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 20, 2011

Alex Carrick
U.S. sub-sector jobs histories provide insight into economic structural change

Considerable insight into structural changes in the U.S. economy can be obtained by looking at six key sub-sectors and their employment levels over the past eleven-and-a-half years.

Employment in the auto sector dropped by a little more than half between the start of the 00s and mid-2009. Then the major Detroit-based auto firms faced down insolvency and Chrysler and GM were rescued by government money and a foreign takeover. Over the past two years, employment has stabilized; but like much of manufacturing, hanging onto the status quo has become a victory. Automation has also played a role in reducing this sector’s jobs number.

Who would have thought there would ever be fewer lawyers? Society seemed to be on a path of increasing litigation. Nevertheless, legal services employment has been on a downtrend since mid-2007. There appeared to be some leveling off in 2010, but the slide resumed again in 2011. Mergers of law firms have been one factor. I would also speculate the weakness in housing starts during the same period has cut deeply into legal employment. A greatly reduced number of residential real estate deals, plus more transactions being carried out and finalized over the Internet, must be driving large numbers of people trained in legal matters to despair.

From the beginning of the U.S. recession in January 2008 through to the end of last year, accounting employment sloped downwards. This year, however, has seen a drastic turnaround. The number of jobs in accounting and bookkeeping services in America has shot up again, to where it is within sight of the previous peak. This suggests good things are going on behind the scenes in a larger-than-suspected share of the business sector. Strong corporate profits and healthy stock market prices – until the most recent worries about a world economic slowdown and debt crises both overseas in Europe and at home in Washington – reinforce that view.

Architectural and engineering services employment fell off with the decline in housing starts and the “run for cover” by private sector investment risk. Public sector stimulus projects filled only a small portion of the gap. (In Canada, government infrastructure projects, during and soon after the recession, played pivotal roles in maintaining construction activity levels.) So far, there is only a faint glimmer of a return to stronger employment in design services south of the border. 

Computer systems design services work has been one of the stars in the whole employment firmament. In the most recent recession, there was nothing like the drop-off in jobs that was experienced during 2001’s dot.com collapse. In fact, the strength of employment in the most recent period is a partial explanation for the weakness of hiring in other professions. Greater use of high-tech operating systems and back-room inventory and other controls management has been a means to maintain or achieve higher output with the same or lower number of staff.

Finally, there is the category I like to refer to as “uber-” or super-services. This is employment in amusements and gaming/gambling. A large part of this is accounted for by casinos. Yes, employment is down by about 100,000 since early 2008, but it hasn’t sunk beneath the waves everywhere, as some reports would have us believe. There are pockets where the drop has been more severe than elsewhere, but it seems the industry is now geographically diversified enough to withstand a storm. Plus there are enough die-hard gamblers willing to keep betting their ship will come in to keep the industry afloat even when faced with tempest-tossed seas.

The U.S. total employment level remains way below its pre-recession peak. While 1.8 million jobs have been recovered relative to February 2010’s trough level, a shortfall of nearly seven million remains versus January 2008’s peak. There’s a lot of ground to be made up.

Meanwhile in Canada, the jobs number in June was another all-time high. In our commodities-blessed and financially-conservative corner of the world, we should count ourselves fortunate.

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

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05/11 - Canada Rode a Second Consecutive Month of Strong Job Gains in April
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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
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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
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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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12/22 - Canada stands firmly in the middle of the road as it enters 2012

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