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STRONG GROWTH ADMIST TALK OF RECESSION
Labor Force Recovers in Canada, Lags in U.S.
As of July, construction employment continues to expand in both the U.S. and Canada. In America, construction added a surprisingly large tally of 32,000 jobs in July despite higher interest rates and growing weakness in the single-family construction market. In Canada, 7,700 construction jobs were added in July.
Because real gross domestic product declined during 2022’s initial two quarters, a debate rages regarding whether or not the U.S. economy is already in recession. GDP declined 1.6 percent during the 2022’s initial quarter in real terms, and then shrank 0.9 percent during the second.
But recessions are typically characterized by too little demand chasing too much supply. America’s challenge has been the polar opposite – too much demand chasing too little supply. Employers continue to try to meet unmet demand, helping to explain why the U.S. added 528,000 jobs in July, well above consensus expectations. U.S. unemployment sits at 3.5 percent, which matches the 50-year low that prevailed in February 2020, just before COVID-19 undid the economy.
Economic recoveries in both the U.S. and Canada continue to be erratic. Total employment in the latter declined by 30,600 jobs in July. Though the two economies have generally tracked one another in terms of decline and recovery, there remain differences. America’s downturn was not as sharp, and the initial phases of recovery were more robust.
But perhaps the biggest difference between the two economies is the rate at which people between the ages of 25 and 54 have returned to the workforce. The labor force participation rate has actually recovered more rapidly in Canada. Prior to COVID-19, participation of this demographic subset in Canada was 87.3 percent. It fell to 83.3 percent by May 2020. As of July 2022, the Canadian participation rate of this core group of workers was 88.2 percent, above where it was when the pandemic commenced. In the U.S., however, participation for the same age group dropped from 83.0 percent in February 2020 to 79.9 percent in May 2020. It has since increased to 82.4 percent as of July 2022, but remains below its pre-pandemic level.
Click here to download this month’s full economic update
(which includes updates on: workforce, inflation, construction industry spending and more.)