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Economy in Brief

Rebound in Canadian Labor Market after Summer Pause
by Carol Stone November 3, 2006

Canadian labor markets seem to be staging a comeback after something of a sinking spell during the summer. In October data reported this morning by StatCan, employment gained by 50,500 and the unemployment rate fell to 6.2%, the lowest since 6.1% in May and June.

Back in September we were puzzled about whether recent months' job losses were a sign of sagging activity, or merely a correction after an outsized rise in May. After two months of increases, we probably can conclude that the latter is the more valid conclusion. In October, at 16,555,500, employment in Canada reached a new high.

Further, the downtrend we thought we were seeing in the goods-producing sector may also be "just a phase". September and October had gains of 18,000 and 9,000, respectively, in construction, mining and utilities. We'd attribute these increases to added supply efforts in Canada's energy production. It is still the case that manufacturing jobs are declining.

Service industries have mixed performances. Some, like finance, business support services and accommodation and food services, are growing vigorously. But others, including professional and technical activities and information services, are waffling after extended uptrends. The service sector as a whole is gaining, but the sources of growth seem to be different most every month.

The unemployment rate fell 0.2 point in October. Not all of that move represents good news, though. Along with the employment growth, the number of people in the labor force flattened out. The so-called participation rate, the labor force as a portion of the population over age 15, has edged lower, reaching 67.08%, the lowest since February's 67.02%; this rate peaked at 67.34% in July. These may look like small differences, but in Canada, each 0.1% in the participation rate represents about 26,000 people who are seeking work or deciding not to seek work. All these caveats aside, the decline in the unemployment rate obviously contains more good news than bad, and we are encouraged by the October labor data, which indeed seem to confirm that the declines in the summer were perhaps a "vacation" and labor markets have picked up once again.

These national Canadian data are contained in Haver's CANSIM database. Some detail is also available for the Provinces; those data are in CANSIMR.

(Seasonally Adjusted)
Oct 2006 Sept 2006 Aug 2006 Year Ago 2005 2004 2003
Employment (000s) 16,555 16,505 16,488 16,268 16,169 15,949 15,672
Change, 000s/% +50 +16 -16 1.8% 1.4% 1.8% 2.4%
Goods-Producing +9 +18 -18 -0.4% 0.2% 1.7% 1.2%
Service-Producing +2 +2 +30 2.8% 2.1% 1.8% 2.7%
Unemployment (000s) 1,086 1,131 1,141 1,155 1,173 1,235 1,286
Unemployment Rate (%) 6.2 6.4 6.5 6.6 6.8 7.2 7.6
Participation Rate (%) 67.08 67.14 67.21 67.20 67.20 67.54 67.54
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