Today’s Job Numbers
There is good news today, but ample reason for caution looking ahead
Canada’s job market continues to surprise. Despite a strong drop in economic growth in late 2007 and recognition this week from the Bank of Canada that a US downturn will spill over into Canada, employment rose by 43,000 last month and the unemployment rate held steady at 5.8%. Most of the new jobs were as full-time employees, and real wages are on the rise.
While most of the news is good, manufacturing employment fell by 24,000 – and there is daily news of more layoffs and closures which will hit in the coming months. Youth unemployment rose from 11.2% to 11.4%, and the proportion of women over 25 working part-time rose from 21.0 to 21.3%.
Part of the explanation for good news is the growth of public sector jobs, up 12,000 last month , and up 87,000 over the past year. Reinvestment in public and social services is helping offset some of the weakness in the private sector, especially for women.
Continued strength in construction is surprising, and unlikely to continue if we do not make major investments in environmental infrastructure as the housing boom slows down.
The bottom-line is that the disconnect between a slowing economy and a seemingly strong job market will not continue for long – so we will have to ensure that other sectors pick up the slack as the US economy slows down.
I get nervous when I see large increases in Public Sector jobs. Most of these don’t do anything to increase GDP . These are jobs funded from Income and other taxes . Recently in Nova Scotia , the conservative government couldn’t say exactly how many government workers there were in the province , nor therefore what they were all doing . That is a guarantee that some are not doing much work at all , while others are under-worked , or doing a redundant job . The Federal government continues to add Income tax auditors , instead of making the personal income tax system fairer so the incentive to cheat isn’t as great . When they have taken away an income stream from seniors , and dissolved much of the wealth of seniors , as they did with the cancellation of many income trusts , they encourage tax avoidance . With the economy headed south as it is presently , there should be a temporary halt to public sector hiring until we come out the other side of this cycle. Reassign present public workers as needed to take care of urgent business , thus halting the expansion of the federal payroll , and easing the chance of a deficit.
I am always amazed at the arrogance of some people priviledged enough to be afforded an opportunity to lead the people of Canada within quite tumultuous times. Reading about al the layoff in the forestry sector and the manufacturing sector, and then having people like new governor of the bank of Canada saying on the one hand employment figures are still quite robust but then on the other today goes on about how the futures of commodities although high now will eventually lead us down the path towards recession.
Quoting him from todays Globe and Mail,
â€œUltimately, it means slower growth than otherwise would have been experienced in a range of markets, including in emerging market economies.â€
â€œThat will have an impact on the outlook for commodity prices and terms of trade â€“ a dampening impact,â€ Mr. Carney said.
â€œYou don’t see it in spot markets right now but you will likely see it going forward. That’s one channel through which this will come back into Canada.â€
Gee that is a pretty keen eye he has for futures and commodities markets. How about picking up a labour market report and using the same keen insight into all these lay-offs of high quality jobs. How about predicting what they will do to the economy.
Just a small point on arrogance.