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The Canadian Economic Month at a Glance: December 7, 2012

Full-Time Positions Make a Comeback

Employment prospects brightened for many unemployed in November, as 59,000 jobs were added to the economy and the unemployment rate dropped to 7.2 per cent. Most of the gains were in full-time positions—which posted their largest monthly gain since April—and in the private sector. The November job report also painted an improved employment picture for those aged 15 to 24. At 14 per cent, the unemployment rate for youth is now on par with where it was in early spring, a significant improvement from the high of 15 per cent it reached in September.

Job gains were predominantly in the services-producing sector. Accommodation and food services, professional, scientific, and technical services, and the wholesale and retail trade industries each added more than 22,000 jobs. The goods-producing sector did not have a great month, and several services sectors felt the pain as well. Manufacturing, transportation and warehousing, and the business, building, and other support services industry each lost more than 10,000 positions.

Ontario accounted for most of the job gains, and the unemployment rate there fell 0.4 percentage points to 7.9 per cent. Quebec, Alberta, Manitoba, and Prince Edward Island also experienced significant job gains, while Nova Scotia lost some part-time positions. Employment was little changed in the other provinces.

Most of the gains were in full-time positions, which posted their largest monthly gain since April.

The pace of economic growth slowed markedly in the third quarter. The economy expanded at an annualized rate of only 0.6 per cent, compared with 1.7 per cent in both the first and second quarters. Declines in exports and business investment were the major drags on economic growth. Hurt by lower global demand from China and other regions, exports suffered their largest drop since the second quarter of 2009. Energy products and consumer goods contributed the most to the decrease in exports. Conversely, motor vehicles and parts exports grew for a fifth consecutive quarter. Meanwhile, imports increased, further deepening the trade deficit. Business inventories also made a positive contribution to GDP. Consumption expenditures increased substantially, with households, non-profit institutions, and governments all consuming more.

September’s monthly economic accounts provided no boost to the third-quarter output numbers, as real GDP growth came in at zero. Wholesale trade posted the largest decline in monthly output, dropping 1.1 per cent. And mining, oil, and gas extraction continued its slide as a result of continued depressed global demand and prices. September marked the fifth consecutive month of decline for the sector. Meanwhile, the transportation and warehousing sector, as well as education and health services, edged up slightly to level out the economy-wide losses. September’s economic stagnation and weaker commodity prices kept inflation well below the Bank of Canada’s inflation-control target rate. Not surprisingly, at its December 3 policy announcement, the Bank held its overnight rate steady at 1 per cent.

Depressed global demand affected the nominal current account balance. The current account posted its second-largest quarterly deficit on record. (Only the third quarter of 2010 saw a bigger current account deficit.) In this most recent quarter, the deficit rose $500 million to reach $18.9 billion, as the trade deficits increased for both services and goods. In fact, the trade deficit for services set a record high—$6.3 billion—driven largely by a deficit in transportation services. Imports of goods declined, though not as much as exports. Exports of goods have decreased in each quarter of 2012 so far, and energy exports posted their largest decline of the year in the third quarter. Meanwhile, the investment income deficit narrowed.

In the financial accounts, positive net foreign investment in Canadian securities (particularly debt securities) continued for the 15th consecutive quarter. Canadians were busy acquiring foreign assets as well. Canadian investment in foreign securities was the highest in more than three years. Investment in foreign equities—U.S. equities in particular—pushed up Canadian ownership of foreign securities. Foreign direct investment abroad by Canadians was more than double foreign direct investment in Canada. Cross-border mergers and acquisitions accounted for half of the overall outflow of investment abroad, while foreign direct investment in Canada was unchanged.

Canadian Data Released to December 7, 2012

Key Indicators Jun. 12 Jul. 12 Aug. 12 Sep. 12 Oct. 12 Nov. 12
Household Sector
Employment (000s) 17,510 17,479 17,514 17,566 17,568 17,627
Employment change (000s) 7 –30 34 52 2 59
Unemployment rate (per cent) 7.2 7.3 7.3 7.4 7.4 7.2
Wage settlements (total, %) 2.1 0.9 2.2      
Wage settlements (public, %) 2.0 0.8 2.4      
Wage settlements (private, %) 2.2 1.4 1.6      
Average weekly earnings (Y/Y, %) 2.83 3.75 3.56 3.35    
Labour income (Y/Y, %) 4.44 4.52 4.57 4.26    
Retail sales (%) –0.37 0.68 0.29 0.15    
Consumer Price Index (Y/Y, %) 1.50 1.25 1.25 1.16 1.16  
Motor vehicle sales (units, millions) 1.726 1.659 1.728 1.719    
Housing starts (units, 000s) 222.9 213.6 228.8 224.0 204.1  
Household saving rate 4.2     3.9    
Consumer confidence (2002 = 100) 74.0 76.9 75.6 82.2 81.1 80.3
Business Sector
Real GDP at basic prices (%) 0.06 0.16 –0.14 –0.04    
Manufacturing shipments (%) –0.96 –0.54 0.86 0.37    
Wholesale sales (%) –0.42 –0.94 0.30 –1.36    
Real merch. exports (%) 2.16 –2.90 –0.20 0.01    
Real merch. imports (%) 1.76 0.61 –2.63 1.60    
Merch. trade balance (current $ millions) –19,330 –32,389 –18,277 –9,917    
Industrial product price index (Y/Y, %) 0.61 0.35 –0.26 –0.26 –0.17  
Raw materials price index (Y/Y, %) –11.75 –10.06 –3.88 –3.88 –2.81  
West Texas Int. crude (US$/barrel) 82.41 87.93 94.16 94.72 89.57 86.66
Business confidence (2002 = 100) 97.8     92.3    
Financial Sector
Chtd. bnk. personal loans ($ billions) 406.9 407.6 410.7 411.3 412.0  
Chtd. bnk. business loans ($ billions) 305.7 308.5 314.4 318.2 320.0  
Prime business rate 3.00 3.00 3.00 3.00 3.00 3.00
3-month T-bill rate 0.90 0.97 1.03 1.00 1.00 0.99
5-year mortgage rate 5.24 5.24 5.24 5.24 5.24 5.24
Exchange rate (US$/C$) 0.9727 0.9863 1.0079 1.0222 1.0130 1.0030
U.S.-Cda. 90-day T-bill rate spread 0.81 0.87 0.93 0.89 0.90 0.90
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 Markets





Financial Markets

Financial Markets

Consumer Markets

Consumer Markets

Business and Trade

Business and Trade

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.

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Jacqueline Palladini
Forecasting and Analysis

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