Growth disguises weakness

Canada’s economy has done a good job of recouping all the jobs lost during the recession — just not as good as the numbers suggest, a new TD Bank report concludes.

OTTAWA — Canada’s economy has done a good job of recouping all the jobs lost during the recession — just not as good as the numbers suggest, a new TD Bank report concludes.

The analysis, which comes a day before Friday’s data for December closes the books on 2010, notes that given the modest expectations, it was a strong year for job growth in Canada.

Dating back to July 2009, when the country stopped shedding workers, Canada has created more than 440,000 jobs, a greater number than was lost during the downturn. And through November 2010, the economy had generated about 350,000 jobs, well above even the most optimistic of forecasts.

But not everyone benefited equally, and many of the jobs created have not been of the same quality as those lost, say economists Derek Burleton and Sonya Gulalti.

“What the data shows is we had a pretty good year for employment growth, and a surprisingly good year, but under the surface less so,” said Burleton.

For instance, four provinces — Ontario, Alberta, Nova Scotia and New Brunswick — are all still below pre-slump employment levels.

And on the key measure of the participation rate — the number of workers employed as a percentage of the population — no province has returned to the pre-slump peak.

The report also points out that although recent months have seen an improvement, there are more part-time, self-employed and discouraged workers in Canada today than before the recession hit in October 2008. As well, hourly wage gains in 2010 averaged about 2.2 per cent, just barely above inflation, as opposed to close to four per cent in 2008.

The best performers in terms of job creation last year were Newfoundland, Prince Edward Island, British Columbia, Manitoba and Quebec.

Ontario’s weakness stems from continuing troubles in the manufacturing sector, say the TD economists, who add that factories will likely continue to struggle under the weight of the strong loonie, which dampens exports.

Thursday’s Ivey purchasing manager’s general index of large manufacturers added some hard data to the analysis, showing a massive 7.5 point fall-off in December to 50.0, the lowest level in a year. The employment gauge also dropped by 7.5 points to only 47.3, the lowest since last February.

The TD jobs report is not the first to point out underlying weaknesses in Canada’s employment record, which has still outpaced many industrialized countries and remains far better than what has occurred in the United States.

Earlier this week, Canadian Auto Workers economist Jim Stanford wrote that while Canada was leading the G7 countries out of recession as the year began, the latter half of the 2010 was not as impressive.