Not any more

Canadian, U.S. job reports expected to tell different stories

In Canada on August 2, 2010 at 14:57

OTTAWA — If the economists are right, this coming week’s economic data will paint a picture of employment trends in Canada and the United States that continue to head in different directions.

For those in Canada, breathe easy — you’re on the right side of the border that serves as a dividing line between a growing job market and a shrinking one.

July employment reports for Canada and the U.S. are both scheduled for release on Friday.

The median estimate among economists polled by Bloomberg is for a gain of 15,000 people working in Canada in July and the unemployment rate staying at 7.9 per cent.

While that would mark the seventh straight month of job gains for Canada, the expected increase might seem tepid in comparison to recent figures, including a surge of 93,200 people finding work in June and 108,700 in April, the latter of which set a record.

But it’s not like analysts were able to see the extent of those job gains coming. For those months, economists were calling for between 20,000 and 25,000 job gains.

In the U.S., economists expect 60,000 jobs disappeared in July. That would compare with the loss of 125,000 in June, which was the first month in 2010 to see a net decline in employment.

Sal Guatieri, senior economist with BMO Capital Markets, is among those who feel the July employment jobs data will continue to show stark differences in the nature of the Canadian and U.S. job markets.

Why the difference? Guatieri chalked it up mainly to a higher level of business confidence in Canada than the U.S.

“Business confidence did not fall as rapidly as it did in the United States during the recession because we did experience a much milder downturn than the U.S.,” he said. “Business investment has come back quite nicely in Canada. Companies are a little more optimistic about Canada’s economic outlook, and as a result, have been more inclined than American companies to hire.”

However, Guatieri said some of the recent jobs data for both countries have to be taken with a grain of salt. For example, Statistics Canada’s monthly payroll report — which polls employers rather than households like the more prominent labour force survey — shows much slower job growth.

For example, the payroll report for May showed 25,000 job losses while the labour force survey had about as many people finding work that month. For April, when the labour force survey showed almost 109,000 people added to the employed, the payroll report showed only 35,600 jobs added.

For the U.S., Guatieri said the addition of census jobs earlier this year disguised the fact that the private sector was not doing significant hiring.

Some economists such as Guatieri and Krishen Rangasamy at CIBC World Markets feel the pace of Canadian job growth went as low as 5,000 in July to even out some of the oversized gains of previous months.

“After pumping 227,000 jobs in the economy in the last three months alone, the Canadian labour market is likely to ramp down a notch in line with a slowing economy,” Rangasamy said in a research note.

Guatieri expects employment trends in Canada and the U.S. to become more similar later this year. He said Canadian job gains will be more moderate to more accurately reflect the pace of economic growth. And as the economic recovery inches along in the U.S., Guatieri said companies will get to the point where they need to hire to keep up with demand.

Besides the job numbers, Canadian economic data will also include June building-permit figures on Thursday and the Ivey purchasing managers index on Friday.

It will be a shortened business week in Canada because of the civic holiday on Monday, and several corporate earnings will be released from companies including Manulife Financial Corp., Yamana Gold Inc., Jazz Air Income Fund and Great West Lifeco Inc.

Postmedia News



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