This is a post from Alex Carrick's blog that covers the Canadian construction industry.

Since 1985, Mr. Carrick has held the position of Canadian Chief Economist with Reed Construction Data's CanaData, the leading supplier of statistics and forecasting information for the Canadian construction industry.

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Construction Industry Forecasts

Notes from Alex Carrick - Nov 08, 2011

Alex Carrick
Canada and U.S. may be on philosophically divergent growth paths

Canada and the U.S. are becoming two economies on distinctly different growth paths.

I’m not speaking about the strength of those routes with respect to output increases.

I mean the actual paths chosen to achieve growth and create employment for the citizens of both nations.

A basic difference in philosophy may be emerging.

In Canada, a nation with a population of 34 million, we’re increasingly hanging our hopes on the demand for commodities.

Employment in the Canadian manufacturing sector has fallen to a many-decades low.

At the same time, employment in construction has continued to climb steadily.

Many of the new construction jobs have been to build mega resource projects in oil and gas, base and precious metals, other minerals, potash and electric power.

Demand for newly extracted product is expected to come from domestic sources, to some degree as always, but to an even greater extent from customers in the U.S. and overseas.

This is a grand plan that can encounter some shocks, however.

For example, if TransCanada’s Keystone XL Pipeline proposal is rejected by the present U.S. administration on environmental grounds that will leave a great deal of Alberta’s heavy oil locked in the ground.

To maintain the nation’s economic well-being, means will have to be put in place to ship the bitumen to markets in the Far East.

Such plans will assuredly come into conflict with environmental activism on this side of the border.

Specifically, there are already measures in place to restrict tanker traffic anywhere near B.C.’s shoreline. 

In the U.S., with its 313 million inhabitants, soul searching about the best way to achieve growth is rampant.

Loss of jobs to cheaper-labor-cost countries in Asia and elsewhere has left confidence about long-term employment in tatters.

However, there is one corner of the U.S. labor market that has seen almost nothing but increased hiring – computer systems design work.

The U.S. is still a world leader in high-tech. The NASDAQ stock index provides the proof. 

Between April and September of this year, North America’s four major stock market indices experienced sharp corrections.

Share prices don’t like uncertainty and that was being dispensed in buckets.

There was the rebellion in Libya, the ballooning of Greek debt and the spread of credit woes even to Washington.

In the last month, those same indices have made considerable strides in taking back lost ground.

There are still major problems to be overcome, but the sense of more nasty surprises to come has diminished.

Versus its recessionary trough figure recorded in February 2009, NASDAQ is ahead by nearly 100%.

On the same basis, both the Standard & Poor’s 500 and Dow Jones Industrials are +70%.

The Toronto Stock Exchange is only +50%, but it didn’t drop as far in the earlier downdraft.

There are risks in both the Canadian and U.S. visions for the future.

For Canada, the overseas component of resource demand increasingly depends on China and its satellites, including Japan.

If the juggernaut of China’s economy were to slow significantly, investment in Canadian resource projects would suffer a setback.

For the U.S., the problems are more immediate and structural.

There is work to be had in the modern U.S. economy, but it won’t be picked up as easily as in the past. 

As just one example, the million-plus construction workers who have lost their jobs due to the housing market collapse won’t be sitting down and writing computer code any time soon.

There will need to be a concerted effort to foster retraining and promote targeted education.

Canada’s not going to want to be left behind in these initiatives either.

Only in Canada, the emphasis in skills development should tie to resource projects through promoting best environmental practices.

That means jobs in research and monitoring.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News. Mr. Carrick also has a lifestyle blog that can be reached by clicking here.


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Read Other Recent Alex Carrick Posts

05/14 - Economic Nuggets - May 15, 2012
05/11 - Canada Rode a Second Consecutive Month of Strong Job Gains in April
05/04 - U.S. Employment Rose by a Mediocre 115,000 in April
04/27 - U.S. GDP +2.2% in Q1 2012 and Alberta led Canadian Provinces in 2011
04/18 - U.S. Inflation Low in March; Canada’s Central Bank Looking to Raise Rates
04/12 - Canada’s Trade Surplus in February Declined but Business is Optimistic
04/03 - A Tale of Two Budgets
03/29 - A strong year for new construction investment intentions in 2012
03/21 - Leading Indicator Series Add to Good News about the U.S. and Canadian Economies
03/06 - Three key trends, more forays into high-tech and the importance for construction
02/29 - Two important sources of strength: share prices and non-residential construction
02/22 - Home resale market may be picking up in the U.S. while flattening in Canada
02/16 - Good news on U.S. housing and employment is positive for Canada as well
02/08 - Home starts and job levels diverge in Canada and the U.S.
02/03 - Canada’s labour market flat in January but U.S. on a roll
01/23 - Canada’s leading indicator series continued to charge ahead in December
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01/11 - 2012 holds promise but there’s no denying the uncertainty (part 1)
01/04 - How stock prices have performed depends on the timing of the data points
12/22 - Canada stands firmly in the middle of the road as it enters 2012

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