Job jump: reason for optimism

Green shoot or red herring?

OTTAWA — Green shoot or red herring?

Economists were divided Friday on the truth behind an eyebrow-raising jump in the number of self-employed workers in Canada last month — a figure that left Prime Minister Stephen Harper cautiously optimistic and Statistics Canada wondering if it has a mole in its midst.

The numbers — a net gain of 35,900 workers, all in the lower-paying self-employment category — don’t mean the deepest recession in decades is approaching bottom, but they are an “extremely positive” sign of job-market stability, Harper said.

“Look, we’re not going to say that this is the end of job losses; there’s still a risk of increased job loss going forward,” the prime minister told a news conference in Ottawa.

“In terms of recessions, employment is the last thing to be hit and it’s also the slowest to recover. We don’t want to declare victory yet, but the very fact we’re seeing some positive numbers in the labour market is a very good sign.”

The better than expected gains also pumped up the Canadian dollar, which rose more than a full U.S. cent to a six-month high of more than 86.7 US cents — a spike that pointed to the possibility the numbers weren’t a total surprise to some.

Heavy trading in the loonie in London before the jobs report was released prompted Statscan to investigate whether the report was leaked before its official release at 7 a.m. Friday morning in Ottawa.

“It doesn’t look like there was any reason to believe that there was a leak from anyone at Statscan,” said Geoff Bowlby, the agency’s director of labour statistics.

“We keep this on a need-to-know basis. If there is any number at Statscan that’s heavily guarded it’s the labour force survey numbers.”

The jobs increase, which kept the official Statscan jobless rate for April at a seven-year high of eight per cent, belied a more pragmatic perspective: the economy actually lost 1,100 full time jobs in April, while gaining 37,000 self-employed jobs.

Overall, those numbers indicate thousands of workers were forced to turn to self-employment in April because they couldn’t find jobs or adequate Employment Insurance benefits, said the head of Canada’s largest labour organization.

Ken Georgetti, head of the Canadian Labour Congress, said the jobs increase is actually a measure of how bad things are in the manufacturing sector, where there have been major layoffs and plant closures in the auto, steel, forestry and machinery sectors.

“We’re seeing unemployed workers, especially older workers, turning to self-employment in desperation,” Georgetti said. “There is little out there in the way of job creation and far too many people can’t get Employment Insurance.”

Labour groups — and the federal Liberal, NDP and Bloc Quebecois opposition — have been pressing the Conservative government to loosen up EI rules to allow more workers to access benefits more quickly.

Ottawa has changed the EI rules to provide a few more weeks of benefits, but has not indicated whether it plans broader changes to loosen eligibility rules.

In Hamilton, Finance Minister Jim Flaherty characterized the increase as encouraging news. But while Canada was already in good fiscal health heading into the recession, there are still challenges ahead, he warned a business audience in Hamilton.

“Now there are glimmers of hope — I’m not going to put it any stronger than that,” Flaherty said. “We Canadians will come out of this recession stronger than ever.”

Less encouraging were the jobs numbers emerging from the United States, Canada’s key trading partner, where another 539,000 jobs were shed last month — fewer than projected but a disappointing result nonetheless, considering recent signs of life on the manufacturing, housing and sales fronts.

In the House of Commons, the Conservative government claimed vindication for its economic plan.

“It shows that our economic action plan is having a positive effect, helping to create and maintain jobs,” said Transport Minister John Baird.

Their political rivals weren’t biting, however.

“The only progress — and that is despite the government — is in the category of self-employment,” said Liberal MP Ralph Goodale, a former finance minister.

“In other words, Canadians are left to fight this recession on their own.”

Economists were divided on what the April numbers really mean.

“Now that’s a green shoot,” enthused economist Douglas Porter of BMO Capital Markets — a reference to the in-vogue term for encouraging economic indicators.

“This report is clearly good news, but it’s premature to send the all-clear signal.”

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