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 »
April Jobs Reports U.S. and Canada – “Move Along, Please. Not Much Happening Here”
May 10th, 2016 by Alex Carrick, Chief Economist at ConstructConnect
Article source: CMDGroup
Standing on the periphery of today’s jobs reports from the U.S. and Canada, I feel more like a cop on the beat, when confronted by bystanders at a minor altercation, than an economist.
My gut reaction is to say, “Move along, please. Not much happening here.” But I don’t want to put you off from reading the rest of this article.
In both countries, the unemployment rates stayed the same, 5.0% for America’s economy and 7.1% for Canada’s.
Month-to-month job creation in the U.S. was a decent enough 160,000, but it was below the 200,000 benchmark that gets everyone at least a little excited.
The last time the month-to-month increase in employment was as low occurred in September of last year (149,000), although January of this year wasn’t that much better (168,000).
Our expectations may have become slightly overblown, after February and March figures of +233,000 and +208,000 respectively.
2016’s monthly average gain in jobs through April, at +192,000, has now dropped by 6.3% compared with the same first four months of 2015, at +205,000.
The latest month-to-month employment increase for the services sector (+174,000) was actually greater than for the economy as whole. Therefore, goods-production must have acted as a drag on payrolls and indeed that was the case. The workforce in ‘mining and logging’ was downsized by 8,000 positions.
Neither construction nor manufacturing had stellar months. Hiring in the former sector rose by only 1,000 jobs, and in the latter by a modest 4,000.
Year-over-year employment in U.S. construction (+4.1%), though, continued to forge ahead faster than for the economy as a whole (+1.9%), services (+2.5%) and all other major industrial sub-categories. Next best was a tie between ‘education and health services’ and ‘professional and business services’ (each +3.1%), followed by ‘leisure and hospitality’ (+3.0%).
There are two other categories of employment in the Bureau of Labor Statistics (BLS)’s monthly Employment Situation Report that are closely aligned with construction job-site workers.
In the first, ‘architectural and engineering services’, which bears a leading-indicator relationship to actual building activity, the month-to-month nominal change was -3,000 jobs and the year-over-year percentage change, +1.9%.
In the second, ‘building material and garden equipment retailers’, where transactions are closer to being coincident with hard-hat hirings, the month-to-month nominal change was also downward, -2,000 jobs, but the year-over-year performance stayed solidly positive, at +3.6%.
America’s not-seasonally adjusted (NSA) construction unemployment rate in April of this year was 6.0%, which compared favorably with 7.5% in the same month of last year.
As a point of interest, and coming as no surprise, − given the chaotic state of world energy markets − the unemployment rate in ‘mining, quarrying, oil and gas extraction’ in the latest month was an elevated 9.5%, worse than the 8.7% recorded 12 months prior.
The push by some foreign producers, led by Saudi Arabia and Russia, to maintain oil output in excess of global demand has taken a big bite out of the earnings of explorers and drillers, work-camp service providers and equipment and machinery haulers in North America.
Drastic cuts to capital spending on potential new sources of supply have further exacerbated the job market difficulties for construction and other workers in the oil patch.
As a hard-luck sign of these extraordinary times, Exxon Mobil recently had its Triple-A credit rating downgraded by Standard & Poor’s. The largest integrated oil companies are managing to struggle on and meet their dividend commitments through the cost advantages gained by their downstream chemical and petrochemical operations, where cheap oil is a feedstock.
Manufacturing’s jobless rate this April also deteriorated from last year, to 4.5% from 4.0%. On a year-over-year basis, the sector’s employment level was an anemic -0.2%.
The jobless rate in ‘leisure and hospitality’ shrank to 6.5% from 7.8%, as it added 22,000 jobs in the most recent month, with most of them generated at ‘food services and drinking places’ (+18,000). The fact Americans are feeling freer to enjoy themselves has not gone unnoticed by casino operators. In upcoming projects lists, there’s a wealth of gambling establishments. (As a corollary, hotel/motel investment is currently on a hot streak in construction markets.)
Signs of a pick-up in earnings, which analysts have been keenly anticipating, remained scanty.
For all workers, including bosses, both average hourly and average weekly wages were +2.5% year over year.
Construction was a little slower with respect to average hourly earnings, +2.3%, but somewhat faster when it came to average weekly pay checks, +2.8%.
The Federal Reserve may still choose to implement another rate hike soon or at the end of summer, but April’s overall set of labor market data from the BLS is hardly likely to stoke the fire under its tepid determination.
In Canada, the employment change in April was in the wrong direction, but to an extent hardly noticeable, -2,000 jobs.
Construction jobs fell by 6,000, but it was a further retreat in manufacturing jobs, -16,000 after a -26,000 figure in March, that really caught one’s attention.
Whereas year-over-year total jobs in Canada are +0.8%, in manufacturing they are -0.9%. The benefits of the low-valued Canadian dollar in promoting the export sales of assembly-line goods remain challenging to spot.
Canadian construction employment is now +1.4% year over year, versus a grand total number of jobs that is +0.8%.
Among the provinces, B.C.’s unemployment rate (5.8%) is now lowest, followed by Manitoba (6.1%) and Saskatchewan (6.3%). Ontario’s has dropped to a quite respectable 7.0%.
Alberta’s jobless rate has climbed to 7.2%, which for all the negative press devoted to the province on account of oil’s price plummet, isn’t that much above the national average (7.1%).
That being said, Alberta is now facing just about the last thing it needed, a wildfire to aggravate its problems.
The raging out-of-control forest conflagration that has been sending tens of thousands of people fleeing from their homes in Fort McMurray and surrounding communities – a human tragedy of heartrending proportions – has also forced nearby Oil Sands producers to cease operations.
Hopefully, the moratorium on output will be relatively temporary in nature.
Category: CMD Group