November 17, 2011
Canadian employment faltered in October while U.S. hiring continued
Chief Economist, CanaData
In October, Canada subtracted 54,000 jobs and the U.S. added 80,000, according to the latest labour market reports from Statistics Canada and the Bureau of Labor Statistics.
As a result, Canada’s unemployment rate rose from 7.1% in September to 7.3% in the latest month while the U.S. jobless level fell slightly, from 9.1% to 9.0%.
The drop in employment in Canada appears dramatic at first glance, but it should be remembered that the month before, the change was in the opposite direction and to almost the same degree, when it rose by 61,000.
Therefore, a certain amount of estimation error may be cropping up as a factor in the overall employment number of late.
September’s entire decline in Canadian employment came in the full-time category (-72,000), while part-time work increased by 17,000.
However, it’s hard to know how seriously to take this figure, given that the month, before full-time work shot up by 64,000 jobs.
That’s a net change of -12,000 in the past two months, which isn’t terribly significant.
The November and December figures will have to be monitored carefully to see if October is the beginning of a trend or just a statistical anomaly.
There is good news to be sifted from the latest report. Canada has added more than 200,000 jobs over the past year. Since the trough for employment in the recession (July 2009), the nation has upped its number of employed workers by nearly 600,000.
But it has to be admitted that Canada’s year-over-year employment numbers, expressed as percentage changes, are no longer appearing far healthier than in the U.S.
There are two factors at play — some weakening in the Canadian figures and definite signs of improvement in the U.S. results.
The U.S. gain of 80,000 jobs in October was only about half of its previous-month increase (+158,000), but it provides positive vibes nevertheless.
The U.S. has added 1.5 million jobs over the past year and 2.3 million since its recessionary trough in February 2010.
There is still a shortfall of 6.5 million jobs to be made up before overall employment in the U.S. will be back to its pre-recession peak.
In the comparisons that follow, keep in mind that for both countries, a year-over-year change in employment of +2.5% to +3.0% has historically coincided with solid growth in the economy.
For most of the past half decade, year-over-year employment in Canada has significantly outpaced the U.S. But the numbers have converged again and Canada (+1.4%) is now only slightly leading the U.S. (+1.2%).
In the important services category, both nations have returned to jobs growth near the desirable benchmark. Canada has been hovering just under +2.0% since early in 2010. The U.S. has climbed back near that level, but only since the spring of this year.
Canada (+2.0%) is still outperforming the U.S. (+1.7%) in services employment, but to only a minor degree.
The two categories where the percentage changes appear most interesting are construction and manufacturing. Mainly due to homebuilding’s collapse, U.S. jobs in construction have been extremely low for the past two years.
The fact they’ve also been flat, however, means that the year-over-year percentage change has moved up from deeply negative to +0.2%.
In Canada, the gradual diminishment of government infrastructure spending (i.e., the stimulus program) has caused year-over-year employment increase in the construction industry to fall back to +1.4%. In the summer of 2010, it had been as high as +8.0%.
The latest calculation for manufacturing employment in Canada took a turn for the worse (-2.7% year over year), while in the U.S. the number of workers on production lines has been steadily increasing since late last year.
The October year-over-year figure for U.S. manufacturing employment was solidly positive at +1.9%.
Abroad, the U.S. is continuing to supply emerging nations with agricultural and construction equipment and machinery. At home, the auto sector recorded its best sales month in October since February.
According to Autodata, vehicle unit sales in October were 13.26 million units seasonally adjusted and annualized, well above this year’s low point of 11.56 million in May.
The turmoil in European debt markets has meant a flight back into the safety of the U.S. dollar.
The easing in value of the Canadian dollar versus the greenback will provide manufacturers north of the border with a currency-adjusted price advantage when it comes to making export sales.
For more articles by Alex Carrick on the Canadian and U.S. economies, please see his market insights. Mr. Carrick also has an economics blog. His lifestyle blog is at www.alexcarrick.com
