There's no way to sugar-coat the latest Canadian job numbers, which are brutal. Economy watchers had predicted a modest gain for December and no change in the unemployment rate. What we got instead was a surprising net loss of 45,900 jobs – all of the full-time variety – almost evenly split among manufacturing and services . It was the biggest drop since March. Unemployment jumped to 7.2 per cent, the first time Canada's rate has exceeded that of the U.S. in more than five years.
Normally, the thing to do with such dismal results is to pay them little heed, because job numbers, particularly those derived from household surveys, are notoriously inaccurate and subject to wide swings from one month to the next. Indeed, if Statscan conducted two different polls the same day, the results would undoubtedly differ.
But what cannot be ignored is the direction of the labour market, and it hasn't been a positive one. December marked the fifth month of negative job numbers in 2013, resulting in weak net employment growth of 0.6 per cent for the year – an average of 8,500 jobs a month. Much of the job creation has been part-time and 70 per cent of the net new jobs were in Alberta.
What's more, total hours worked slid 0.2 per cent and the pace of average hourly wage gains, both key gauges of the market's health, slowed last month. And there will likely be more of this to come in the months ahead.
"You need to take the one-month number with a big grain of salt," says Avery Shenfeld, chief economist with CIBC World Markets. "But the general trend has not been tremendous. Which is consistent with economic growth being fairly lacklustre over the past year."
The U.S. also posted far-from-robust numbers, with a net increase in December of 74,000 jobs, the smallest in three years. But the Canadian and American numbers aren't comparable, because they are calculated differently. Using the U.S. methodology, Canada's jobless rate would be 5.8 per cent.
Despite a much poorer-than-forecast end to 2013, the U.S. economy still appears to be on the recovery track. Healthier U.S. growth has often been an elixir for whatever was ailing the Canadian economy. But this time, it is unlikely to translate into a growth spurt north of the border, at least partly because the two economies are at different stages of the credit cycle. The weaker loonie, which took a further hit from the gloomy job data, is not going to prompt a surge in Canadian manufacturing unless it slides all the way back to to the low 80s and stays there for quite a while.
Massive new government stimulus spending is not the answer to the slowing economy and the toll it's taking on the job market. And it's unlikely that the Bank of Canada will respond with a new round of monetary easing, particularly when it remains so concerned about high household debt levels.
But the Harper government ought to be reconsidering its determination to balance the budget and instead start tempering its fiscal restraint. A little tax relief in the next budget would be a good starting point.