Construction Forecasts

News & Analysis

Warning! More construction and construction employment ahead!

05/25/2012 by John Clinkard

Over the past several months, considerable attention has been given to the weak pattern of job growth in Canada as reflected both by the establishment and the household surveys of employment.

Indeed, the most recent (February) establishment survey and the (April ) household survey both reported that employment in Canada was up by only 1.2% over the past 12 months. This subdued pattern of overall job growth contrasted sharply with the strong job growth in the construction sector.

Although employment in the construction sector contracted more sharply than most other sectors late in 2008 and early in 2009, it has recovered strongly over the past two years.

The relative strength of this recovery is highlighted in a recent issue of The Daily published by Statistics Canada, which reported that employment in the construction sector, driven by strong growth of business investment, was up by 3.3% year over year in February, more than twice the rate of job growth in the overall economy.

Indeed, although the construction sector, the country’s seventh largest, employs just under 6.0% of all workers, it generated approximately 15% or almost one out of every six of the 182,286 payroll jobs added in Canada over the past year.

Across the country, resource-rich provinces accounted for much of the strength in construction employment over the past 12 months. Although growth (13.6%) of employment in Newfoundland and Labrador’s construction sector over the past 12 months has outpaced the rest of the country, the vast majority (58%) of new jobs in the sector were created in Alberta, where employment increased by 16,276 (10.7% year over year).

In Ontario, employment in the construction sector increased by 1.8% over the past 12 months, largely on account of a 7% rise in employees working in non-residential building and an accompanying, much smaller (1.7%) increase in residential construction employment.

Reflecting the relative strength of employment growth in the construction sector over the past 12 months, average weekly earnings in the sector rose by 5.4% year over year in February, three times the all-sector national average of 1.8% year over year.

Although the increase in weekly earnings in Alberta (4.9% y/y) was slightly below the country as a whole, the $1,355 level in the construction sector in the Wild Rose province in April was 21% above the national average. Despite the fact that they were up by 18.9% year over year in April, weekly earnings in Prince Edward Island’s construction sector ($824.50) were still 26% below the national average. Weekly earnings also exhibited above average gains in Saskatchewan (+14.4%), Newfoundland and Labrador (+9.7%) and Ontario (+5.9%).

Breaking out the major industries within the construction sector, employment in non-residential building construction was up by 6.5% year over year in February, accounting for 18% of the overall gain in the sector as a whole. At the same time, utility system construction rose by 11% year over year while payroll employment in residential construction increased by 3.6%. According to Statistics Canada, the largest share of construction employees (26.8%) was working in building equipment contracting, which includes mechanical systems, installation and maintenance.

Looking forward, the healthy gain in private and public investment intentions reported by Statistics Canada in February, the increase in investment plans reported by the most recent (Q1/2012) Bank of Canada Business Outlook Survey, recent gains in capacity utilization and stronger growth of corporate profits suggest that employment in construction will continue to grow more quickly than the rest of the economy into 2013.

Canada: Construction Employment vs. Total Employment

Canada: Construction Employment vs. Total Employment
Data Source: Statistics Canada/Chart: Reed Construction Data, CanaData.

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