March 12, 2014
Labour shortages and slowdowns dominate discussion
Canadian construction must prepare for slowing growth potential in some sectors and a looming labour crunch in 2016, says Export Development Canada's (EDC) chief economist.
“Labour restraints are going to get really tight,” said Peter Hall, EDC’s chief economist and vice-president in his economic outlook to the Canadian Construction Association during its conference in Panama.
“2016 is the magic year if you need to lock in good, skilled workers, now is the time to do it – love ’em or lose them.”
Hall advised Canadian construction stakeholders to be aware of the constraints that exist in the Canadian economy.
Even with the soft investment sector, labour challenges will be something to tackle going forward.
“We have solutions that are very appropriate to the construction sector, for the low amount of productive capacity we have, we believe we could be in for a wave of business investment here in Canada,” explained Hall.
With the recent inking of the Canada-European Union trade pact, Hall believes Canadian construction horizons do have potential.
“We are now in a space where the construction industry is actually one of the top industries that has been identified as one of the net beneficiaries,” he said.
A study of the pact indicates Canadian construction is one of the top five industries that could benefit.
Hall said global economic growth is back, but the Canadian construction opportunities on the domestic investment front will ease, especially with little projected growth potential in the residential construction market.
“But, what you will see, with the export sector being reignited, it will actually cause, what we think is a wave of investment inside export-orientated business investment,” stated Hall.
Canadians have been raising their debt burdens to keep the economy going over the last couple of years and industries need to be cognizant of that fact, added Hall.
“Our debt-to-income levels are sort of where the American debt-to-income levels were at prior to the crisis happening,” he said.
“We don’t think we are looking at a crisis, we actually think this means we won’t get a lot of growth at the consumer (level).”
Hall further explained why EDC also does not expect multi-unit construction to be a growth driver for the Canadian economy in the near future.
“There is not a whole lot of growth potential (in residential construction), we have been overbuilding in Canada,” he said.
“We are not expecting a full-blown correction, other aspects of the economy will be in place to keep the housing market from imploding but it will not be a source of growth, neither is the government sector.”
The growth will come from the world economy “firing up” on the trade side of Canada’s economic equation.
Hall explained that the world has turned the corner, the U.S. economy is showing incredible growth in its confidence and there is self-sustaining growth happening there and not due to the result of policy.
“The other piece of good news is that the European economy is through its recession. We have two and soon to be three quarters of revival inside Europe,” he said.
“What that is doing for the European economy has ignited that continent and gives them a sense that all is not all lost.”
European countries that are showing the most growth are in the most “stretched economies” like Spain, Ireland and Greece.
The Irish federal deficit, from its double-digit level in fall 2013, is now under two per cent. Spain, whose deficit was at 10 per cent of its GDP is now below four per cent.
Lastly, Greece, whose red ink hovered at 20 per cent of its economy in late 2009, recently hit balanced spending and revenues in fall 2013.
For more CCA conference stories, blogs and videos visit www.journalofcommerce.com.
with files from Kelly LaPointe
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