U.S. and Canadian Labor Market Performances Unusually Divergent

July 11, 2014

U.S. non-farm payroll jobs rose 272K per month in the second quarter, their fastest pace of increase since March-May 2010, which was inflated by temporary census workers.  Jobs have risen at least 200K in each of the past five months.  In June, they climbed by 288K.  Canada, in contrast, experienced a 9.4K drop in employment last month, which is akin in percentage terms to a loss of 73K in the considerably larger U.S. labor market.

Yearly change in employment has diverged sharply in the two neighboring economies.  In the twelve months to June 2013, Canadian jobs growth of 1.4% was only slightly less than the U.S. increase of 1.7%.  But in the ensuing year to June 2014, U.S. jobs expanded by 1.8%, whereas the rise in Canadian jobs shrunk to just 0.4%, smallest since February 2010. 

The U.S. unemployment rate, which rose from a pre-recession low of 4.4% to a peak of 10.0% in October 2009, subsequently dropped 3.9 percentage points to 6.1% in June 2014.  Prior to the Great Recession, the unemployment trough in Canada was 5.8%, but such crested in August 2009 at 8.7%, 1.3 percentage points below the U.S. peak.  Now Canadian unemployment of 7.1%, which was up from 7.0% in May and 6.9% in April, is a full percentage point higher than the U.S. level.

Ironically, real GDP growth in Canada of 2.2% between 1Q13 and 1Q14 easily outpaced the concurrent rise in U.S. real GDP of 1.5%.

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



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