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 - May 04, 2012

Alex Carrick
U.S. Employment Rose by a Mediocre 115,000 in April

The U.S. economy created 115,000 net new jobs in April, according to the latest labor market report from the Bureau of Labor Statistics.

The reaction to this number will be similar to what occurred last month, a collective sigh of regret and expressions of “that’s too bad”. 

A month ago, the net new jobs figure was given as 120,000, not far off what is being reported for the latest period. While there’s some sense of “déjà vu” in this, there’s also irony.

In April’s report, the figure for March was substantially revised – upwards to +154,000 net new jobs.

The +115,000 figure for April was foreshadowed by initial jobless claims that rose back around the 390,000 level after dropping down to 360,000 in February and March.

The weak jobs increase has caused speculation that prospects for employment have cooled from being warm to tepid. (Unfortunately, at no time since the end of the recession has the employment “burner” been hot.) 

One theory is that the mild weather at the start of this year caused a number of seasonally-related jobs (e.g., in retail) to be brought forward. Therefore, the pause in April was perfectly logical.

This gains more credence when the initial jobless claims report is taken into account.

The latest initial jobless claims figure, for the week ending April 28, was a return to a more bullish number, 365,000. In other words, companies are laying off workers at a reduced rate.

Until the most recent quarter, U.S. business productivity was advancing strongly. Firms were finding a way to increase output without hiring back workers.

This may be about to change. In the first quarter of this year, productivity reversed and declined.

From this point on, it may be necessary for firms to take on more staff in order to achieve production targets.

The unemployment rate moved in the right direction in April, to 8.1% from 8.2% in March. But it was partly due to a negative. More people have decided to withdraw from the labor force.

Good news can be found in some unexpected places. For example, manufacturing jobs have been on an upward arc. This is a sector that has come under a great deal of pressure from work shifting overseas.

Since the beginning of 2010, however, manufacturing employment in the U.S. has increased by half a million. That’s remarkable, considering that in the decade before, the sector did nothing but shed jobs.

Year-over-year manufacturing employment in April of this year was +2.0% versus the same month last year. A major boost was provided by work in motor vehicles and parts manufacturing, +7.2%.

The most recent sales figures from Autodata Corp. show year-to-date light vehicle sales in the U.S. climbing 10.3% when compared with the same January to April period of 2011.

Individual-month-of-April passenger car and light truck sales were +2.3% versus the same month of last year.

Construction employment in April was little changed (-2,000) from March. Relative to April of last year, however, there were 63,000 more jobs in the sector. That increase dropped construction’s unemployment rate from 17.8% to 14.5%

During the worst of the recession, one in five people (i.e., 20%) who claimed to be in construction were on the sidelines. That ratio has dropped to less than one in six.

The uptick in construction employment has been modest so far. It’s being held back by a homebuilding sector that remains frustratingly slack. 

For non-residential construction, some support can be derived from employment in the architectural and engineering services category. The jobs turnaround there has been more evident.

The year-over-year gain in design services employment was +2.8% in April. All things being normal (which is an admittedly dicey proposition these days), this should be an advance indicator of on-site construction work coming down the pipeline. 

Service sector employment (70% of total jobs) in the latest month was +1.8%. That falls just below the magic +2.0% to +2.5% range that signifies when the U.S. economy is jogging along with head up and smooth even strides.

The leaders in services are: professional and business services (+3.6%); leisure and hospitality (+2.4%); and education and health (+2.2%).

Two subsets within business and professional services are standouts – accounting and bookkeeping services (+7.7%) and computer systems design services (+4.5%).

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

05/14 - Economic Nuggets - May 15, 2012
05/11 - Canada Rode a Second Consecutive Month of Strong Job Gains 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
01/12 - 2012 holds promise but there’s no denying the uncertainty (part 2)
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
12/14 - Trade issues climb the agenda in both Canada and the U.S.

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