S. Is Real And It Is, Spilling Into Canada, And Will Continue

Category: Finance.

Recently, Statistics Canada came out with job numbers for February, indicating that the Canadian economy is still defying recessionary pulls from our neighbor south of the border.

At the same time, U. More specifically, Canadian employers added 43, 300 new bodies to their payrolls, which added up to just under 46, 400 new jobs added in January, and much better than 31, 000 reported in February of last year. S. employers culled the amazing number of 63, which represents the, 000 jobs highest monthly number since 200Job- wise, things are so- far- so- good in Canada. This remains the question. But for how long? While these numbers are certainly encouraging, investors should bear in mind that employment data are a lagging indicator of what is really going on within an economy. S. , the results of events that happened last year are showing only now in the labor market.

To illustrate, in the U. It means that, recessionary effects adversely, in Canada impacting our largest trade partner are likely to start showing in the labor market late in the summer, or thereabout. By the same token, the employment rate is at its historical high of 69% . Currently, the unemployment rate in Canada has been holding at its 33- year low of 8% . Wages have increased as well in February, showing a 9% annualized increase. Furthermore" beautifying" the labor picture in Canada was the fact that, for the second consecutive month, employment gains were nearly entirely comprised of full- time jobs. This represents the seventh month in a row whereby wages have increased by more than four percent.

Sector- wise, most new jobs came from Ontario s construction sector, closely followed by public service and administrative jobs, as well as professional, scientific and technological jobs. Perhaps the most surprised by Statistics Canada s findings were the economists, who were calling for a significant slowdown in the jobs market for the month of February due to export declines and recessionary woes in the U. They were even more surprised by Ontario s performance in this respect. According to Philip Cross of Statistics Canada, December GDP decline was a fluke and" did not signal a major disruption in the economy, but was more an isolated air pocket related to a combination of cutbacks in the auto sector, mostly because of model changes and bad weather. " On the other hand, Bay Street forecasters claim that hiring new employees during an economic slowdown simply defies economic logic, which is to say that January and February employment numbers should be perceived as a fluke, rather than the December GDP decline. So, is Canada s economy bouncing back or should the relative health demonstrated by the labor market be taken with a grain of salt, considering its lagging nature? I m more inclined to agree with the Street forecasters and say that we are merely enjoying the fact that the labor market lags behind the frontline economic events. S. is real and it is, spilling into Canada, and will continue.

I m afraid that the recession in the U. So, while I congratulate those who found new jobs last month, I also urge investors not to look into these numbers as a sign that the worst is over. Because it s not!