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Domestic employment data has been an excellent leading indicator for gross domestic product growth in recent years and today's disappointing report supports predictions of a weakening economic backdrop in Canada.
This chart shows that, while both employment and GDP are lagging indicators (they describe what the economy has been doing, rather than what it will do), the trend in job creation can usually be used to predict GDP. This was particularly observable during the depths of the financial crisis, September 2011, and March 2012 where weak employment numbers presaged weaker GDP.
Today's Statscan report showed an increase of 12,500 jobs – slightly below the consensus forecast of 15,000. For investors, the underlying details are a tad alarming – private companies cut 20,000 workers, which forced the public sector to pick up the slack by hiring 34,200 new employees.
The manufacturing sector did provide a bright spot, adding 20,600 positions in its strongest monthly performance since May 2012. The positive employment growth for April is also a welcome recovery from the loss of 54,000 jobs in March.
On the whole, today's results suggest that the pace of domestic economic growth is declining, but after a difficult 2012, is showing signs of stabilization.
Scott Barlow is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here to read more of his Insights, and follow Scott on Twitter at @SBarlow_ROB.
Scott Barlow