StatsCan report will shed light on growth

Canadians workers could be in for the most encouraging news in months Friday, just in time for Labour Day — a return to job creation coinciding with the first positive economic growth in almost a year.

OTTAWA — Canadians workers could be in for the most encouraging news in months Friday, just in time for Labour Day — a return to job creation coinciding with the first positive economic growth in almost a year.

Jobs is often called a lagging indicator, so the consensus is that Statistics Canada will report the country shed another 15,000 jobs last month.

But at least one economist, CIBC chief economist Avery Shenfeld, is predicting just the opposite, saying up to 15,000 jobs may have been created during the month.

Last week, StatsCan reported that Canada’s economy began to expand ever so slightly in June, and forecasters widely expect the momentum continued both in July and August, particularly with federal infrastructure dollars flowing to various projects during the summer months.

“Usually recessions begin when employment is declining and recessions end when employment is growing,” said Shenfeld, who went on to add that the lagging-indicator mantra can be overstated.

Normally, the unemployment rate often continues to rise months after economic expansion begins because the new jobs created are not sufficient to overcome population growth and discouraged workers returning to the workforce.

In some cases, like in Canada and the United States in 1991-92, recession was followed by a so-called jobless recovery and a similar pattern appears to be emerging south of the border this time.

Despite what many expect to be a banner third quarter of growth, the consensus is that the U.S. lost another 250,000 to 300,000 jobs in August and will continue to shed workers for at least several months more.

The outlook is brighter in Canada, said Bank of Montreal economist Douglas Porter, in part because this country’s job market has held up far better in comparison, and also because Canada’s domestic economy is far stronger.

“We are seeing more strength in domestic spending and that tends to have an impact on jobs, albeit it will be low productivity jobs,” he said.

“If Friday’s report is positive (on job numbers), I think a lot of people are going to jump all over that as proof positive the recession is over,” he added.

Any growth in jobs, or even flat reading, would be welcome, particularly since July saw a surprisingly large 45,000 contraction in jobs. Since fewer people were looking for work, that kept the unemployment rate at 8.6 per cent.

Few economists are expecting another such downside shock.

Of course, Canada’s labour market is a long way from where it was last October at the beginning of what appears to have been a relatively short but also deep recession, during which economic output fell 3.3 per cent in 10 months.

During the period, 414,000 jobs disappeared and tens of thousands of employees went from full-time employment into part-time work. Many others saw their hours reduced, and others became what analysts call “involuntary entrepreneurs,” meaning they chose to try and create their own job when they lost their old one.

The biggest victims were youth, a norm in most recessions, and somewhat unusually, adult males, particularly in manufacturing, construction and forestry. About half of the job losses was of males in the 25 to 55-year age group.

Labour economists Erin Weir of the United Steelworkers is not quite ready to call an end to the hard-hat recession, however.

He believes Canada is entering the first of three phases of job recovery — one that sees job losses continue, although fewer in number in the face of modest economic growth. It won’t be until the economy fully recovers, perhaps in 2011, before strong job growth resumes in Canada, he predicted.

“One thing that’s happened is not just a bunch of people being laid off, but people have had their hours cut back, people have been converted from full time into part-time jobs, so that puts employers in a position where they can increase production by getting their existing employees to work more hours,” he explained.

In addition, Weir said the population has increased and the recession has sapped savings, so that some elderly Canadians hoping to retire may instead re-enter the labour force.

“So you need not just a hint of economic growth, you need strong growth to create jobs for all those people,” he said.

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