Manufacturing AUTOMATION

Canadian, U.S. job gains beat expectations

October 7, 2011
By Julian Beltrame The Canadian Press

The Canadian and U.S. economies appear to be weathering the economic storm after both countries reported positive employment gains in September, a month when financial markets retreated amid recession fears.

The Canadian economy churned out 61,000 new jobs, all public sector or in self-employment, taking the unemployment rate to the lowest level since December 2008 at 7.1 percent. The return of teachers to school added nearly 40,000 jobs.

The news was even better south of the border, with a reported a gain of 103,000 jobs, and significantly upgraded results from the previous two months by about 100,000 jobs.

Given the trepidation that preceded the reports, with economists forecasting very moderate gains all attributed to specific, one-time factors, the employment results were like a breath of fresh air.

“What a way to end a week,” said economist Derek Burleton of the TD Bank. “Given the high level of anxiety, these numbers should provide some comfort. We were braced for a real downward swing…[but] the numbers in the U.S. and Canada have been holding up generally well.”

Economists had been expecting 15,000 new jobs in Canada and about 50,000 in the U.S. in September.

But even those caveats came with large asterisks. In Canada, a large cohort of education jobs – mostly rehires from summer layoffs – were expected to distort the data. In fact, the 38,400 increase in education workers accounted for much of the jobs pickup in Canada.

In the U.S., the return of 47,000 striking Verizon workers represented almost half the September gain.

As a result, economists were not as overjoyed by the results.

“Yes, we’ll always take an upside over a downside to jobs, but in doing our own job, we can’t exactly be over the moon,” wrote Derek Holt, vice-president of economics at Scotiabank.

Other aspects of the Canadian report showed the underlying softness in the labour market. About 39,000 of the increase was in self-employment, a category that often rises during slumps because workers can’t find regular employment.

In net, private sector employment actually fell by 14,900 and the manufacturing sector shed 23,500 jobs.

“But here’s where the rubber hits the road on the details,” Holt added. “Hours worked fell 0.3 percent. That’s key since GDP equals hours worked times labour productivity, such that a decline in hours worked means September GDP already faces downside risk.”

Still, there are positives to be taken from the data, particularly since employment in Canada had been flat the past two months. September’s gain means Canada has averaged 20,000-plus new jobs the past three months, consistent with moderate growth.

Outside of the education hires there were other strengths as well, including in the professional class, scientific and technical services, hotel and food, public administration and particularly natural resources, which gained about 17,000 jobs.

Aside from the factory sector, the biggest setback was the large 35,000 drop in employment in the finance, insurance, real estate and leasing industries.

Statistics Canada notes that employment in Canada remains relatively strong. Over the past year, the economy has created 294,000 new jobs, most full-time and most in the private sector.

Regionally, employment was up in eight of the 10 provinces in September, with the biggest increase being a 31,600 gain in British Columbia.

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