Strong Output, Weak Payrolls
GDP Halfway Home
Canadaâ€™s Gross Domestic Product (GDP) blew past an important milestone in January. Output is now closer to the high-point attained before the crisis than to the low-point reached during the crisis.
Specifically, GDP (in chained 2002 dollars) peaked at $1,241 billion in July 2008 and plummeted to $1,185 billion in May 2009. By January 2010, it recovered to $1,217 billion. We are now $32 billion above the trough, but still $24 billion below the peak.
(As recently as the previous month, those figures were reversed. In December 2009, GDP was $1,209 billion, $24 billion above the trough, but still $32 billion below the peak.)
Manufacturing Roars Back
Januaryâ€™s rapid growth, 0.6% in just one month, was driven by an acceleration of the previous monthâ€™sÂ industrial recovery. Manufacturing expanded by an incredible 1.9%. Construction was close behind at 1.7%. GMâ€™s recent announcement that it will ramp up production in Oshawa and Ingersoll provides further evidence of a manufacturing recovery.
But the fastest-growing industry was wholesale trade at 2.9%. It is worth remembering that a similar jump in wholesale trade in November had presaged the start of an industrial recovery in December. Wholesale trade is, of course, the link between production and consumers.
Recovery for Whom?
However, Statistics Canada provided a sobering reminder that a recovery in output does not necessarily mean a parallel recovery in employment. This morning, it also released payroll data for January.
According the Survey of Employment, Payrolls and Hours (SEPH), employment decreased by 5,800 that month. Meanwhile, average weekly earnings edged up by a measly dime from $834.37 to $834.47: an increase of just over a penny a day.
Given that employees worked more hours in total, the implication of flat weekly earnings is that average hourly earnings actually declined. (But Statistics Canada has not yet released Janauryâ€™s SEPH figures on hourly earnings.) Certainly, todayâ€™s payroll figures indicate a monthly pay cut relative to inflation.
Combining todayâ€™s GDP and SEPHÂ releases suggests that Canadians are working harder and producing more, but getting paid less.