Heading into the final quarter of 2016, the Oshawa economy has definitely got its pedal to the metal. This observation is based on the fact that Canada’s 13th largest Census Metro Area (CMA) has outpaced the rest of the country, in terms of job growth, for the past five consecutive months.
Indeed, since August of 2015, employment in Oshawa has accelerated from -8.3% y/y (the slowest rate in the country) to +13.4% y/y (the fastest among the country’s 33 CMAs).
Moreover, virtually all of the net increase in employment over the past twelve months (+25,500) was due to a 27,100 surge in full-time hiring which more than offset a slight (-1,700) decline in part-time hiring. From an industry perspective, since August of last year, hiring in construction posted the largest gain (+7,800) followed by accommodation (+6,800), business services (+6,100), and education services (+4,700).
Given the strong sales of motor vehicles on both sides of the Canada-U.S. border over the past several quarters, it is not all that surprising that year-to-date employment in manufacturing in Canada’s Motor City is up by 16.9%.
Despite this very strong growth of total employment in Oshawa over the past six months, the unemployment rate in the CMA has trended up slightly since May, due to the relatively faster growth of the labour force.
Fuelled in large part by the combination of very strong growth of full-time employment and near record low interest rates, housing demand in Durham Region, in general, and Oshawa, in particular, reflected by sales of existing homes, is also exhibiting unprecedented growth.
Year to date (August), there have been record home sales in Durham Region (2,467 units) — +13.2% year to date. Two even more compelling indicators of the strength of housing demand in the Oshawa CMA are the fact that the MLS Composite House Price Index posted a 24.7% y/y increase in August while the months’ supply of homes for sale dropped to a record low of 0.6 months availability.
Consistent with the strong pattern of housing demand, the number of housing units started in Oshawa during the first eight months totalled 1,795 units, up 8.1% year to date.
Despite this solid gain in housing starts, the volume of building permits approved year to date is down by 16.2% due primarily to a 23% drop in single-family units.
This weak pattern of building permits will probably depress residential construction in the very near term. However, the double digit increase in house prices and the depressed inventory of existing homes for sale suggest to us that residential construction will pick up speed next year and remain strong into 2018.
Looking forward, a number of recent developments have brightened Oshawa’s economic prospects through 2017 and into 2018. First, the recently negotiated labour contract between General Motors and the Union for Canada (Unifor) removes a major source of uncertainty regarding the future of Oshawa’s largest private sector employer.
Further, GM’s commitment to invest an estimated $400 million to upgrade its flex assembly line will give a significant boost to employment over the near term.
After GM, the refurbishment of the four nuclear reactors at the Darlington Nuclear Generating Station is projected to create an estimated 8,800 construction jobs on the outskirts of Oshawa.
Other investment projects which should underpin economic growth in Oshawa over the next twelve to twenty four months include the extension of Highway 407 to Highway 35, the Windfield Farm Retail Development and the Taunton Road Condo Project.