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 Q1 2006 Comment
Greater Vancouver's economy continues to exhibit strong growth through the first quarter of 2006 with major economic indicators displaying positive activity. Of special note are the consistent gains in employment growth and decrease in unemployment rates through the first quarter. A continuing strong residential and non-residential construction market in 2006 continues to drive economic and employment growth as the region undertakes major construction projects (RAV line) and preparation for Olympic-related activity.
Labour Force
Greater Vancouver's employment picture continues to reach statistical levels not seen in several decades. Q1 2006 averages show an (unadjusted) unemployment rate of 4.8% (a decline of 0.3% from the same period last year) considerably lower than the Canadian national average of 6.4%. Monthly unemployment rates continue to measure historic lows, with the first quarter showing unemployment rates of 4.5%, 4.8%, and 4.8% respectively for January, February, and March.
The employment rate (employment/working age (15+) population) increased by 1.8% in Q1 2006 over the same period in Q1 2005.
Construction
The construction sector continues to be a significant economic driver for the region as indicated by the value of building permits. Building permits continue to experience double-digit growth rates increasing 10.1% between Q1 2006 and Q1 2005. Industrial and commercial building permit values increased by 28.6% over the same period.
Housing starts were up 24.2% in Q1 2006, a continuation of the increase experienced in Q4 2005, an antidote to the decline experienced in previous quarters. It appears that residential investment continues to experience demand from buyers although with increasing residential prices and rising mortgage rates, may have settled into a more sustainable level of growth.
Commercial/Industrial Real Estate
GreaterVancouver'soffice market continues to experience greater absorption although this trend appears to be slowing. Office vacancy rates declined slightly from 10.8% in Q4 2005 to 9.3% in Q1 2006. With 21.5 million square feet available, downtown Vancouver's office vacancy rate continues its downward progression from 7.8% in Q4 2005 to 7.3% in Q1 2006. Much of the current absorption activity occuring in Class B & C and suburban markets is from the squeeze on high-quality downtown office space. Responding to market demand, lease rates have increased to an average of $14.54/sq. ft. for all classes throughout Greater Vancouver while AAA leases in downtown decreased marginally over the quarter with an average asking price of $25.91/sq.ft.
Business & Sales
Business incorporations continue to grow throughout Greater Vancouver, and are up 15.5% in the first quarter of 2006 when compared with the same period in 2005. Vancouver accounted for 49% of the business incorporations experiencing a slightly higher rate of growth at 17.2% for the quarter. Correspondingly, corporate bankruptcies continue to trend downward decreasing by 11.5% over the period reflecting the positive economic climate.
Continuing to demonstrate the strong employment picture and consumer confidence, the Greater Vancouver's retail sales reported strong growth in spite of the post-Christmas season. In January 2006, retails sales increased by 7.3% in the Greater Vancouver area followed by stronger growth in February of 8.4%. This follows the provincial and national trend of strong retail sales growth for the quarter.
Greater Vancouver's consumer price index (CPI) increased by 1.5% during the first quarter of 2006 somewhat lower than the increases of 1.7% and 2.4% at the provincial and national levels, respectively. According to Statistics Canada, increases in gasoline, the purchase and leasing of automotive vehicles, homeowners' replacement cost, and natural gas continue to apply upward pressure on the consumer price index. Greater Vancouver remains slightly more competitive than the rest of Canada on the CPI index at 126.3 compared with128.9 nationally. However, with a British Columbia CPI of 125.9, the GVRD continues to be a slightly more expensive community.
Tourism
The Greater Vancouver & Whistler tourism industry continues the recovery that began in 2004. At 61.0% occupancy, the first quarter 2006 was 4.9% above last year's occupancy during the same period of 56.4%.
Transportation
Passenger volume at Vancouver Airport increased by 1.3% in the first quarter of 2006 compared with total passenger traffic experienced in the same quarter in 2005. Of the three categories of passenger travel, domestic, USA, and International, only domestic and USA travel increased in Q1 2006. Domestic travel increased by 2.1% with USA travel up by 1.3%. International travel decreased marginally by -0.3%. Cargo volume decreased by 0.4% over the quarter when compared to Q1 2005.
The Port of Vancouver continues to be a strong contender in the container business. Container traffic is up 17% for the first quarter of 2006 when compared with the same period in 2005. Bulk cargo traffic year-to-date to March is down by -2% compared to the similar period in 2005. Declines experienced in bulk cargo commodities include fertilizer commodities and coal shipments.
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