ($) 577,297 522,480 481,793 -40,687 -95,504 Down
Average price - resale market ($) 365,996 364,798 361,637 -3,161 -4,359 Down

Construction

Indicator Sep. 2013 Aug. 2014 Sep. 2014 Change from last period Year-over-year change 12-month trend
Residential permits ($'000) 87,899 150,259 408,186 257,927 320,287 Up
Non-Residential permits ($000) 113,912 84,612 29,846 -54,766 -84,066 Down
  Industrial ($000) 1,282 270 7,710 7,440 6,428 Up
  Commercial ($000)   98,755 52,344 18,601 -33,743 -80,154 Down
  Institutional/Gov’t ($000) 13,875 31,998 3,535 -28,463 -10,340 Down