Given the increases in mortgage rates that have transpired, significant slides in homebuilding activity are being taken for granted in the United States and Canada. Based on the latest housing starts statistics, this is already underway and clearly apparent in the former more than in the latter. See Graph 8 below, where Canadian housing starts have been moving mostly sideways throughout this year, while U.S. starts have been exhibiting significant declines month to month.

Canada has become much more than a natural resource-based economy.

Megaprojects Take a Back Seat in November ConstructConnect announced today that November 2022’s volume of construction starts, excluding residential work, was $31.1 billion, a decline of -36.3% compared with October’s figure of $48.9 billion (originally reported as $47.5 billion; the difference coming mainly in the multi-unit residential subcategory of starts).

The accompanying table records the top 10 project starts in the United States for November 2022.

Clichés are often true and it is the case that a picture can be worth a thousand words.

Much of the world may be taking a break as yearend approaches, but that doesn’t mean the economy is kicking back with eggnog and gingerbread cookies. Public and private sector data releases are pouring forth regardless, and here are some of the nuggets to be gleaned.

Total U.S. construction labor supply has grown by 5% since the end of 2019. Despite this growth, the supply of willing laborers is well below the level demanded. Based on data released in the fourth quarter of 2022, there remain nearly 400,000 unfilled construction industry positions. This severe shortage has worsened over the last two years despite some of the largest annual pay increases—but also wage-eroding inflation—for construction workers in decades. The overall labor challenge (shortage) facing construction is not expected to significantly change at the broadest level. However, there are several important intra-industry trends that will force industry leaders to take very different labor strategy tactics in the coming one to two years.

November’s inflation data reported on December 13, 2022, came in below expectations. The basket of goods and services, which are used to broadly track prices, rose 7.1% in the year period ending November. This latest year-on-year rate change is the lowest since prices first began their rapid ascent in early 2021. Furthermore, it marks the fifth consecutive decline in annualized inflation rate readings since June 2022’s decades-high reading of 9.06%.

Only in recent months has a consensus developed that the global economy is likely to contract in 2023. In the Wall Street Journal’s latest survey of 65 highly recognized economists conducted during October, the average nominal U.S. GDP outlook on a seasonally adjusted annualized basis was for declining GDP rates in both the first and second quarters of 2023 before returning to less than 1% growth in the third quarter.

As the United States added 263,000 jobs in November, Canada stood by and watched in awe. The change in total employment north of the border in the latest month, according to Statistics Canada, was only +10,000 jobs.