Canada vs U.S. Year-Over-Year Percent Change in Construction and Manufacturing Employment – April 2007

Alex Carrick -- May 18, 2007

The drop in U.S. construction employment growth appears to have bottomed out at around 0%. This is the net result of a large drop in residential employment offset by a strong gain in non-residential work. Year-over-year construction employment in Canada (+4.4%) has done relatively better than in the U.S., as residential work has held up better and non-residential activity is gathering momentum. So far in this cycle, construction wage rates remain relatively restrained, about +3.0% annually for Canada as a whole in the latest quarter. The country-to-country comparison in manufacturing is the reverse, with the U.S. (-1.1% year over year in April) doing relatively better than Canada (-4.2%). Canada’s manufacturing employment is now under the further disadvantage of an increase in the value of the Canadian dollar from $0.85 US to $0.90 US. Also, a significant proportion of manufacturing activity ties in to the homebuilding sector, through building materials, appliances and interior design. Manufacturing in both countries (the U.S. far more than Canada) will continue to be vulnerable to weaker housing markets at least through the end of 2007.