Canadian unemployment dropped to 7.6%

Apparently in November America created only 39,000 jobs (market was hoping for 150/200k), whereas in Canada 15,000 were created (Canada’s economy is roughly 1/10 that of the U.S.). Canadian unemployment rate drop to 7.6%, mainly because of a drop in the labor force, mainly because of youth participation dropping (a seasonal factor).  Over the past 12 months, nearly 318,000 jobs were created (+1.9%). 

(Source: StatsCan)

Underlying numbers were less stellar as all the growth in jobs was from part time work, full time employment actually declined:  Not entirely surprising the bulk of the cuts came from the manufacturing sector – even when the economy recovers it is more than likely that manufacturing is permanently displacing workers (as attested by the dramatic (+30%) surge in plant and equipment investments over the past 2 quarters).  Services (Insurance and finance were also targeted)

In terms of regional differences, the biggest winner was Ontario, with Quebec and Manitoba loosing employment.  The other showed virtually no shift in employment.

The most interesting aspect to emerge from the data is that number of hours worked rose by 0.7% (which is good) and wage bill rose by 0.5%, another indicator that the economy is doing well.  

(Source: national Bank of Canada)

What is hurting Canada’s open economy is the strength of the Canadian dollar that is once again flirting with parity this morning – the two most important factors affecting the Canadian dollar is the price of oil and the S&P 500 (positive correlation in both cases).  At the very least the employment picture seems to support a stronger GDP (than in September) for the 4^th quarter.  Income is growing; obviously the employment picture would be better if it were full time jobs that were created.  Finally, Canada’s 7.6% unemployment rate is still elevated, but the recovery is proceeding well.

[Note:  Canadian Unemployment Statistics:  American and Canadian unemployment levels are measured differently, in a like for like comparison, 0.9% must be removed from the Canadian figures to compare “apples with apples”]