While this is obviously a subjective evaluation, I would say the U.S. economy presently deserves an upwardly mobile grade of “B+” or higher.
What about Canada? Difficulties on account of the reversal in the commodities super-cycle are yielding a passing mark of “C”, but there’s not a great deal to boast about.
U.S. annual ‘real’ (i.e., inflation-adjusted) gross domestic product (GDP) growth in 2015 was +2.4%. That was double Canada’s +1.2% pace of improvement.
The differences between the two countries have also been showing up clearly in their jobs markets. Total month-to-month employment in February rose by 242,000 in the U.S. while it declined by 2,000 in Canada. The respective year-over-year percentage changes were +1.9% compared with +0.7%.
America’s unemployment rate now sits at a commendably tight 4.9%. Canada’s jobless rate has been inching higher since its most recent low point of 6.6% in October 2014. It is now 7.3%, although Statistic Canada asserts it would be 6.2% if it were measured according to the same strict criteria about who is actually, really, honest-to-goodness looking for work as are adopted by the Bureau of Labor Statistics.
A long-term analysis of employment in Canadian manufacturing and construction reveals essentially flat patterns, since 2009 for the former and beginning in early 2013 for the latter.
There have, however, been recent movements that show encouraging promise.
The total number of Canadian construction jobs in February may have been -0.4% year over year (compared with +4.0% for the U.S.), but there was an exceptionally large month-to-month pickup in nominal terms, +34,000 jobs.
At the same time, and surely no coincidence, Canadian new home starts shot up to 213,000 units annualized from only 165,000 in 2016’s kick-off month of January.
There are two interesting U.S.-Canada ratios to keep in mind. With respect to overall population, there are nine people living south of the border to every one residing above it. But according to employment counts, there are only slightly less than five workers in construction in the U.S. compared with every one such individual in Canada.
This suggests construction activity is considerably more important to Canada’s economy than to America’s.
(Technical note: the U.S. construction jobs count is based on an employer survey, while Canada’s derives from a household questionnaire. This lowers the ratio to some degree, although probably not much. The same sources yield a total employment ratio that is eight-to-one.)
The Canadian manufacturing jobs picture, no doubt aided by a loonie that has wilted versus the greenback, is also brightening. A low-valued currency stimulates export sales. Year-over-year employment in manufacturing in Canada is currently +2.4% versus +0.4% in the U.S.
In the latest report on Canadian manufacturing released by Statistics Canada, sales rose 2.3% in January to their highest level ever, driven to that new pinnacle by remarkably upbeat motor vehicle and parts shipments.
Geographically, as was to be expected, the new strength in manufacturing is arising in Ontario, Quebec and British Columbia. Those three provinces have more diverse economies and aren’t as resource-dependent as their siblings. Alberta, Saskatchewan and Newfoundland/Labrador are particularly suffering with the global price of oil so low, at $35 USD per barrel.
Among all provinces, B.C. has achieved the biggest year-over-year increase in total employment, +3.0%. Ontario is in second place, at +1.1%. The actual number of jobs those percent changes represent are +69,000 and +74,000 respectively.
Furthermore, Ontario’s jobs increase has been more weighted towards full-time work (+66,000) as opposed to part-time (+8,000). Full-time employment is usually better paying and more stable than its part-time counterpart and, therefore, considered to be of a higher quality.
B.C.’s jobs pickup has been more mixed in nature, + 28,000 for full-time and 41,000 for part-time.
The full-time versus part-time distinction also takes on a depth of meaning on the downside.
Alberta has lost 21,000 jobs in total year over year. That acquires a more significantly negative connotation when it is realized that the province has suffered a full-time jobs loss of -56,000, only somewhat recovered through additional part-time employment of +35,000.
Canadian Provincial Labour Markets - February 2016
|Newfoundland and Labrador
|Prince Edward Island
Data source (seasonally adjusted figures): Statistics Canada.