The AEC Lens
Alex Carrick, Chief Economist at ConstructConnect
Alex Carrick is Chief Economist for ConstructConnect. He is a frequent contributor to the Daily Commercial News and the Journal of Commerce. He has delivered presentations throughout North America on the Canadian, United States and world construction outlooks. A trusted and often-quoted source for … More »
October’s Jobs Report: Terrific for U.S.; Maybe Marvelous for Canada
November 6th, 2015 by Alex Carrick, Chief Economist at ConstructConnect
Article source: CMDGroup
There were worries after the issuance of labor market reports for August and September that indicated month-to-month job creation in the U.S. was slowing to +150,000 or less.
October’s data from the Bureau of Labor Statistics (BLS) sends those clouds scurrying away.
The BLS says the latest net increase in jobs was +271,000, the greatest gain in any month so far this year. It lifts the average in 2015, with only November and December still remaining, to +206,000.
While 2014’s monthly average, January to October, was somewhat faster, at +236,000, a figure of +200,000 or higher warrants an enthusiastic response.
America’s jobless rate now sits at 5.0%, a marginal decline from September’s 5.1%, but more significantly down versus October 2014’s 5.7%.
Unless some other statistics on the U.S. economy (e.g., retail trade) come in far worse than expected, the Federal Reserve will now almost assuredly begin to take action on interest rates at the December meeting of its Open Market Committee (FOMC).
The Fed has passed up previous opportunities to hike its benchmark interest rate, the federal funds rate, but it’s not likely to do so again. Another bout of hesitation would send a baffling message of lack of confidence to financial markets concerning the nation’s economic outlook.
The number of jobs in construction in October suddenly soared again, +31,000. With respect to other months this year, that was the best increase since February (also +31,000) and was only beaten by January (+41,000).
Most of the latest month’s leap was recorded among non-residential specialty trade contractors, +21,000.
The U.S. construction sector’s unemployment rate is now 6.2%, down a bit from 6.4% at the same time last year.
The most dramatic news for construction, however, in October’s Employment Situation Report, concerns wages. Whereas average hourly and weekly earnings for all private non-farm jobs in the U.S. were +2.5% and +2.2% year over year respectively, in construction they were +2.6% and an outsized +4.1%.
Leaving out supervisory employees, the all-jobs average hourly and weekly year-over year increases were both +2.2%; but for construction, they were +2.4% and +3.9%.
The 271,000 total-jobs jump in October owes thanks to especially strong hiring in four industry sub-sectors: professional and business services (+78,000); education and health services (+57,000); retail trade (+44,000); and leisure and hospitality (+41,000).
About one-third of the increase in professional and business services employment in the latest month was tied to temporary-help-wanted activities.
All of the new positions in education and health services were provided by health care and social assistance (+56,000). Hospitals alone added 18,000 jobs. The year-over-year change in hospital employment is now +3.5%.
By way of comparison, the year-over-year change in total private non-farm jobs is +2.0%.
U.S. construction employment year over year is +3.8%.
For manufacturing, the figure is +0.7%.
There were no new jobs created in the manufacturing sector in the latest month. But within manufacturing, assembly-line positions making motor vehicles and parts were +5.3%.
Even that large increase, though, falls short of the annual percentage rise for the number of workers toiling in computer systems design and related services, +5.8%.
The government sector added only 3,000 net jobs in October. Washington’s payroll shrank by 2,000, but state administrations expanded their staffing by 5,000, while local government stood pat.
Based on the size of its labor force (i.e., one-ninth that of America’s), Canada’s increase in employment in October, +46,000, might be even greater cause for celebration than the +271,000 figure for the U.S.
According to Statistics Canada, the jobless rate north of the border improved to 7.0% from 7.1% the month before; but it stayed worse than the 6.6% level in October of last year.
Canada’s economy struggled in the first half of this year, with annualized quarter-to-quarter ‘real’ (i.e., inflation-adjusted) gross domestic product (GDP) slightly negative in both Q1 and Q2. Dramatic drops in commodity prices, particularly in the energy sector – also leading to a curtailment of many investment spending plans – knocked the stuffing out of the national output measure (a.k.a., GDP).
Canada’s surge in employment in October, however, may or may not suggest the hoped-for turnaround in economic prospects.
The 45,000-job increase overall was comprised of full-time work at +9,000 but part-time employment at a vastly better +36,000. Furthermore, there was a +14,000 private sector versus +31,000 public sector divide.
Statistics Canada, in its press release comments, draws the inference that many of the new jobs were probably spur of the moment in aid of the federal election which was held on October 19.
This opens up the possibility of a corresponding contraction when November’s job results are released.
As for the value of the Canadian dollar receiving a lift from the nation’s latest jobs increase, there are bigger developments underway in world currency markets that blunt that notion.
A heightened expectation of a Federal Reserve yield prod shoots another dose of vitamins into the greenback, causing it to race further ahead. Neither the loonie, nor any other currency, can match the U.S. dollar stride for stride at this time.
Canadian manufacturing employment in October rose by 6,000 jobs. That left the employment level in the sector flat versus the same month of last year.
The number of Canadian construction jobs declined by 9,000 in the latest month. Year over year, the change was -1.7%.
Regionally, Alberta’s economic and labor market distress, caused by low oil and natural gas prices, is showing up in its unemployment rate, 6.6%, which is highest among western provinces and not much better than Ontario’s 6.8%.
Blessed with a well-rounded economy, Manitoba is no longer being overshadowed. It has emerged with the country’s lowest jobless rate, 5.3%.
Statistics Canada: http://www.statcan.gc.ca/daily-quotidien/151106/dq151106a-eng.pdf
Category: CMD Group
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