In December,
2013, the economy lost 45,900 jobs instead of gaining what economists projected
would be 14,000 jobs. The unemployment
rate rose to 7.2 per cent from 6.9 per cent in November and the dollar started
to tank.
Then
Statistics Canada reported on February 7, 2014 that the Canadian economy added
29,400 jobs in January and the unemployment rate declined 0.2 percentage points
to 7.0 per cent. Analysts had estimated 20,000 jobs would be added last month. The unemployment rate also slid 0.2
percentage points from December to 7.0 per cent for the first month of the year
as the number of full-time jobs increased.
It’s
hard to determine what those numbers mean. Is the economy healthy or not? The
January numbers did offset the December losses somewhat, which means the
economy is generating approximately 15,000 jobs a month. That’s not bad, but nothing to write home
about, wrote CIBC Deputy Chief Economist Benjamin Tal in his Weekly Market
Insight report.
Minister
of Finance Jim Flaherty said the said the job trend was good. "This is
comforting as we plan the budget and plan modest, steady job growth in
Canada," he said in a Globe and Mail report.
But
a few economists remain cautious although it does represent a “nice recovery”
said BMO Capital Markets chief economist Doug Porter, in a report. “In other
words, the underlying trend in job growth is just firm enough to keep up with
labour force population growth -- no better, no worse."
A
more important indicator is the export market, which many economists and the
Bank of Canada hope will lead Canada out of a sluggish economy. The trade
deficit has widened $1.7 billion in December. This was a billion wider than the
market expected. Right now, the economy has
paused, or at least that’s what a few economists are saying.
The
export market is key to Canada’s growth because without an active export
market, Canadian goods are not leaving the country and no outside money is
getting in. A healthy export market means more jobs as the manufacturing sector
gears up to meet demand. It also means more investor confidence and a growing
economy.
Tal
says Canada is in a non-linear recovery, but also says that, economically, the
upcoming months will be uninspiring. Add the trade deficit to very low
inflation, and a devalued
loonie and we have an under performing
economy.
Instead of focusing so much on
house prices and debt, a new consideration with our economy is that we are now
lagging behind the G7 countries, which have already started their recoveries.
