Jobs Growth in the United States and Canada

January 10, 2014

Both North American jobs reports for December proved disappointing.  U.S. jobs rose only 74K last month, about three-eighths as much as the market consensus.  Even with an upward revision to November’s increase, the 4Q monthly average of 172K was little better than the 3Q mean of 167K and less than the 2Q average of 182K.  Moreover, all of these results were appreciably smaller than the prior two quarters ending March 2012, whose average was 208K per month.  The Fed took a cautious approach to tapering in 2013 partly because of a desire to see clear strengthening in the labor market.  These data fail to show that.  In fact, growth in jobs has been remarkably steady for the past three calendar years, with December-over-December employment gains of 1.6% in both 2011 and 2013 flanking an increase of 1.7% in 2012. 

Other discouraging signs popped up in the data.  Hours worked in the United States of 34.4 in December was actually a tad less than 34.5 per week in December 2012.  And average hourly earnings in the year to December grew at a pace south of 2.0% (namely 1.8%), which compares unfavorably with on-year growth of 2.0% in November and 2.2% in October.  The brightest labor market development, a jobless rate of 6.7% versus 7.0% November, 7.9% in December 2012, 8.5% in December 2011, 9.4% at end-2010 and 9.9% at end-2009, has a dark side.  The labor force is greatly shrunken.  The menu of jobs to be had in the intelligence-intensive offerings of the 21st century cannot accommodate the diverse spectrum of innate abilities.  Unless a way can be found to lift IQs across the board, this promises to be a structural rather than a temporary problem.  Better education can fix only part of the problem.

The Canadian jobs data highlight a reason why the Canadian dollar has been sold off in the early going of 2014.  In 2012, Canadian jobs growth of 1.8% was a stride better than the U.S. increase of 1.7%, but last year saw Canadian jobs advance only 0.6%, less than half the U.S. trend.  Full-time Canadian employment edged up by a infinitesimal 0.1%.  Some of this sluggishness reflected fiscal restraint, as positions in the public sector dropped 0.8%.  A part stems from the Canadian dollar, which through end-2013 had remained too elevated for the economy’s good.  In December, the Canadian jobless rate went up 0.3 percentage points to 7.2%, and 45.9K jobs (equivalent to 354K in the larger U.S. labor market) were lost. 

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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