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 - Jul 13, 2012

Alex Carrick
Latest Economic Nuggets: Mid-July 2012

The following are Economic Nuggets “ripped” from the latest data releases and media headlines.

(1) The European debt problem may have reached a key turning point. A new centralized banking authority will be allowed to lend directly to financial institutions in trouble while keeping the loans off the balance sheets of sovereign states. This will be a huge help. 

(2) Central bankers around the world are taking further action to “juice” the world economy. The European Central Bank (ECB) has lowered its key lending rate by 0.25%. Australia and Israel have also made cuts. The Bank of England is buying bonds again, another version of printing money. The Federal Reserve has extended Operation Twist, a means to lower long-term interest rates. The People’s Bank of China has dropped interest rates twice in the past month.

(3) The U.S. housing market, on the mat for so long, appears finally set to trend gently upwards. Home starts in June were over 700,000 units, but more significantly levels for April and May were revised much higher. April’s new figure of 744,000 is a peak since October 2008’s 777,000 units annualized, before the recession. Furthermore, U.S. residential building permits in June were nearly 800,000 units. The permit series leads ground-breakings by a month or two.

(4) Also in the new homes market, the number-of-months of unsold inventory has settled back to a historical norm near 4.5. It’s taken six-and-a-half years to achieve. At the start of 2009, the inventory figure was 12.0 months. Builders could have chosen to take that whole year off. 

(5) The S&P Case Shiller existing-homes price indices (10- and 20-city composites) moved higher for the first time in eight months in April. 19 of 20 cities recorded m/m advances.

(6) The U.S. jobs improvement in June was only +80,000. The jobless rate stayed at 8.2%. But the number of service sector jobs (+1.8% year over year) is approaching its pre-recession level. When the economy is near capacity, the year-over-year employment gain is +2.0% to +2.5%. 

(7) The latest reading (49.7%) from the Institute of Supply Management indicated a contraction in U.S. manufacturing activity for the first time since the end of the recession in mid-2009. But auto sales remain strong and some goods exports have performed well. Both Caterpillar and John Deere have become business-media darlings on account of their strong sales around the world. .

(8) Canada’s employment change in June was also ho-hum, only +8,000. But the unemployment rate fell to 7.2%. The nation has added 180,000 jobs year over year, which is perfectly acceptable. The nature of that gain has been impressive. There are now 220,000 more full-time jobs than a year ago, while part-time work has declined by 40,000. Stable, usually higher-paying full-time jobs contribute more to the economy than temporary work.

(9) Canada’s growth is being held back by weaker-than-normal foreign trade. The hesitancy in the world economy has muted commodity demand and prices. A possible correction in the housing market is something else worrying government authorities. Starts have remained elevated – over 200,000 units annualized in ten of the past 12 months – and prices, both for new (+2.4% y/y) and existing properties (Vancouver’s drop offsetting Toronto’s rise), have found support.

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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Read Other Recent Alex Carrick Posts

07/04 - U.S. Auto Sales Continue Bullish While Canadian Incomes Languish
06/28 - Three Pivot Points for the World Economy - U.S. Housing, Europe’s Conundrum and Oil Prices
06/14 - Economic Nuggets – June 15, 2012
06/06 - Canada’s First Quarter GDP Growth Met Expectations, But What Comes Next?
05/30 - Ontario has a Backbone of Strength for the Decade Ahead
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.
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