Employment, Interest Rates and Construction

Canadian economic data doesn’t make the headlines as it does in the U.S.  However, as the G-7 best performing economy (still not sure this is a compliment!) data out of the “Great White North” is interesting because as an open (ish) economy what happens here can be seen as an early warning system.

First, the data:

• September employment numbers were -6,600 instead of +10,000.  Although the headline was a little worse than the underlying data; 43,000 temp jobs were lost and 37,000 permanent jobs were created. 
• Losses were uneven across the country, Ontario did the worse losing 23,000 and Quebec did the best with 15,000 new jobs.  On that note, Quebec has created more than 122,000 jobs over the past 12 months.  Quebec’s economy is 1/50^th that of the U.S., so Quebec’s job creation performance is the same as if the U.S. had created 6.4 million jobs.
• New permits for construction are off by nearly 10% in August, a further indication that Canada’s economy is slowing down rather fast.
• According to David Rossenberg, Canada’s performance in Q2/2010 and Q3/2010 now appears to be worse than that of the U.S.

What does this mean?

First, the Bank of Canada’s window to increase interest rate is quickly closing. In fact, since the beginning of the summer 2010, economic data for Canada has underperformed that of the U.S.  Although, I suspect that the large U.S. banks are about to hit a massive brick wall with the mortgage mess which is getting bigger every day, and more dangerous.