Canada's economic travails

It's hard to find much good news about the Canadian economy these days.  Just a week after the US revealed unexpectedly strong employment gains in April, Canada today reported a sharp decline in employment in the same month.  And the anecdotal evidence suggests more of the same to come...

* despite the recent fall in the exchange rate, manufacturing continues to shed jobs.  The latest announcement is that a Unilever processed foods factory near Toronto is to close, with the loss of 250 jobs.  Those jobs are moving to Missouri.

* Ontario-based auto parts giant Magna is opening 23 new factories in the next few years -- none of them in Canada.  The company cites high electricity prices in Ontario, and the Liberal governments plans for a provincial pension plan, as reasons for its unwillingness to expand further.

* Hyundai, now the fourth-largest auto seller in Canada, baldly states that it will never consider manufacturing cars here, citing much the same factors as Magna. And why should it?  It will be one of the biggest beneficiaries of the recent Canada-Korea free trade agreement.  The big winners on the Canadian side appear to be artisanal cheesemakers and ice wine producers.

* The energy sector, on which the Federal government has pinned much of its economic strategy, is looking distinctly shaky.  The Keystone pipeline into the US increasingly looks like a dead man walking, undermined by soaring US energy production and unceasing environmentalist opposition.  Other ways of moving tar sands crude to market seem equally problematic.

Will there be a policy response?  Bank of Canada Governor Stephen Poloz always seems to be on the brink of cutting interest rates, but as the depreciation in the exchange rate has been ineffective to date, it's not clear what he could hope to accomplish.  And the Federal Tories will just mouth platitudes about their "Economic Action Plan", which, as large roadside signs brag, is currently squandering tax dollars on a completely unnecessary roundabout near my home.

Of course, there's an election under way in Ontario, home of much of the beleaguered manufacturing sector.  Provincial Tory leader Tim Hudak says he has a "million jobs plan", to be executed over a ten-year period.  Today he fleshed out some of the details: if elected, he's going to fire 100,000 public servants. Guess he needs a bigger plan.