The recently released employment report for June contained a number of important economic signals.

First, the smaller than expected decline in total employment suggests that the job market in Canada is in the process of stabilizing. Having said this, the fact that full time employment dropped by 47,500 in June following a 58,700 drop in May indicates this process will take some time.

Second, consistent with the sharp rise in both residential and non-residential construction building intentions in May, employment in construction increased for the first time since November of 2008. As the chart illustrates, the construction sector tends to add jobs before other sectors do.

Although total employment increased in nine of the 10 provinces across the country, the bulk of the jobs created during the month were east of the Manitoba/Ontario border.

In Prince Edward Island, construction employment increased by 5% month over month, largely due to sustained growth of industrial and commercial building, which offset weakness in the residential and institutional categories.

In Nova Scotia, a 35% year-to-date increase in non-residential building plans led to a 6.5% rise in the number of construction jobs, the largest monthly increase since October of 2008.

Fuelled primarily by strength in residential building, construction employment in Newfoundland increased by 5.2% month over month in June. It was that province’s fourth consecutive monthly increase.

In Québec, employment in construction rose 3.6% month over month. This was its largest month-over-month increase since April of 2007 and was largely due to the strength of institutional building, which year to date is up 43%.

Following a 3.7% decline in May, the number of construction jobs in Ontario increased by 1.4% in June. The major contributor to this increase appears to be strength in residential building, reflected by a 36% month-over-month rise in May residential permits, accompanied by an increase in institutional building, which is up 22.4% year to date.

Looking forward, although construction employment will probably exhibit erratic growth over the next several months, it should continue to trend higher into 2010, driven primarily by stronger residential and institutional construction activity.

Canada – Total Employment and Construction Employment

Data source: Statistics Canada/Chart: Reed Construction Data – CanaData.