EI claims on hold while Statscan fixes jobs report error

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Statistics Canada's decision to pull its latest jobs report forced officials to put employment insurance claims on hold and triggered a flood of speculation from economists as to what Friday's updated numbers will reveal.

Approvals for EI claims are partly based on regional unemployment rates, but officials say staff will be able to manage the expected backlog next week so the wait for Friday's new job numbers won't affect when people get their cheques.

Canada's national statistics agency continued to stay quiet as to the exact nature of the mistake that led it this week to pull Friday's disappointing Labour Force Survey results. Officials would only say the mistake occurred in connection to a July update in the way the agency processes its job data.

Economists expressed their frustration at being left in the dark.

"This is not trivial," said Benjamin Tal, deputy chief economist of CIBC World Markets. "You have three days of the market guessing 'oh, it's going to be major. It's not going to be major.'… Clearly the market is speculating. That's not a healthy situation."

Philip Cross, a former chief economic analyst with the agency who is now a senior fellow with the Macdonald-Laurier Institute, argued Statscan is right to take a few days and ensure its numbers are accurate when they are re-released on Friday.

The monthly reports are based on raw data from a survey of 50,000 households that are then extrapolated into estimates for the economy as a whole. Statisticians also make adjustments for factors such as seasonal jobs and summer vacations.

"It's an abattoir in there," said Mr. Cross of all the tweaks that are made to the raw data. With Statistics Canada saying the error is tied to a new process, he said the agency could risk another mistake by rushing the correction.

"That would be just disastrous. It would be just lights out for the place," he said. "Statscan doesn't get any points for rushing this out the door. They get points for getting it right."

The monthly jobs report has a direct connection to the federal EI program, because regional unemployment rates dictate how many weeks unemployed people need to have worked before they can qualify for the program.

Government officials said new EI applications filed this week will essentially be put on hold until the new numbers are available so that no one receives or is denied EI based on faulty data. Staff will then try to catch up on the casework.

Jordan Sinclair, a spokesperson for the department, said the Statistics Canada correction will not cause any processing delays.

The department's own reporting concluded that it failed last year to meet its processing time targets. The department sets a goal of providing applicants with an answer on their claim within 28 days, 80 per cent of the time. Last year they provided answers within 28 days 74.5 per cent of the time.

The Canada Employment and Immigration Union, which represents workers who process claims, said there was a "tremendous" backlog in the system already and expressed skepticism of the department's claim that the Statscan issue would not worsen the situation.

Statistics Canada said Wednesday that the mistake has been found and corrected internally, but the extra time is needed to revise all of the packaging of the report for Friday morning's re-release.

Meanwhile, some economists are telling clients they simply have no idea what to expect when the numbers are updated later this week.

"We have little confidence in any theory with respect to what may change this Friday," wrote Scotiabank economists Derek Holt and Dov Zigler in a Wednesday morning note.

Those same economists had highlighted some unusual numbers last Friday after the July jobs report was released, showing a loss of 59,700 full-time jobs and essentially the same number of part-time job gains.

"What caught our attention was a series of remarkable coincidences that while not statistically impossible to explain collectively nevertheless arise with the regularity of asteroids hitting our planet," they wrote on Friday.