2015 Canadian Construction Overview Graphic


Statistics Canada found more jobs in July and should dig up more, in the months ahead

0 105 Economic

by John Clinkard

The recent announcement by Statistics Canada that it had overlooked 41,500 of the 41,700 jobs that the economy added in July was completely consistent with the other measures of economic activity which indicated that after a weather-chilled first quarter, the Canadian economy was picking up speed heading into the second half of the year.
Statistics Canada found more jobs in July and should dig up more, in the months ahead

Not satisfied with the sharp rise in total employment, a number of commentators have expressed concern that virtually all of the gain was due to a 59,000 increase in part-time hiring which more than offset an 18,100 decline in the full-time workforce.

Indeed, the fact that over the past four months, full-time employment in Canada has contracted by 44,600 while the number of individuals in part-time situations has increased by 73,800, suggests that firms are still hesitant about adding full-time staff.

Despite the preponderance of part-time jobs, a closer look at the revised July employment report does reveal a number of positive developments.

First, after shrinking by 21,000 in June, firms in the private sector added 54,600 employees in July, the largest one-month gain in this series since September of 2013. It is interesting to note that the bulk of these jobs were in Quebec (+39,900) and Ontario (+24,600).

Further, the fact that these increases in private sector hiring were accompanied by declines in self-employment of 15,700 and 18,400 respectively clearly suggests that central Canada's economic pulse is starting to quicken, driven in part by the steady gradual strengthening in manufacturing activity in both provinces over the past six months.

At first glance, the lackluster pattern of construction employment through the second quarter and into July appears at odds with the solid pattern of residential construction, indicated by housing starts, which averaged in the range of 190,000 to 200,000 over this period.

However, this apparent disconnect is partly explained by the fact that the volume of non-residential construction spending was essentially unchanged in the second quarter following a 1.2% quarter-over-quarter decline in the first quarter.

Looking forward, a number of indicators suggest that employment in general, and construction employment in particular, will strengthen further through the remainder of the year and into 2015.

First, following a modest estimated increase of 0.3 in June, the RBC Canadian Manufacturing PMI Employment Index exhibited its fastest gain in July since September of 2013.

Second, although hiring intentions indicated by the Bank of Canada's Summer Business Outlook Survey retreated somewhat in the third quarter, they remain firmly in positive territory.

In addition, following an eleven point gain in 2013, the Conference Board of Canada's Index of Business Confidence continued to move higher, hitting a three-year high of 104.9 in the first half of 2014.

With respect to the outlook for construction employment, after trending lower since mid-2013, the uptrend in the net percentage of firms planning to boost their investment spending, reported in the latest Bank of Canada's Business Outlook Survey (illustrated in the chart), suggests construction employment will gain momentum in the near term.

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