Canadian Labor Market Takes a Step Backward
November 6, 2009
Canada reported significantly worse-than-projected October labor market figures ninety minutes ahead of the highly anticipated U.S. labor force survey. The two data series tend not to dovetail exactly, but the Canadian figures are a reminder that all economies face a bumpy return to positive growth and, in most cases, atypically weak growth in the initial stage of expansion.
- Canada lost 43.2K jobs last month after such increased by a combined 57.7K in the previous two months. A 43.2K drop in Canada is analogous to a drop of 336K in the larger U.S. labor market. 85.6% of Canadian job losses in October were in retail or wholesale trade industries. Part-time workers plunged by 120.7K between August and October. Total jobs were 399.9K or 2.3% weaker than in October 2008. Factory jobs reverted to a decline after unexpectedly rising 26.1K in September.
- Other indications of a discouraged work force include a 27.5K advanced in self-employment (which can mask unemployment) and a downtick of the participation rate to 67.0% from 67.1%.
- Two-thirds of the surprising September decline of unemployment to 8.4% from 8.7% in August was reversed in October. August’s jobless rate was the cyclical high and compares with prior peaks of 8.0% in December 2001 and 11.8% in July 1993. The rate bottomed in February 2008 at 5.8%.
- Hourly average wages increased 3.3% in the year to October, same as in the year to August but up from 2.5% in the year to September.
Financial markets would react very poorly if U.S. labor statistics similarly arrive much weaker than expected. Prior to September’s reported drop of 263K, U.S. non-farm payroll jobs had been expected to post a 188K decline. The U.S. jobless rate is forecast to be 9.9%, but a 10-handle would obviously exert an exaggerated psychological effect. June 1983 was the last time that U.S. unemployment was in double-digit territory.
Copyright Larry Greenberg 2009. All rights reserved. No secondary distribution without express permission.
Tags: Canadian Dollar
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