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The Canadian Economic Month at a Glance: November 2, 2012

Job Growth Pauses in October

Labour markets held steady in October, following two months of significant gains. The economy added only 1,800 jobs, while the unemployment rate was unchanged at 7.4 per cent. There was a small shift from part-time work to full-time employment.

The private sector shed 20,300 jobs while the public sector added 36,900 jobs. Most of the gains were in educational services, with public administration and health care and social assistance also posting significant increases. Meanwhile, the agriculture industry experienced the steepest losses, with the accommodation and food services industry a close second. Among the provinces, Newfoundland and Labrador led the way in terms of job growth, as its unemployment rate fell 0.4 percentage points to 11.9 per cent. (Still, that level remains the highest in the country.) Quebec was the only other province to see its unemployment rate drop as a result of job gains. There were job losses in Manitoba and British Columbia, while the remaining provinces saw little change.

On a demographic level, there were no significant changes among the major groups. Youth employment was little changed, as was employment in the 25–54 age group. However, there was a slight shift from male employment to female employment.

The economy added only 1,800 jobs, while the unemployment rate was unchanged at 7.4 per cent.

The Canadian economy stagnated in August, shrinking 0.1 per cent—the first contraction since February. Declines were widespread among goods-producing industries, as they struggled to find a foothold amid easing global demand and softer domestic conditions. Mining and oil extraction were particularly hard hit, though much of their decline was due to scheduled maintenance at metal ore mines and oilfields. Potash mining also dropped, offsetting gains in natural gas production. The mining and oil and gas extraction sector is struggling to make gains this year. While natural resources helped prop up the economy in 2010 and 2011, the mining industry has struggled this year with lower global demand, falling prices, and tight credit conditions. Mining wasn’t the only industry to feel the pain of depressed demand. Most of July’s manufacturing gains were wiped out in August. Primary and fabricated metal products decreased, as did furniture and electrical equipment, appliance, and component manufacturing. Production was also down in the construction and utilities industries in August.

Meanwhile, output from the services industries as a whole did not change. Led by food products and machinery, wholesale trade increased, while retail trade was pushed lower by a reduction of activity at motor vehicles and parts dealers. Transportation and warehousing output increased, but finance, insurance, and real estate decreased for the first time in 11 months. A weaker housing sector and decreased output by security brokerages were responsible for the decline.

The Canadian economy stagnated in August, shrinking 0.1 per cent—the first contraction since February.

On October 23, the Bank of Canada announced it would hold the target for its key overnight interest rate at 1 per cent. The announcement marked the 25th consecutive month in which rates have not changed. The Bank doesn’t expect the economy to return to full capacity until the end of 2013.

The Bank did hint for this first time that it could use monetary policy to stem the rise in household debt levels in the future. This would be a major departure from its generally strict rule of focusing its monetary policies on inflation alone. Such action might not be needed, however, as debt levels could moderate without the intervention of the central bank. A combination of factors will slow the housing market in the near term. The return of tighter restrictions on mortgages, overheated multiple unit starts in key markets in the first half of 2012, and slower employment and economic growth going forward will all contribute to a slowdown in housing market activity. The Conference Board’s latest Canadian forecast expects housing starts for both single and multiple units to post declines for the second half of 2012. Housing starts for multiple units will continue to decline throughout 2013. To date, new housing prices have held up in almost all markets across the country, with the exception of some markets in British Columbia and the Maritimes.

Canadian Data Released to November 2, 2012

Key Indicators May 12 Jun. 12 Jul. 12 Aug. 12 Sep. 12 Oct. 12
Household Sector
Employment (000s) 17,502 17,510 17,479 17,514 17,566 17,568
Employment change (000s) 8 7 –30 34 52 2
Unemployment rate (per cent) 7.3 7.2 7.3 7.3 7.4 7.4
Wage settlements (total, %) 1.6 2.1 0.9 2.2    
Wage settlements (public, %) 1.6 2.0 0.8 2.4    
Wage settlements (private, %) 1.8 2.2 1.4 1.6    
Average weekly earnings (Y/Y, %) 2.28 2.83 3.75 3.61    
Labour income (Y/Y, %) 4.11 4.11        
Retail sales (%) 0.24 –0.37 0.69 0.26    
Consumer Price Index (Y/Y, %) 1.24 1.50 1.25 1.25 1.16  
Motor vehicle sales (units, millions) 1.739 1.726 1.658 1.725    
Housing starts (units, 000s) 216.8 222.9 214.5 229.8 225.2  
Household saving rate   4.0        
Consumer confidence (2002 = 100) 80.8 74.0 76.9 75.6 82.2 81.1
Business Sector
Real GDP at basic prices (%) 0.06 0.05 0.16 –0.14    
Manufacturing shipments (%) 0.43 –0.55 –0.81 1.46    
Wholesale sales (%) 1.02 –0.43 –0.72 0.46    
Real merch. exports (%) –0.02 1.91 –3.34 0.88    
Real merch. imports (%) –0.13 1.76 –0.05 –3.02    
Merch. trade balance (current $ millions) –16,615 –19,732 –30,371 –12,692    
Industrial product price index (Y/Y, %) 0.78 0.52 0.26 –0.35 –0.35  
Raw materials price index (Y/Y, %) –10.11 –11.75 –10.06 –3.88 –3.94  
West Texas Int. crude (US$/barrel) 94.70 82.41 87.93 94.16 94.72  89.57
Business confidence (2002 = 100)   97.8     92.3  
Financial Sector
Chtd. bnk. personal loans ($ billions) 405.5 406.9 407.6 410.7 411.3  
Chtd. bnk. business loans ($ billions) 308.4 305.7 308.5 314.4 318.2  
Prime business rate 3.00 3.00 3.00 3.00 3.00  3.00
3-month T-bill rate 1.01 0.90 0.97 1.03 1.00 1.00
5-year mortgage rate 5.34 5.24 5.24 5.24 5.24  5.24
Exchange rate (US$/C$) 0.9903 0.9727 0.9863 1.0079 1.0222 1.0130
U.S.-Cda. 90-day T-bill rate spread 0.92 0.81 0.87 0.93 0.89  
All data are seasonally adjusted to annual rates, excluding interest rates and prices.
Percentage changes (%) are month-to-month with the exception of those designated year-over-year (Y/Y).
Wage settlements represent average annual percentage increase in base rates over first year of contract.
Total settlements exclude COLA.
Sources: The Conference Board of Canada; Statistics Canada; CMHC Housing Time Series Database.

Labour Markets

Labour market charts for November 2012


Prices charts for November 2012


Wages charts for November 2012

Financial Markets

Financial markets charts for November 2012

Consumer Markets

Consumer market charts for November 2012

Business and Trade

Business and trade charts for November 2012

Sources: The Conference Board of Canada; Statistics Canada; CMHC Housing Time Series Database.

Disclaimer: Forecasts and research often involve numerous assumptions and data sources, and are subject to inherent risks and uncertainties. This information is not intended as specific investment, accounting, legal, or tax advice.

Jacqueline Palladini
Forecasting and Analysis

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