The U.S. economy has recovered nearly half of the jobs lost in March-April, and Canada has recovered nearly three-fourths. Click here to download the latest economic intel that finishing contractors need to know.
A TALE OF TWO RECOVERIES
The early stages of economic recovery from the horrendous period of economic dislocation suffered in North America in March and April has been remarkable. During that two-month period, the U.S. lost approximately 22 million jobs while Canada sustained a loss of roughly 3 million jobs. By April, America’s unemployment rate approached 15 percent while Canada was in the range of 13 percent.
Since that time, both economies have benefited from a pace of recovery that has surprised many economists. The U.S. added another 661,000 net new positions in September while Canada added 378,200. Arguably, the Canadian recovery has been more vigorous. By September, Canada had recovered 76 percent of the jobs it lost in March and April while America had recovered a bit more than 51 percent.
The pattern is markedly different with respect to construction employment. In September, construction added 26,000 net new jobs, with the level of employment down less than 4 percent from a year ago. In Canada, construction employment was unchanged in September and industry employment is down 7.4 percent on a year-ago basis.
GREAT EXPECTATIONS FOR HOMEBUILDERS
Construction spending rose 1.4 percent in the U.S. and 7.7 percent in Canada in September, thanks primarily to burgeoning residential activity. Ultra-low interest rates have induced more people to jump into owner occupancy. The enhanced desire to social distance, the demographics of Millennials, and a growing demand for enough space to support a home office has also persuaded more people to abandon their leases in favor of a mortgage. In September, nonresidential construction spending rose 0.8 percent in Canada, but residential spending was up by nearly 11 percent. Similar patterns are apparent in America where commercial construction has been faltering while single family building permits surge.
MATERIAL PRICES TWIST HIGHER
Though the global economy will end the year considerably smaller than it began, various commodity (e.g. copper, oil) and materials
prices have been edging higher recently. In September, materials prices rose 1.6 percent in the U.S. after falling for much of the previous year. Even with September’s rise in prices, materials are only 1.1 percent more expensive than they were a year ago.
With residential activity surging and many homebuilders placing orders for softwood lumber packages, lumber prices have exploded. In the U.S. softwood lumber prices rose 27.4 percent in September alone, and are up more than 80 percent on a year-ago basis. However, if Europe,
the U.S., and other regions continue to experience rapidly rising COVID-19 infections, economies could shut down again, which would likely result in near-term reversals in many materials prices.
As if COVID-19 were not enough, the U.S. has also encountered the uncertainties that accompany a highstakes presidential election. As is often the case, many economic actors embraced a wait and see attitude, stalling the pace of economic recovery as winter approaches.
There is much at stake, including America’s policies on the taxation of capital and income, regulation of the oil and natural gas industry, attitudes toward international trade and immigration, infrastructure, and the shape of stimulus presumably yet to come.
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