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Canadian Employment: Bad or Good news?


This morning the numbers for job creation were reported with a small drop for the month of March 2011, 1,000 jobs were lost instead of 28,000 created – as per the market’s expectations.  Now that’s bad news on the surface.  Dig a little (and since its on line 4 of the StatsCan report you don’t have to dig very deep, the underlying is that 91,000 full time jobs were created and 92,000 part time jobs were eliminated.

That’s good, because few people work part time out of choice.  Hence the U6 unemployment in the U.S. is around 15% (while unemployment is around 9%), because some people have part time jobs when the want full time work.  So this is good-“ish” news for Canada. 

Yesterday’s building permit for February came out at +9% which somewhat erases the precipitous fall in new permits for January.  Most of the gain was in the non-residential sector (not entirely surprising as if you are going to buy machine tools and equipment you will require space in which to install them.

These factors says nothing for the direction of monetary policy; we still have to see what’s going on with income growth.  However, the door to interest rate normalization is open the question is when will the BoC take action.  BMO is of the opinion that interest rates will be around 2% by year end… we shall see.  Canada’s economy is performing much better than the BoC had anticipated last year (target of 2.4% to 2.5% GDP growth), when in reality Q1 numbers are almost certain to generate GDP growth in excess of 4% (on an annualized basis).  

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