Canadian job gains defy forecasts
By Julian Beltrame, THE CANADIAN PRESS
OTTAWA - A whopping 43,000 new jobs were created in February, stunning economists and creating a widening jobs gap with the United States that suggests Canada may be able to ride out a mild U.S. recession.
Statistics Canada said Friday the country's unemployment rate remained unchanged, at a 33-year low of 5.8 per cent, shrugging off the storm clouds that have swirled for months, including a shrinking trade surplus and gross domestic product,
In contrast, the United States shed another 63,000 jobs in February.
Finance Minister Jim Flaherty said in London, Ont., that he was particularly pleased with the jobs growth in Ontario. Its battered manufacturing sector lost 20,000 more jobs but the province still added 46,000 jobs, mostly in construction and public service.
"This is a good development. We have economic growth in all regions of the country and people are able to adjust to get new jobs," Flaherty said.
Still, the jobs picture shocked most analysts. For the second straight month, predictions of a jobs slowdown were dismissed by the real economy.
Like last month, Canada's job report surprised both in the aggregate number and in the details. The job gains were once again mostly full-time, private-sector and were concentrated in Ontario, where the slowing U.S. economy is supposedly being felt the most.
"We are knocked off our feet like everyone else," said Dale Orr of Global Insight, which Friday downgraded Canada's growth rate this year to 1.6 per cent, from 1.9 per cent projected last month.
"There is, unfortunately, an ominous side to this," Orr added. "It is happening in an economy where the pace of output is very weak, meaning labour productivity this year is going to be very close to zero."
That suggests that the impressive jobs numbers can't last, said CIBC senior economist Avery Shenfeld, but it also means that Canada likely won't fall into recession.
Canada avoided following the U.S. into the 1973-75 oil shock recession and the 2001 technology slump, and will likely avoid the current U.S. subprime recession, Shenfeld said, although the manufacturing sector will continue to suffer.
"Since Canada never had much of a subprime market, there was nothing to blow up (in Canada) in the first place," he pointed out. "The best defence against recession in Canada is the consumer sector and with the job growth and some very nice wage gains to go along with it, there's still a lot of spending power in the hands of Canadians."
Pay gains also remained strong in February, with the average hourly wage up 4.9 per cent from a year earlier - more than double the rate of inflation.
The employment news initially helped send the Canadian dollar up around nine-tenths of a cent. But the currency slipped later in the day and closed down 0.27 cent at 101.05 cents US.
"To say that today's employment numbers were stunning simply doesn't do the outcome justice," commented TD Bank economist Craig Alexander.
"In fact, we've run out of superlatives to describe the remarkable strength in the labour market at a time that the other monthly economic reports are signalling slowing economic growth."
February also saw another record being set with 63.9 per cent of Canadian adults now holding down a job, as the economy added 361,000 jobs over the past 12 months.
But the Canadian Labour Congress pointed to "a disconnect between the slowing economy we all see and the numbers published by Statistics Canada."
Said CLC president Ken Georgetti: "Can this apparent strength of the job market continue when there are so many announced or expected layoffs and plant closures due to the high dollar and rising energy costs?"
Few economists think so, although Orr said he expects the strength in construction to have legs because Canadians are taking advantage of low interest rates to buy homes.
The Bank of Canada dropped the key overnight rate to 3.5 per cent this week and many are forecasting a further half point cut in April, which is likely to lead to even lower mortgage rates for prospective home buyers.
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The national unemployment rate was 5.8 per cent in February. Here's what happened provincially (previous month in brackets):
-Newfoundland 13.1 (12.2)
-Prince Edward Island 7.8 (8.3)
-Nova Scotia 7.7 (7.4)
-New Brunswick 8.1 (8.2)
-Quebec 7.0 (6.
-Ontario 6.1 (6.3)
-Manitoba 4.2 (3.
-Saskatchewan 4.1 (3.9)
-Alberta 3.5 (3.2)
-British Columbia 4.1 (4.1)
The national unemployment rate was 5.8 per cent in February. Statistics Canada also released seasonally adjusted, three-month moving average unemployment rates for major cities but cautions the figures may fluctuate widely because they are based on small statistical samples. (Previous month in brackets.)
-St. John's, N.L. 7.6 (7.0)
-Halifax 4.4 (4.5)
-Saint John, N.B. 5.0 (4.6)
-Saguenay, Que. 9.1 (8.3)
-Quebec 4.9 (5.2)
-Trois-Rivieres, Que. 8.5 (8.1)
-Sherbrooke, Que. 5.9 (6.3)
-Montreal 7.1 (6.9)
-Gatineau, Que. 4.3 (4.3)
-Ottawa 4.6 (4.4)
-Kingston, Ont. 5.4 (5.2)
-Toronto 6.5 (6.7)
-Hamilton 5.9 (5.9)
-Kitchener, Ont. 5.2 (5.3)
-London, Ont. 6.8 (6.7)
-Oshawa, Ont. 6.3 (5.7)
-St. Catharines-Niagara, Ont. 6.3 (6.2)
-Sudbury, Ont. 5.4 (5.0)
-Thunder Bay, Ont. 5.3 (6.3)
-Windsor, Ont. 8.7 (8.7)
-Winnipeg 4.4 (4.5)
-Regina 4.0 (4.2)
-Saskatoon 3.3 (3.5)
-Calgary 2.8 (2.9)
-Edmonton 3.7 (3.6)
-Abbotsford, B.C. 4.5 (3.6)
-Vancouver 3.8 (4.4)
-Victoria 3.4 (3.1)
http://cnews.canoe.ca/CNEWS/Canada/2008 ... 15-cp.html