June 22, 2009
Economy at a Glance — June 23, 2009
Manufacturing and construction drag down labour markets in the U.S. and Canada
Prepared by Alex Carrick, Chief Economist, CanaData
May labour market reports have been released by government statistical agencies on both sides of the border. U.S. employment fell by 345,000 in May on a month-to-month basis. Canada’s total jobs fell by 42,000. These numbers are roughly in line on a proportional population basis (i.e., the usual “ten times” factor for the U.S. versus Canada).
Job Losses, Peak to Present
However, since its most recent employment peak in December 2007, the U.S. has lost a total of 6.0 million jobs. In Canada, the most recent cyclical peak occurred in October of last year, only a short time ago. Since then, the number of jobs lost has been 360,000.
Media attention has been focusing on the fact that the U.S. month-to-month number is a good deal less negative than in the preceding six months. In fact, it was only about half of January 2009’s level of decline. If the U.S. labour market were to be described in medical terms, its condition has been upgraded from “on life support” to “breathing on its own”. Over the summer, there is increased hope that it will come out of intensive care.
Two Most Shocking Categories – Construction and Manufacturing
The two most shocking employment categories in both countries are construction and manufacturing. Canada’s year-over-year construction employment (-7.8%) is not as bad as in the U.S. (-13.6%). That is because residential starts in the U.S. have fallen further and for longer. But the manufacturing employment decline has been about the same in both countries and in double digits (i.e., -10.0% for Canada and -11.6% for the U.S.)
Service Sector is Performing Best
In both economies, service-sector employment is doing better than goods production. Canada is even with last year (+0.1%). The U.S. is -2.4%, but that is lower than for total jobs, at -3.9%. Several U.S. sectors displayed a levelling off in their most recent year-over-year job declines – retail trade; transportation and warehousing; professional and business services; and leisure and hospitality.
Canada’s Regions
Manufacturing and construction explain regional labour markets in Canada. The three provinces with the largest percentile increases (+3.0 year over year) in unemployment rates are Ontario, Alberta and British Columbia. It is Ontario that has suffered the most from lower manufacturing output and the two western-most provinces have seen big drops in their housing starts, after experiencing speculative surges earlier in the cycle.
For more articles by Alex Carrick on the Canadian and U.S. economies, visit his
blog and Market Insights.
Data source (seasonally adjusted): Statistics Canada amd U.S. Bureau of Labour Statistics.
Chart: Reed Construction Data – CanaData.
