Economic Momentum Driven by Vibrant Labour Market

TORONTO, July 18, 2011 /CNW/ - Toronto's economy is firing on multiple cylinders, driving it to the top spot among the country's major cities in CIBC World Markets' latest Canadian Metropolitan Economic Activity Index rankings. 

The city did not lead the pack in any of CIBC's sub-measures of economic momentum, but it ranked high in many categories giving it the top aggregate score in a measure of Canada's top 25 metropolitan areas. "Simply put, the multi-channel nature of Toronto's economic engine is the secret not only behind its current top ranking, but also behind its ability to maintain a relatively high ranking position over the past two years," says CIBC Deputy Chief Economist Benjamin Tal in his latest Metro Monitor report. The city moved up one spot in the latest rankings.

"This can be easily seen in the robust activity of the city's economy during the economic recovery, with the city outpacing the national average by a wide margin. Key here is Toronto's vibrant labour market. During the first quarter of the year, overall employment in the city rose by just under two per cent with many of these jobs being relatively high quality jobs. More than 80 per cent of the increase in employment over the past quarter was in full-time positions."

The city's population is now rising by an annual pace of close to two per cent -- lagging only Saskatoon, Calgary and Vancouver. The housing market is another source of growth for the city, with housing starts continuing to advance at an impressive rate - 8,377 in the first quarter, 47.8% higher than the same period in 2010. The rate of consumer bankruptcy in the city has been trending downward over the past year, and it is currently among the lowest in the nation.

The city of Kitchener continues to show positive momentum and ranked second in CIBC's index. This largely reflects a very strong labour market, healthy population growth, relatively high quality employment and a low level of business bankruptcies. Kitchener placed fourth in Mr. Tal's previous rankings.

Winnipeg ranked third in the assessment, marking a steady improvement coming out of the latest recession. "The positive momentum in Winnipeg is a relatively new development," notes Mr. Tal. "During the recession the city followed the trajectory of the national economy very closely. However, recent quarters have seen the city outperforming the national average, with the performance gap currently at a record-high.

Winnipeg's ranking is helped by a relatively strong population growth (1.7 per cent year-over-year), above-average employment growth, and the lowest unemployment rate among all major urban centers. The city is also enjoying very low consumer and business bankruptcy rates, while the housing market is still very strong.

Regina, which has had strong numbers in recent years, continues to maintain its high ranking driven by a growing population and a job market that has the second lowest unemployment rate in the nation. The city also has the lowest personal bankruptcy rate among all urban centres while construction activity remained elevated in absolute terms and relative to most other cities.

Montréal, which topped CIBC's previous ranking, is currently ranked fifth. The ability of the city to maintain a relatively healthy pace of momentum reflects continued improvement in the manufacturing sector.

CIBC Metropolitan Economic Activity Index (2011 Q1)  

About the CIBC Metropolitan Economic Activity Index
Using 9 key macroeconomic variables, CIBC's metropolitan index of economic activity is structured in a way that approximates the change in each city's level of economic activity. With data going back in history, the index monitors not only the current performance of a given city but also tracks its cyclical behaviour against the national economy and other census metropolitan areas (CMAs). The focus is on the 25 largest CMAs in Canada.

The macro variables used to develop the index are:

• Population growth;
• Employment growth;
• Unemployment rate;
• Full-time share in total employment;
• Personal bankruptcy rate;
• Business bankruptcy rate;
• Housing starts;
• MLS Housing resales; and
• Non-Residential building permits.

The complete CIBC World Markets report is available at:
http://research.cibcwm.com/economic_public/download/metro_monitor.pdf

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