Employment number misses consensus; US consumers cutting back....will Canadians follow?; Another great CMHC video
MARCH 11, 2011
Employment misses consensus
Stats Canada released their most recent employment numbers today. The headline stat reported in most media outlets is the 15,000 net new jobs created in February. However, aside from that stand-alone headline, the report is actually very weak. Let's look at the good news and bad news contained in the report.
- Net employment gains amounted to an increase of 15,000 new positions in February.
- The three month gain in employment is not at 115,000 positions.
- Youth employment was a big driver of gains.
- The public sector added 10,000 new positions.
- Unemployment held steady at 7.8% (not sure if that should be good news or bad news...)
Unfortunately, there are a number of weak readings in this report...
- Market expectations were for a 25K increase in employment.
- Part-time employment rose by 39,000 in February but was offset by a decline in full-time work (-24,000).
- In the past 12 months, the growth in part time employment has been 5 times faster than the growth in full time jobs.
- The number of 'self-employed' workers increased by 26,000.
- Private sector jobs decreased by 20,000.
- Total full time employment has not returned to pre-recession levels.....and that's not adjusting for population increase.
- Private sector employment is still below pre-recession levels
- Construction employment has significantly outpaced general employment gains coming out of the recession. I have significant doubts that this will continue through 2011. This is particularly problematic as the industry employs 1.2 million people.
- Ontario- Employment in Ontario edged down in February. The unemployment rate also edged down to 8.0%, the result of fewer people participating in the labour force.
- Alberta- Employment in Alberta increased for the second consecutive month, up 14,000 in February. As a result, the unemployment rate edged down by 0.2 percentage points to 5.7%.
- BC- The unemployment rate jumped to 8.8% as more people entered the workforce.
It will be interesting to see if the Canadian economy can continue to add jobs at the stable pace it has for the past year in the face of declining construction and slowing consumer spending.
US consumers cutting back amid rising fuel prices
Protesters and government regimes are not the only casualties of the growing revolutionary currents in the Middle East. As gas prices have soared of late, consumers have begun quietly retrenching. While data always trickles in first from south of the border, it will be interesting to see if the rise in gas prices will sap our domestic consumer spending in lock-step.
One-in-three U.S. consumers (32 per cent) has already significantly reduced discretionary spending because of the increase of rising gas prices, according to the monthly RBC Consumer Outlook Index. With the national average price at approximately $3.20 per gallon at the time this survey was conducted (February 25-28, 2011) another one-in-five (18 per cent) say they would reduce spending if gas prices climb to $3.75 per gallon. Four-in-10 (41 per cent) place their pain threshold at $4.00 per gallon or more.
Interestingly, since the time of the survey, the average gas prices in the US have in fact surged by an additional 10% to an average of $3.50 as of March 1.
The debate continues as to whether or not high gas prices are net beneficial to an oil exporter like Canada. But with consumer spending making up such a hefty chunk of our GDP, I strongly suggest that it is a negative on balance. It remains to be seen just how stable these high prices will be and whether Canadian consumers will adjust their consumption accordingly.
Another great CMHC video
After we released the latest video primer on CMHC, we were alerted to another interesting video on the topic by one of the faithful readers. Enjoy!