August 20, 2008

Construction employment strong in July, despite overall decline in jobs

‘Only a matter of time’ given housing drop: economist

RICHARD GILBERT

staff writer

The number of employed Canadians declined sharply in July, but employment in the construction sector remained strong.

Employment in Canada dropped by 55,000 in July, states a Statistics Canada Labour Force Survey released on August 8.

The last time employment declined so rapidly was in February 1991 and August 1982, during previous recessions.

“Overall, manufacturing employment declined by 32,000 in July, as the number of factory workers dropped by 41,000 in Ontario and increased by 7,000 in Alberta,” said the report.

“Over the past 12 months, manufacturing employment across Canada was down 88,000, with nearly all the losses in Ontario.”

According to a TD Bank economist, there are some interesting industry details behind the rapid decline in employment.

“While the 32,300 decline in manufacturing jobs came as no surprise, we were slightly puzzled by the continued strength in the construction sector, which posted an additional 10,300 jobs,” said economist James Marple.

“With all signs pointing to a significant slowdown in the Canadian housing market, it is only a matter of time before construction hiring follows suit.”

The rapid decrease in employment corresponded with a fall in the unemployment rate to 6.1 per cent from 6.2 per cent in June. The reason behind the fall was what labour economists call the discouraged-worker effect.

The unemployment rate dropped as 74,000 people (54,000 of them youth) left the labour force.

“These numbers are truly shocking. Canadians haven’t experienced job losses like this since 17 years ago, when the country was in full recession,” said Ken Georgetti, president of the Canadian Labour Congress.

“Since this time last year, we’ve lost another 88,000 manufacturing jobs. Now, in the middle of the summer, we’re seeing people give up on the job market altogether. This is a catastrophe for working families.”

The Canadian Labour Congress blames the worsening jobs situation on the federal government and continues to demand immediate action to prevent further deterioration.

In contrast to this position, Marple said it is important to keep the monthly number in context.

This year started with an incredible pace of job creation – an average of 35,000 jobs per month in the first quarter, even as the Canadian economy as a whole contracted slightly, he explained.

“At that time we could only express disbelief at this tremendous pace of job growth amidst obvious signs of a weakening economy. This was simply an unsustainable pace of job creation and it is not surprising to see some payback,” he said.

Statistics Canada reported that employment grew by 1.3 per cent over the last 12 months (227,000), but the pace of growth has slowed in recent months.

Employment gains have averaged 10,000 per month thus far in 2008, compared with an average monthly gain of 30,000 for 2007.

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