More extraordinary job gains in Canada

StatsCan reported this morning that Canada added 80,000 jobs in November, fully eight times as many as the analysts' consensus had predicted.  This pushed the jobless rate down by a remarkable 0.4 percentage points, to 5.9 percent.  This is the lowest jobless rate since February 2008, at the inception of the financial crisis.

Details of the report are, for the most part, as encouraging as the headline. Although more than 50,000 of November's new jobs were classified as part-time, the addition of 30,000 full-time jobs was in and itself way stronger than the analysts' consensus.  Moreover, the month saw 30,000 new jobs in manufacturing and 16,000 in construction, meaning that the focus of job gains is firmly in the productive sector -- indeed, 72,000 of the new jobs were in the private sector, with little change in either public sector employment or self-employment.

In the past 12 months full-time employment has grown by 441,000, or 3 percent, with part-time employment falling slightly.  Somewhat perplexingly, total hours worked in the economy rose only 1 percent in the year.  One possible explanation for this is that companies are more confident about using new employees to boost production, rather than relying on overtime work by the existing workforce.

The strength in employment seems to suggest that the much-anticipated slowdown in GDP growth may not be as pronounced as some have forecast, though it needs to be kept in mind that employment is generally seen as a lagging indicator.  (StatsCan reported separately today that real GDP rose at a 1.7 percent annualized rate in Q3, in line with expectations but significantly slower than in the first half of the year).  With the Bank of Canada already signalling that it sees the economy operating close to full capacity, it seems likely that a further rate hike will be forthcoming during the winter months. All such bets will, however, be off in the event that the ongoing NAFTA renegotiations collapse.