Canada employment data -- another positive surprise

Confounding analysts'expectations that Canadian employment would be flat or even slightly lower in January, StatsCan reported this morning that the economy in fact added 48,000 jobs in the month.  Aside from a minor setback in November, employment has been growing surprisingly strongly since August, with an average monthly gain of 40,000.  Remarkably, this is the strongest six-month performance in fifteen years.  Employment has risen by 276,000, or 1.5 percent, in the past year.

As always, there are caveats, although, as the string of above-expectations numbers continues, these are starting to have less force.  The preponderance of new jobs continues to be part-time in nature: such jobs account for 190,000 of the positions added in the past twelve months.  Moreover, the economy continues to rely heavily on the services sector for job creation. As defined by StatsCan, this accounted for 41,000 of the new jobs added in January.  Employment in the goods-producing sector has scarcely budged in the past six months, and jobs in the manufacturing sector have actually edged lower.

More positively, the majority of the jobs added in January -- about 33,000 -- were in the private sector, with an additional gain of 8,000 in the number of self-employed. Moreover, the unemployment rate edged down to 6.8 percent, despite a second straight strong increase in the size of the labour force, which likely indicates rising confidence on the part of job-seekers.

How long can this continue?  Donald Trump all but took personal credit for the strong US jobs data that were released last week, but his impact on the Canadian economy and jobs market may prove less benign, if he follows through on his threats regarding NAFTA.  Prime Minister Justin Trudeau is heading to Washington this coming Monday for his first face-to-face meeting with Trump.  Thus far, the Trudeau government's approach has been to avoid unnecessarily poking the bear.  Trump is by all accounts a lot less abrasive in private than he affects to be in public, but Trudeau will need to walk a fine line between politeness and docility as he attempts to protect Canada's all-important trade relationship with the US.