Todayâ€™s Labour Force Survey: The High Dollar Hits Good Jobs
The Dollar Hits Parity
During the reference period for this Labour Force Survey, September 15 through 22, the Canadian dollar reached parity with the American dollar. Todayâ€™s release does not capture the consequences that have begun to play out since then.
A rapidly-rising exchange rate has increased the price of Canadian-made products in foreign markets, which has reduced the viability of Canadian manufacturing. If the Bank of Canada chooses not to take corrective action, thousands more manufacturing jobs will disappear.
The Manufacturing Crisis Deepens
Canada lost 3,000 more manufacturing jobs in September. In total, 295,000 manufacturing jobs have disappeared since November 2002. Last month, Ontario lost 11,000 manufacturing jobs and Quebec lost 7,000.
Other Goods-Producing Industries Down
Employment declined by 8,000 in construction, 8,000 in utilities, and 3,000 in natural resources. The service sector, which generally pays lower wages, accounted for all of the net employment creation. This trend contradicts the argument ofÂ CIBC andÂ Export Development Canada that lost manufacturing jobs are being replaced by relatively well-paid jobs in other goods-producing industries.
Wage Trend Positive
Despite job creation being concentrated in lower-wage industries, average Canadian wages have increased over the past year. After years of sluggish growth, hourly wages are now rising at about 4% per year. Although half of this increase is needed simply to cover inflation, the other half constitutes a genuine improvement. More and higher wage increases will be needed to recover from the long period during which wages stagnated as productivity improved.