Canadian (un)employment – the worst is yet to come

Here are the Canadian employment numbers courtesy of Statistics Canada that tell the story of 2014. Jobs losses were 4,300 with full time employment increasing 53,500 and part-time decreasing 57,700. For the year, employment rose by 185,700.

Canadian Labour Force (month/month and year/year)

Let’s keep in mind, however, that employment numbers are a lagging indicator. The drop in oil prices and the knock on effects in oil sands jobs will be reflected in the coming months. This is in turn should also see a multiplier effect in the form of housing and jobs dependent on growth in the resource sector.


2 thoughts on “Canadian (un)employment – the worst is yet to come

  1. What are your thoughts on the impact of the lower loonie on other parts of the economy, like automobile manufacturing/exports? Seems like oil and currency moves will result in a net shift of jobs from Alberta to Ontario, and we may not see a big change in the headline number. The oil patch would pay better overall, so perhaps a net reduction in wages…though more than offset by higher disposale income enjoyed by everyone courtesy of lower fuel costs.

    • I am not different to anyone else as my qualitative views are based on a model of the macro economy in relation to other factors and the feedback loops they entail as well as the political economy of the domestic market.
      It is a net positive for Ontario and Quebec manufacturers but will Canadian manufacturers increase output by hiring more labour like they have traditionally done or invest in capital? Furthermore, how long will the increased output to the US market last given that the American expansion is already long in the tooth by traditional standards.
      Despite Central Banks attempts, the business cycle is alive and well and remains an essential component of a market economy.
      Imports for Canadians become more expensive so there is a drag on domestic consumption there.
      Central Bank action which encourages asset price increases in the form of real estate and stock appreciation begets further central bank easing when there is an over-reliance on the portfolio channel without concurrent rise in wages; we have seen this repeatedly over the past generation.
      The lower prices at the gas pump are a tax refund to families but short of people purchasing bigger vehicles will it create the necessary multiplier effects for domestic demand?
      I am less optimistic as I am expecting further falling of oil prices and bankruptcies in the oil patch. How this will affect the builder commitments and the economic capital at risk of the major banks remains to be seen. Remember, we are having this discussion in the context where household debt to income is at 162% and the majority of Canadians carrying a large amount of consumer debt as well. You are well aware of this. I don’t foresee a crash but certainly not robust expansion. I remain in the low growth to recession like camp and like this time last year, I remain long on long bonds.

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