December 12, 2011
In November, Canada shed some jobs while the U.S. bulked up
Chief Economist, CanaData
For the second month in a row, Canada’s labour market report was disappointing in November. There was another decline in the number of jobs reported by Statistics Canada.
At least the drop wasn’t as large as the month before. Between October and November, 19,000 positions were eliminated. Between September and October, the drop was a much larger 54,000.
There’s not a great deal to be worried about just yet. Prior to October, going all the way back to the end of the recession, month-to-month changes in employment were almost always positive.
The total number of jobs in the country is still well above the previous peak level that was achieved prior to the recession.
The recession in Canada lasted for the three quarters encompassed by October 2008 through June 2009.
The unemployment rate has now crept back up to 7.4%. September of this year was its most recent low point, at 7.1%.
Manufacturing employment continued to trend down in the latest month. There are 80,000 fewer production-line workers now than at the start of the year.
Construction employment rose 20,000 in the month and now stands 51,000 higher than at year-end 2010.
The spread between the higher number of manufacturing jobs in the country and those in the construction industry continued to narrow in the latest month.
If present trends continue – which is far from being a given for a variety of reasons as discussed in earlier Economy at a Glances – the two series will meet in four or five years.
The decrease of 19,000 jobs in November was the net result of +35,000 full-time jobs and -53,000 part-time jobs.
Full-time jobs are generally considered to be better for the economy than temporary work. They’re usually more stable and higher paying.
On a year-over-year basis, the private sector has added nearly 200,000 jobs since November of 2010. During the same period, the public sector has been more conservative, accounting for a gain of only 14,000 staffers.
Regionally, the pace of hiring in Alberta at +4.8% year over year has been much faster than in any other province in the country. The Canada-wide increase has been +1.2%.
After trailing Canada for the past five years in terms of year-over-year percentage change in total employment, the U.S. has finally caught up, registering an identical +1.2% increase in the latest month.
One probably shouldn’t read too much into Canada’s latest two months of labour market weakness.
The more important recent data release from Statistics Canada concerns third-quarter gross domestic product (GDP) results.
The seasonally-adjusted and annualized “real” (after adjustment for inflation) growth rate in Q3 versus Q2 was an impressive +3.5%.
Q1’s growth rate was also a robust +3.5%.
Between Q1 and Q3, however, was a “dead zone”. Q2’s real GDP change was -0.5%, causing many analysts to worry about the possibility of slippage back into recession.
A recession is defined as at least two quarters in a row of negative GDP performance. Q3 growth was led by the foreign trade sector. Goods exports shot up (+17.6%) while goods imports retreated (-2.1%).
An improving American economy is clearly starting to have a beneficial effect on Canada.
There’s a good reason Black Friday and Cyber Monday set retail-spending sales records south of the border.
The latest labour market report from the U.S. Bureau of Labor Statistics records a net increase of 120,000 U.S. jobs in November versus October.
That’s a solid enough number on its own.
Upward revisions to the two previous months also need to be taken into account. When they’re factored in as well, the combined result positively “glows’.
September’s total employment level was bumped up by 52,000 and October’s by 72,000.
Such radical adjustments are most common when the cycle reaches a significant turning point.
There’s often an adjustment period before background estimation catches up with what is happening in the real world.
U.S. initial jobless claim reports from the U.S. Department of Labor have been pointing in a healthier direction for almost four months.
The number of first-time unemployment insurance seekers has dropped to around 400,000 on a consistent basis, meaning the number of new hires is significantly exceeding the number of people recently dismissed.
The bottom line is that November’s U.S. labour market report records an increase in employment of nearly one-quarter of a million – 120,000 from the latest month plus 124,000 from revisions to the two previous months.
Summarizing the situation in colloquial terms, that’s more like it.
Furthermore, the U.S. unemployment rate has dropped 0.4 percentage points to stand at 8.6%.
The jobless rate has finally broken through a formidable barrier. With only two exceptions (February and March of this year at 8.9% and 8.8% respectively), the jobless rate has been above 9.0% for the past 30 months.
The drop in the headline measure of unemployment will be an important confidence booster.
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
seasonally adjusted data
