U.S. construction employment continues to suffer as housing starts are leveling off from their precipitous slide, but are not yet at bottom. After a slight hiccup in late 2006 and early 2007, construction employment growth in Canada has bounced back to the 7.0%-plus year-over-year rate that it experienced from mid-2004 to mid-2006. Canadian housing starts set a record high in the latest month (278,000 units in September) and non-residential construction activity levels are growing stronger with each passing month.

Prospects for the U.S. manufacturing sector have improved, provided that consumer and business confidence rebound as expected after the sub-prime mortgage and liquidity crisis. The drop-in value of the U.S. dollar will position U.S. manufactured exports to make sales gains in foreign markets as the world economy continues to expand.

Positive Changes in U.S. Auto Sector
Furthermore, the former Big Three U.S. automakers are reaching agreements with their unions to offload “heritage” costs, reducing their cost-per-car disadvantages versus foreign competitors. The UAW has also won concessions that domestic automakers give priority to investing in the U.S. first.

At the same time, Canada’s dollar value gains will make the playing field a tougher contest for Canadian manufacturers trying to sell into the U.S.