Construction Industry Forecasts

Average weekly earnings of non-farm payroll employees in Canada rose 0.8% between July and August, according to Statistics Canada. That left them +1.9% on a year-over-year basis.

The +1.9% figure is the lowest annual growth rate since November 2009.

These figures appear in the latest edition of the monthly “Payroll employment, earnings and hours” report. 

Average earnings per week are a function of more than just one variable.

They depend on hours of employment, hourly pay raises or cuts, shifts in activity levels between industries, overtime, strikes and holidays. 

The weak performance in the latest month is a reflection of the overall funk that has enveloped the world economy.

Average weekly earnings in construction over the past year, at +2.8%, have been higher than for the economy as a whole.

But they have fallen well short of what has transpired in some other industries: utilities, +9.3%; real estate and rental and leasing, +9.2%; educational services, +5.0%; wholesale trade, +4.7%; and transportation and warehousing, +4.6%;

The biggest declines have been in arts, entertainment and recreation (-4.8%) and forestry, logging and support (-2.8%).

Regionally, the leaders over the past year have been Newfoundland and Labrador (+4.7%), New Brunswick (+4.5%) and Alberta (+4.5).

Ontario (+0.4%) has fallen behind the other provinces.

Over a longer time horizon than just one year, the most fascinating province for employment and incomes - since a little after the turn of the century - has been Alberta.

During the mega energy project boom in the middle of the past decade, construction workers were enticed to the Oil Sands from across the country.

Year-over-year employment growth in the province vastly exceeded the nation as a whole.

Then when projects were shelved as a result of the world recession and coincident drop in global oil prices, the shedding of jobs exceeded all other regions.

From August 2008 to August 2009, the number of jobs in Alberta fell 5.1% versus a 2.7% decline for the country as a whole.

Recently, from August 2009 to August 2011 - a period of two years – Alberta employment has been +7.2%, more than double Canada’s overall gain of +3.4%.

Since way back in 2005, the highest average weekly earnings in the country have been in Alberta. That’s when the province overtook Ontario.

Alberta’s better jobs picture lately has tied to an improving energy market outlook.

While this is partly dependent on adding pipeline capacity to U.S. refineries, more attention is also being paid to potential markets in Asia.

But enthusiasm has, of necessity, been muted due to several flash points on the world stage – chief among them being Greece.

On that subject, the overhanging dark cloud of uncertainty is perhaps dispersing. 

While some of the details are still sketchy, there are indications that Europe is finally taking forceful action to rectify its sovereign debt problems.

A 50% haircut (i.e., write-off) of Greek debt has been approved. The burden will be handed to European banks, but joint government action will be taken to help prop up their capital.

Backing for the European Financial Stability Facility will be increased from $600 million (US dollars) to $1.4 trillion and the role of the International Monetary Fund (IMF) expanded.

The problem of Greek debt plus speculation over whether the European Union as well as the Euro can survive has dominated the headlines for months.

If this distraction truly is removed, then quite a different light is cast on the world economy.

It may be time to focus more attention on what is happening in the United States.

South of the border, many of the numbers on the economy really aren’t that bad.

Consumer confidence has tanked again, but elsewhere in the data set can be found a solid base to build hopes on.

In many cases, it’s a matter of activity levels being so restrained, there’s not a great deal of danger they can get worse. There’s only one direction to go – up.

The unsold inventory of new homes is at rock bottom. Prices are presenting all-time bargains.

“Real” (i.e., inflation-adjusted) interest rates are actually negative.

Stockpiles held by manufacturers are historically low and inventory-to-sales ratios are quite sustainable.

In September, 103,000 net new jobs were created, according to the latest labor market report.

The initial jobless claims figure has been around 400,000 for the past three months. That’s well below the benchmark figure of half a million above which more people are being newly fired than hired.

At the current level of initial jobless claims, some progress will be made in lowering the so-far intractable unemployment rate of 9.0%-plus.

Keeping things in perspective, initial jobless claims even in the best of time rarely fall below the high 200,000s.

Success in creating jobs is occurring, although at the kind of glacial pace that is harder to track than one would wish for.

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.