Canadian employment beating odds for now; 24,700 jobs added in May

The Canadian Press ~ The News
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The Canadian economy keeps beating expectations and most of the industrialized world in its ability to create jobs.
But market reaction was muted at best Friday as U.S. jobs numbers were dismal and a new wrinkle in the European sovereign debt crisis cast a cloud over global growth, calling into question just how far ahead of its peers Canada's economy can remain.
The Canadian economy seems very far ahead of its peers now - particularly in the repairing of its labour market - with Friday's report that 24,700 new jobs were added in May and an astounding 67,300 full-time jobs, most of them from employers and in the private sector.
With such underlying strong numbers, the news that 28,000 self-employed and 42,500 part-time jobs vanished was interpreted as an indicator of underlying strength - employers turning part-timers into full-timers and the involuntarily self-employed finding a regular paycheque.
"This is very, very solid. There's no other way to characterize it after a record April," said economist Benjamin Reitzes of BMO Capital Markets.
"It just highlights the domestic strength in the Canadian economy despite all the stuff going on all over the world, the weakness in financial markets and continued worries out of Europe."
More impressive is that the fresh data is part of an ongoing pattern. Canada has added 310,000 jobs since July and 215,000 since the beginning of the year.
Compare that to Europe, which is in full-fledged crisis and was confronted with another problem Friday after a spokesman for Hungarian Prime Minister Viktor Orban was quoted as saying the nation's economy was in a "grave situation."
Or the U.S., which has yet to make a dent in the 8.5 million jobs lost during the recession and issued another disappointing jobs report for May, showing that while 431,000 net workers were added, almost all were temporary census takers.
Those two negative factors were blamed for steep losses in North American markets Friday, and the Canadian dollar taking another nosedive of more than a cent to below the 95-cent US level in midday trading.
While the market reaction may appear counterintuitive, particularly as regards the loonie, analysts said investors were registering future concerns about how Canada can fare in what is becoming a darkening global picture.
"Canada can't decouple from the U.S. and Europe for long," said Brian Bethune, IHS Global Insight's Canadian chief economist.
"Canada has to sleep in the same bed as the U.S. and to presume there can be stronger growth sustained in Canada than the U.S. is just a pipe dream."
Bethune said there were already signs of braking in the fact May's jobs data contained a slight decline in the export-oriented goods producing sector. Construction jobs also fell, an indication the housing boom may have ended.
Other economists have also predicted that Canada's 6.1 per cent growth rate registered in the first quarter of the year cannot be sustained and that there will be a pronounced slowing in the second half of the year.
CIBC's Krishen Rangasamy said Canadians shouldn't expect to see the unemployment rate to show dramatic improvement from the current 8.1 per cent, where it was last month as well, over the rest of the year. May's job growth did not move the jobless rate because more Canadians are returning to the labour market in the expectation that work is now available.
But unlike Bethune, Rangasamy argued that Bank of Canada governor Mark Carney was justified in pushing the trigger on the 25-basis point interest hike this week, the first among the G7 group of big industrial economies to do so.
"But a pause in rate hikes by the end of the year is likely," he added, "if, as we expect, a likely U.S. slowdown in the second half of the year, coupled with fading fiscal stimulus restrain Canada's growth."
For now, however, Canada is in a different world from its G7 peers.
Canada suffered less than most during the recession, and already 75 per cent of the 417,000 jobs lost during the year-long slump have returned.
The government agency said the key gains last month came in the transportation and warehousing industries, as well as health care and social assistance, and public administration.
There were setbacks in the accommodation and food services sector, information, culture and recreation, and in natural resources.
If there was a soft spot in the May numbers, it was that the goods-producing sector, including construction and manufacturing, was relatively flat, although both had experienced gains of late.
Regionally, Quebec, Saskatchewan, British Columbia and Prince Edward Island saw employment fall back, although only the last two by significant amounts relative to their population. Big job gains occurred in Ontario, 17,700 gain, and Alberta, 14,700.
Hourly wages rose 2.4 per cent from last year, still clear of the inflation rate.

Organizations: BMO Capital Markets, G7, CIBC Bank of Canada

Geographic location: Canada, U.S., Europe Quebec Saskatchewan British Columbia Prince Edward Island Ontario Alberta

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