Statistics Canada has just announced that this nation lost 34,000 jobs in December 2008. The particular areas of decline were in full-time employment, according to nature of work, and in construction, according to industrial sector.

Total job losses over the past two months have been about 100,000. However, on a year-over-year basis, Canada is still ahead by a similar number on the upside (+100,000). It has been this relative strength in employment that enabled Canada to get through the critical Christmas shopping season with a minimum of disruption to retail sales.

By way of comparison, the U.S. has now lost 2.6 million jobs in this recession. That is about the same level of decline as during the dot.com collapse. Except this time, the downturn has been much more precipitous. The U.S. appears to be headed for total job losses of between 4.0 and 4.5 million, before this is all over.

Canada, in my estimation, is about three quarterly periods behind the U.S. My working proposition with respect to the magnitude of the problems we are going to face is that they will be about half of the U.S. level (proportionally). On that assumption, job losses in Canada will reach 200,000 to 250,000 at some point in this recession. I would expect similar lower-amplitudes with respect to auto sales, housing starts, home prices and retail sales.

We’ve heard the talk about deferrals and cancellations of construction projects, particularly in the resource sector and especially in Alberta’s oilsands. But this is not what is behind the latest job losses in construction. Those will come longer term as priority work is still proceeding. Rather, current construction job cuts are a housing story.

Canada Mortgage and Housing Corporation (CMHC) has released its December housing starts today as well. For the second month in a row, housing starts are slightly less than 180,000 units, after averaging above 220,000 units per month on an annualized basis since 2002. Clearly housing starts have moved to a new lower level.

Among regions, it was Alberta that had the sharpest decline (-34%) in housing starts in 2008 versus 2007. As for the rest of the country, there is one specific set of numbers that I must point out. The most amazing figures in the housing start numbers are multiple-unit starts in Toronto, +67% year to date and +272% in the individual month of December 2008 versus December 2007. This is not sustainable. Nationwide, the inventory of unsold multiples has climbed to 10,500 units. That is above a normal level by more than 100%.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News.

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