Canadian employment rebounds, sort of

Judging purely by the headline number, the August employment report released today by Statistics Canada was encouraging. The number of Canadians in work jumped by 26,000, much higher than the analysts' consensus and largely reversing the 31,000 decline reported for July.  The unemployment rate actually ticked up 0.1 percent, to 7.0 percent, but that reflected an increase in the number of people looking for work, which is often seen as a positive sign.

Dig into the data, however, and it all gets a bit less rosy. Before we do that, though, the usual caveat about the Canadian employment numbers: the wild monthly gyrations in sub-categories (public vs. private employment, self-employment and so on) make it very difficult to discern underlying trends -- and may even cast doubt on the validity of StatsCan's survey methods.

 Take public sector employment, for example.  Today's report shows a 57,000 increase in the number of public employees in August, or about 1.6 percent.  But that comes in the wake of a reported decline of 42,000 in July.  Reports of mass firings and mass hirings in the public sector over the past couple of months are hard to find, and here's the killer point: these are supposedly seasonally adjusted data, so wild swings of this sort are not supposed to happen.  Yet they're a feature of just about every monthly report.

Assuming that we choose to believe that 57,000 figure, it then starts to cast a bit of a shadow over the entire report.  One of the positives that analysts have tried to take from today's number is the fact that there was a strong gain in full time work -- up 52,000 in the month -- offset by the loss of 26,000 part time jobs.  But if all or most of those full-time jobs are in the public sector, that doesn't tell us much about the overall state of the economy.

If we then look at the breakdown by industry, there's further cause for concern.  Most notably, there was only a 3,900 increase in the number of manufacturing jobs in August, and the number of such jobs has fallen by over 17,000, or about 1 percent, in the last twelve months. Far from offsetting the problems in the resource sector, as the Bank of Canada has been hoping (and very likely praying) for several years now, the manufacturing sector is actually adding to those problems, despite the supposed advantage of a weak exchange rate.

Finally, one small local triumph: according to StatsCan the unemployment rate in my own region (St Catharines-Niagara) fell by a full percentage point in August, to 6.8 percent.  It's impossible to slice-and-dice the data enough to confirm this, but it may well be that the weak exchange rate has given a nice boost to the tourism sector, which is now the area's economic mainstay.  That's certainly the impression you get from the number of out-of-Province cars circling the main streets of Niagara-on-the-Lake looking for parking spaces!