Jobs Report Worse Than It Appears
Total employment reportedly increased by 36,000 in August. This increase was entirely driven by 68,400 more jobs in educational services, which simply offset a decline of 65,300 in July. In other words, the educators that Statistics Canada counted as being â€œunemployedâ€ in midsummer are now â€œemployed.â€
So, todayâ€™s Labour Force Survey confirms that Julyâ€™s release was less bad than it initially appeared. However, for the same reason, August was worse than the headline number suggests. Factoring out the 68,400 â€œadditionalâ€ jobs in education implies that employment actually decreased by 32,400.
Indeed, Statistics Canada reports that there were 39,900 fewer employees in the private sector in August. In particular, manufacturing shed a further 25,600 positions.
Despite the reported decline in unemployment among educators, total unemployment still rose by 17,800. The official total is now back above the 1.5-million mark.
Todayâ€™s gloomy numbers raise more questions about Wednesdayâ€™s decision to hike interest rates yet again. The data point not to a tight labour market stoking inflation, but to a weak labour market in need of further stimulus.
In particular, job losses in manufacturing, transportation, and accommodation – as well as yesterdayâ€™s international trade figures – suggest that the high Canadian dollar is hurting export and tourism industries. The Bank of Canada repeatedly hiking interest rates, as the US Federal Reserve stands pat, aggravates this problem by putting upward pressure on the exchange rate.
The federal governmentâ€™s temporary five-week extension of Employment Insurance benefits expires this month (September 2010). With more than 1.5 million Canadians still officially unemployed, the government should renew that benefit extension.