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 »
U.S. and Canada December Jobs Reports Should Quell Some Jitters
January 8th, 2016 by Alex Carrick, Chief Economist at ConstructConnect
Article source: CMDGroup
According to the Bureau of Labor Statistics (BLS), the U.S. economy recorded its second-best month for jobs-growth last year in December, +292,000. Only October’s +307,000 was better.
2015 ended with a gain (+292,000) that was considerably above the monthly average for the year as a whole (+221,000). There is speculation by some analysts that December’s strong result may have been aided by weather that was unseasonably warm.
The final tally of the total number of jobs in America at year-end 2015 was ahead by 2.65 million compared with 2014. One big story has been the shift in the composition of those jobs. According the ‘household survey’ of employment, all of the grand-total increase came in full-time work. The total number of part-time jobs contracted slightly.
Earlier, after the Great Recession, concern was often expressed that while the jobs picture was improving, too often the work being offered was of the poorer quality, lower-paying and less-stable part-time variety. This dilemma appears to have self-corrected in the latest 12 months.
The unemployment rate stayed low at 5.0%; but as it was the same as in November, it did not tighten further. As a consequence, remuneration in the U.S. economy overall remained relatively restrained. For all workers, including supervisory personnel, year-over-year average hourly earnings were +2.5%, while weekly earnings were +2.2%.
In the construction sector, where the total number of jobs in December jumped by a healthy +45,000 month to month, compensation moved upward at a faster pace. For average hourly earnings, the annual climb was +2.9%; and for average weekly earnings, +4.2%.
Construction’s not-seasonally-adjusted (NSA) unemployment rate in the latest month was a commendably low 7.5%. A year ago, it had been 8.3%. Two years ago, in December, it was 11.4%, and three years prior, nearly twice as high at 13.5%.
For many economy-watchers, 2016’s launch has been marred by jitters about China’s wavering growth prospects and how that might cast a pall around the world. Stock market investors have certainly expressed their concern through a surfeit of sell as opposed to buy orders in this year’s early days of trading.
The latest buoyantly-positive U.S. jobs numbers should put some of those fears to rest, although they may also spur on another, and relatively quick, 0.25 basis-point (i.e., where 100 basis points equals 1.00%) increase in interest rates, to be initiated by the Federal Reserve.
Besides construction (+45,000 seasonally adjusted or SA), major increases to total U.S. employment in December were contributed by: professional and business services (+73,000); education and health services (+59,000); leisure and hospitality (+29,000); and transportation and warehousing (+23,000).
Delving deeper into the numbers within those four sub-categories, there were some remarkably notable changes. For example, hiring by ‘food services and drinking places’ bubbled up by 37,000 jobs.
The health care sector increased staffing by 39,000, with hospitals contributing 12,000 net new positions. And courier and messenger services bumped up their payrolls by 15,000.
The latter must have been above and beyond the usual increase associated with the holiday gift-giving season, since that would have already been captured in the standard seasonal-adjustment calculation.
Not all sectors ended 2015 in an upbeat jobs-offering frame of mind. Employment in the retail sector advanced by only 4,000 in December. Manufacturing added just 8,000 employees.
Those manufacturers which traditionally count heavily on foreign sales are being burdened with an exchange rate problem. The U.S. dollar has climbed mightily versus most other major currencies, making made-at-home goods pricier across borders.
Year-over-year manufacturing employment in the U.S. in December was elevated to only a marginal degree, +0.2%. That compares with +4.2% for construction; +2.4% for all service-providing work; and +1.9% for grand-total jobs.
Before leaving America’s Employment Situation report, it should also be recorded that the public sector was an active recruiter in the latest month. All three levels of government combined for a +17,000-jobs month, with the feds at +4,000; the states, +6,000; and local administrations, +7,000.
North of the border, December’s Labour Force Report from Statistics Canada was mildly encouraging.
It set out a month-to-month total jobs increase of 23,000. Let’s not fail to add the caveat, however, that all the new work was part-time (+30,000). Full-time employment back-tracked (-6,000).
The ‘lead story’ for Canada concerns the regional shift in jobs strength that is underway.
With ongoing mushiness in commodity prices, especially for oil and natural gas, Alberta is being battered and bruised. The unemployment rate in that province has risen 2.3 percentage points year over year and now stands at 7.0%.
It will come as no surprise if that figure is later revised higher, since there have been outsized job losses in the energy patch as well as in related industries. Furthermore, a 7.0% jobless rate for Alberta is still better, although only barely so, than the national average figure of 7.1%, which was a repeat of November’s level.
The most telling statistics, though, highlight where there was the most jobs growth last year. The three leaders were Ontario (+80,700 jobs), British Columbia (+52,000) and Quebec (+48,000). Those three provinces enjoy more diversified economies than elsewhere in the country.
The number of Canadian construction jobs month-to-month in December was -2,000. Year-over-year, the finding was -19,000.
The comparable figures for manufacturing were +6,000 and +36,000. The $0.70-to-$0.72 USD ‘loonie’ is helping Canadian producers with export sales to some degree, but a true tsunami of better results has yet to materialize.
Four of the key year-over-year percentage changes for the Canadian jobs market in the latest month were as follows: total, +0.9%; services, +1.3%; construction, -1.3%; and manufacturing, +2.1%.
Only in manufacturing (+2.1% versus +0.2%) did Canada outperform the U.S.
Category: CMD Group