OTTAWA — A few new forward looking indicators are offering a glimmer of hope —amid a generally bleak backdrop — for the economy and job prospects in the coming months.
The Conference Board of Canada said Wednesday its help-wanted index returned to positive territory in December after a couple of months of negative readings, with 14 of 26 metropolitan areas showing a rise in job prospects.
As well, the Canadian Federation of Independent Business reported its latest survey of firms found confidence climbed to 65, almost a point and a half above the November finding and close to what would be considered normal for an expanding economy.
Most economists predict Canadian growth this year of less than two per cent, which is too feeble to help many of the 1.5 million unemployed Canadians find jobs.
So far, most of the encouraging economic news has come from south of the border, where the United States economy continues to outperform expectations.
Many experts now expect the U.S. economy will post a higher rate of growth than Canada in 2012 for the first time in five years. That would remove one of the key risk factors identified by the Bank of Canada for the Canadian economy, which is heavily invested in the U.S. consumer market.
Europe, however, remains a large and threatening storm cloud feared by policy-makers and markets.
In recent weeks, the U.S. posted positive results in manufacturing, retail sales, consumer confidence, employment and even housing, which is at last showing signs of being on the mend.
“Think back four and five months for reference and the talk was of a recession in the U.S.,” said Douglas Porter, deputy chief economist with the Bank of Montreal.
“Now there is a feeling there’s a little bit of a virtuous circle happening in the U.S.”
None of the new data and confidence indicators are sending economists back to the drawing board and recasting projections of at best slow, laborious expansion in 2012 and 2013, with minimal jobs growth.
The consensus for Friday’s employment report from Statistics Canada is that the year will end with a middling 20,000 jobs gain, and that the unemployment rate will remain fixed at 7.4 per cent.
Even that is a rosy view to some. Scotiabank’s Derek Holt said many economists are likely assuming that since 73,000 jobs were lost during the previous two months, a little make-up is in order.
Holt believes that the opposite is likely the case, however. Canada’s labour market is now paying back for a insupportable creation of about 200,000 new jobs in the first six months of 2011.
Employment went south in the second half of the year. In fact, if Friday’s number shows no employment gain, as Holt expects, the last six months of the year would have seen an overall loss of 20,000 jobs, the first extended period of flat or declining employment since the recession.
Analysts expect this year’s jobs record will mimic last year, with the proviso that most of the gains will come in the second half of the year, when the economy is projected to be stronger if European leaders put in place the measures needed to stabilize their debt crisis.
In an update published Wednesday, the Toronto-Dominion Bank said it now believes Greece will be forced to default in the first half of the year, sending Europe into a recession and impacting the Canadian economy indirectly. As well, Canada’s economy will be held back by high household indebtedness and government spending restraints.
The report also warns of a housing correction in British Columbia and Ontario, with prices dropping 3.5 per cent and 1.8 per cent respectively in 2012. TD says the price pressures will be particularly acute in Vancouver and Toronto’s condo market.
“No provincial economy will thrive spectacularly in such a volatile, uncertain environment,” the paper states — only Alberta, Saskatchewan, Newfoundland and Prince Edward Island posting plus two-per-cent growth.
The business survey, while positive overall, still suggests small and medium-sized firms remain cautious about adding on employees in the risky economic backdrop.
Only 15 per cent of respondents said they expected to add employees in the next three or four months, while 16 per cent said they planned to cut staffing, about the same, mixed level of hiring intention found in the November survey.