Tags: Canada | US | Jobs | Growth

Canada Outshines US With Stunning Jobs Growth

Friday, 07 Oct 2011 11:20 AM

Canada churned out a stunning 60,900 jobs in September, once again outshining the United States with an economy that is humming along even as other rich nations struggle with debt and slumping confidence.

The jobless rate fell unexpectedly to 7.1 percent from 7.3 percent in August, Statistics Canada reported Friday, compared with a U.S. rate that has stayed stubbornly above 9 percent. The U.S. unemployment rate was 9.1 percent in September.

Adjusted to take account of the relative sizes of the two economies and slightly different statistical methods, Canada's gain in new jobs would be comparable to half a million new U.S. positions. U.S employment rose 103,000 in September.

"It's a blockbuster report," said TD Securities macro strategist Mazen Issa.

Though Canada's economy contracted marginally in the second quarter, largely due to temporary factors, the country, the world's 10th largest economy, emerged from the last recession in a stronger position than the U.S. and many other mature economies. Officials expect modest growth in the second half.

More cautious Canadian banking practices meant there were no subprime mortgage crisis and no government bank bailouts, and consumers kept spending and borrowing. Housing prices remain strong, and already in January Canada had regained all the 428,000 jobs it lost in the 2008-09 crisis.

The September job gains far exceeded the median forecast of 10,000 new jobs in a Reuters survey of economists after August's decline of 5,500. The most optimistic forecasters had predicted 30,000 new positions in September.

Adding to the positive news, September saw 63,800 full-time additions, while part-time employment declined by 2,900.

One caveat is that 38,400 of the new jobs were in education, as teachers and assistants returned to work after summer layoffs. Statscan adjusts for seasonal factors — the unadjusted job growth in education was 242,000 in September — but says there has not been enough of a pattern in this sector to eliminate all summer fluctuations.

The unemployment rate was Canada's lowest since December 2008, and appears to reflect the greater speed with which Canadians who lose their jobs manage to return to work.

An out-of-work American has about a 15 percent chance of leaving unemployment in a month, while in Canada the chances are about 33 percent, a recent Statscan study shows. About 50 percent of Canadians laid off between 2008 and 2011 got a paid job within four months, up from 42 percent in the previous two recessions.

Some analysts suggest this is because the construction sector is so much healthier than in the United States. Canada's larger public sector could also play a role, since civil servants are more likely to be find jobs quickly.

KEEPING RATES LOW

The data tempered market expectations of a rate cut by the Bank of Canada. Overnight index swaps, which trade based on expectations for its key policy rate, showed that traders cut the odds of a rate cut this year or next.

"The Bank of Canada is probably more convinced the economy is picking up and doesn't require further stimulus," said Sal Guatieri at BMO Capital Markets.

However, Royal Bank of Canada chief economist Craig Wright added that while the numbers were a pleasant surprise, domestic issues have never been the main challenge for policymakers.

"The challenge lies outside our borders and we're still waiting for more proactive policy from the euro zone, near term, and longer term out of the U.S.," he said.

The yield on the two-year Canadian government bond, especially sensitive to interest rate moves, rose to 0.995 percent from 0.939 percent just before the release.

The Canadian dollar climbed to C$1.0326 to the U.S. dollar, or 96.84 U.S. cents, up from Thursday's North American session close at C$1.0378 to the U.S. dollar, or 96.36 U.S. cents. It strengthened further to around C$1.0300 as the U.S. jobs report buoyed investor appetite for riskier assets.

Scotiabank economists Derek Holt and Karen Cordes Woods, who have often taken a more bearish view, said they could not be "over the moon" over what they said was a misleadingly positive report.

Besides the education distortions, they pointed to a rise of 38,900 in self-employment, which they described as soft, and among actual employees, private sector jobs fell 14,900.

© 2017 Thomson/Reuters. All rights reserved.

   
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Economy
Canada churned out a stunning 60,900 jobs in September, once again outshining the United States with an economy that is humming along even as other rich nations struggle with debt and slumping confidence. The jobless rate fell unexpectedly to 7.1 percent from 7.3 percent...
Canada,US,Jobs,Growth
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2011-20-07
Friday, 07 Oct 2011 11:20 AM
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