OTTAWA — Prospects for the North American economy brightened a shade Friday with the release of fresh data showing job gains entrenching in Canada and finally emerging in the critical U.S. market.
Canada’s unemployment rate slid to 7.9 per cent last month — the lowest since June — on thin net job creation of 3,000 and fewer people looking for work.
More important for the overall economy is that the U.S. finally appears to be coming out of the doldrums. October saw 151,000 new jobs created, more than twice what had been expected, and revisions added 100,000 jobs to the previous two-month tally.
“Arguably, the U.S. employment report is more important to Canada than Canada’s employment report,” explained Douglas Porter, deputy chief economist with BMO Capital Markets.
“The reasoning is, if the U.S. economy does well, then the global economy does well and commodity prices do well and Canada benefits from a strong U.S. economy.”
Manufacturers and exporters also stand to benefit from a stronger U.S. economy, particularly if American households resume spending on autos and homes.
The results were far from stellar — particularly in Canada — but markets took some solace from the better-than-expected U.S. numbers and that there were no signs of retreat in Canada.
The Canadian dollar briefly peeked above parity in early trading before finishing the day up 0.2 of a cent at 99.96 cents U.S.
In other economic indicators, Statistics Canada said the value of building permits increased 15.3 per cent to $6.6 billion in September, making up for declines in the previous two months of declines.
The new reports point to an economy that is inching forward on both sides of the border, but is far from fully recovered.
The American unemployment rate remains at 9.6 per cent, and if discouraged workers are included, the jobless rate approaches an alarming 17 per cent.
Even Canada’s 7.9 reading is a full two points higher than the lows reached in 2008, before the global crisis hit. If population growth is added to the calculation, the jobless rate is close to three per cent higher.
The Canadian Labour Congress points out there are still 102,000 fewer full-time jobs today than was the case two years ago.
The weakness was seen as sufficiently worrying that U.S. Federal Reserve chairman Ben Bernanke this week resorted to a second round of quantitative easing, unveiling a plan to inject an additional US$600 billion into the economy.
Bank of Canada Governor Mark Carney has not followed suit, but last month ended his tightening bias and held the policy rate at one per cent.
But the numbers are indicative of a recovery that is sinking its roots deeper with each passing month, if ever so slowly, analysts say.
The U.S. has created over 800,000 jobs in the past year, retracing a portion of the eight million lost during the recession.
Canada, has added 423,000 jobs since last July, offsetting the 417,000 lost during the economic crisis, even though the vast majority came in the first half of 2010.
Although October’s numbers were basically flat, economists pointed to several underlying strengths — there were 47,000 more full-time jobs and 38,000 of those were in the private sector.
Part-time employment declined by 44,000, and self-employment was down by 24,000.
“It was a case of in with the good jobs, out with the bad,” said CIBC’s Avery Shenfeld. “The country traded full-time jobs for fewer part-time positions, paid employment for typically lower-paid self employment and private sector hiring for a smaller public sector.”
And the economy has added 164,000 full-time jobs over the past three months, an indication employers are increasing the hours worked by their employees.
The biggest gains in October came in the goods-producing sector, led by a 21,000 increase in construction, and 10,000 in manufacturing.
The number of people working in the service sector declined by 33,000, with losses concentrated in retail and wholesale trade.
Hourly wages rose by 2.1 per cent in October over last year.
While net employment appears to have stalled of late to just over five thousand a month, Canada has seen a marked bounce-back from the recession.
Not all sectors have rebounded, however. The agency noted that manufacturing remains 10.8 per cent below pre-crisis levels, with significant losses in Ontario and Alberta. As well, transportation and warehousing jobs are down 5.4 per cent, and employment in natural resources remains 2.6 per cent lower.
Youth have been the most affected, with employment still down 7.8 per cent from the pre-recession level.