Immigration is proving a strong source of population growth for Canada, and it’s driving the formation of new households in particular, which provides an important boost to the economy, says a new report from National Bank Financial Inc. (NBF).

“At a time when the drivers of Canadian economic growth are losing steam and many observers are bearish on the country’s housing market, we think it is important to highlight a reassuring factor in the economic backdrop,” NBF says in its report.

And that reassuring factor is what it terms “highly favourable net migration” that is strongly skewed to the 20-44 age group. It reports that, in 2012, this slice of the population grew at its fastest pace in more than 20 years, and at a substantially higher rate than for other developed countries.

“Without the immigration contribution, this cohort would be shrinking in Canada,” it says. And this is particularly notable because this age group is most closely associated with the formation of new households, which is, in turn, a strong source of demand for both housing and durable consumer goods.

“In short, immigration is a major boost for the country’s economy,” it says.

NBF says that the growth of the 20-44 age group likely peaked last year, and is set to decelerate over the next five years, but it is still “likely to remain positive and well above the trend line of other advanced economies”, it says.

And, it expects that this phenomenon “will cushion the effect of rising mortgage rates on the Canadian housing market.”

“With economic prosperity depending on a country’s ability to attract capital and skilled labour, we are confident that Canada can hold its own for now,” it concludes.