This report is both worse and better than anticipated. The reality of Canada's unemployment rate drop is entirely driven by a fall in the participation rate, as few new jobs were created in July, but potential workers got discouraged.
(Source: StatsCan)
Addendum: I must add that total job created in the month was 7.1k (expectation of 15k, and 28k in June). In terms of private sector creation it was +28k full time jobs and -18.4k part time jobs -- full time jobs are always better than part time jobs.
On a year-on-year basis the picture is "positive" insofar as 252,000 jobs were created in the private sector, while 72,000 jobs were lost in the public sector. We anticipate that this trend will continue, as the Federal government is looking to cut its budget by nearly $4 billion for the 2014/15 budget term, so that the budget deficit of 2010/11 is reverse to a surplus.
While Canada's Q2/11 GDP growth appears to be flat, the Bank of Canada is still working off a script for 2.5% GDP growth for the year as a whole. It is not an unreasonable growth rate for Canada, and if achieved (and the BoC has factored in the targeted cut in the public sector), Canada has a solid chance of reducing its structural budget deficit from the current 3% level all the way to zero.
As for yesterday's stock market activity, there is little to justify this sudden drop; all the big elements have been well known for months -- the US budget problems (QE2 ending), the PIIGS, the plight of the the Euro and the weakness of the Europe's over leveraged banking system. Yet, the markets plunged! It may also fall of the cliff today (it all depends on the U.S. non farm payroll -- anything below 85k could be a disaster, anything above 150k could be a huge -- but temporary)
(Source: StatsCan)
Addendum: I must add that total job created in the month was 7.1k (expectation of 15k, and 28k in June). In terms of private sector creation it was +28k full time jobs and -18.4k part time jobs -- full time jobs are always better than part time jobs.
On a year-on-year basis the picture is "positive" insofar as 252,000 jobs were created in the private sector, while 72,000 jobs were lost in the public sector. We anticipate that this trend will continue, as the Federal government is looking to cut its budget by nearly $4 billion for the 2014/15 budget term, so that the budget deficit of 2010/11 is reverse to a surplus.
While Canada's Q2/11 GDP growth appears to be flat, the Bank of Canada is still working off a script for 2.5% GDP growth for the year as a whole. It is not an unreasonable growth rate for Canada, and if achieved (and the BoC has factored in the targeted cut in the public sector), Canada has a solid chance of reducing its structural budget deficit from the current 3% level all the way to zero.
As for yesterday's stock market activity, there is little to justify this sudden drop; all the big elements have been well known for months -- the US budget problems (QE2 ending), the PIIGS, the plight of the the Euro and the weakness of the Europe's over leveraged banking system. Yet, the markets plunged! It may also fall of the cliff today (it all depends on the U.S. non farm payroll -- anything below 85k could be a disaster, anything above 150k could be a huge -- but temporary)