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by Daily Commercial News last update:Jun 29, 2007

The multi-year boom in residential construction is fuelling much of the new job growth in Canada, according to a report released by Scotia Economics.

Scotia Economics report credits surge in homebuilding

By Grant Cameron

staff writer

The multi-year boom in residential construction is fuelling much of the new job growth in Canada, according to a report released by Scotia Economics.

The report, called Real Estate Trends, says the upsurge in homebuilding, home renovations and resale activity has been “an important factor behind the consistent strength of job creation in recent years.”

According to the report, total paid employment in Canada over the first eight months of 2004 was 5.5 per cent higher than the same period in 2001. This translates into just over 700,000 new public and private sector jobs.

Adrienne Warren, senior economist at Scotia Economics, says the construction industry has led the way.

“Not surprisingly, the construction sector has been a major source of these new jobs. Employment in the broad construction industry has risen 16 per cent, or by 91,000 net new positions, since 2001.

“While this industry represents just five per cent of all paid employment in Canada, it has accounted for 13 per cent of all new jobs.”

The report says that residential construction and specialty trade contractors such as bricklayers, painters and electricians witnessed an increase in payrolls of 28 per cent and 18 per cent, respectively.

Meanwhile, engineering construction, which includes land subdivision as well as infrastructure requirements, saw a 12 per cent increase.

The report notes that the labour requirements of the housing sector are far more reaching because real estate transactions require a range of support services, including credit intermediation, real estate and legal services.

Strong housing markets also generate strong retail sales, especially for big-ticket durable goods, the report says, and producers of household appliances and furniture have both expanded their payrolls.

The strength of the housing market has also been a major factor behind the rise in self-employment in recent years, the report notes.

Self-employed workers represent about one-quarter of all workers in the construction industry. From 2001 to 2004, the number of self-employed construction workers surged 18 per cent, or by 49,000—just over one-third of the total rise in self-employment.

The report says many of the jobs are of good quality and construction industry positions tend to be full-time with good wages.

Average weekly earnings (including overtime) of construction workers are almost 20 per cent above the industrial average, and in line with those in the manufacturing sector, the report says.

Warren says housing-related sectors should continue to provide support to labour markets in 2005, while other industries face headwinds.

“While the pace of homebuilding is expected to gradually moderate, the record-setting level of existing home sales this year points to continued strength in renovation activity,” he says. “Moreover, public sector infrastructure investments are likely to remain relatively strong.”

Scotia Economics is part of the Scotiabank Group and provides clients with research into the factors shaping the outlook for Canada and the global economy.

last update:Jun 29, 2007

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