Canada pulls back
Three key reports today help paint a picture of a softer Canadian economy, but one that's more cause for concern than alarm, as BMO Nesbitt Burns puts it.
- Canada lost 22,000 jobs in January, though the jobless rate dipped, following an exceptional showing late last year.
- The pace of new homebuilding slowed rapidly amid a cooling housing market.
- Canada's trade deficit narrowed, but it's still a deficit, and the dip is because imports fell more than exports.
"To some extent, the drop in jobs appears to be a payback for the surprising strength in the second half of last year, and would normally be little cause for concern," he said in a research note.
"However, with housing softening notably, and consumers and governments not in much mood (or ability) to spend, the economy will need a major helping hand from a stronger U.S. performance in the year ahead to help generate renewed job gains."
Mr. Porter added in an interview that the overall showing is not "cause for alarm, but it is cause for concern."
Canada sheds jobs
A pullback in the public sector led to the loss of 22,000 jobs in Canada last month, while the unemployment rate dipped to 7 per cent as more people stopped looking for work.
Some 27,000 jobs in the public sector disappeared in January, Statistics Canada said today, while private employers held the line and the ranks of the self employed grew slightly.
Today’s numbers come after a couple of months of particularly strong hiring, As The Globe and Mail’s Tavia Grant reports.
Compared to a year ago, private sector employment has climbed 1.9 per cent, while government jobs have held the line.
January’s losses came in the 25-54 age group, and largely among men, a pullback from the past several months.
Unemployment among Canada’s young people, the 15-24 age group, fell 0.6 of a percentage point, but still remains high at 13.5 per cent.
"It was about time that the [labour force survey] corrects to reflect the realities of stagnant economic growth," said senior economist Krishen Rangasamy of National Bank of Canada.
"We could have had an even worse number were it not for the 17,000 increase in the construction sector, which looks suspicious in a month that saw a collapse in housing starts," he added.
Housing starts slow
Housing construction slowed markedly in January, coming in below a key measure for the second month running.
Housing starts slipped last month to just 160,577 units, measured at an annual pace, compared to 197,118 in December, Canada Mortgage and Housing Corp. said today.
Urban construction starts plunged 22.3 per cent.
The drop comes amid a rapidly cooling housing market in Canada, though most observers still see a soft landing.
“The trend in total housing starts has been moderating since September 2012 and in existing home sales since May 2012,” said Mathieu Laberge, the agency’s deputy chief economist.
“Trends in the two market segments typically follow a similar pattern with the new home market lagging behind the existing home market by a few months. The current trend is also in line with CMHC’s housing market outlook, which calls for moderation in housing starts activity in 2013.”
Like building permits, these numbers can be volatile, but today’s reading was still deemed troublesome.
“While the series can be volatile during the winter months, particularly as December’s reading may have been supported by warmer-than-normal temperatures, the sheer scale of the drop points to an acute weakening in the homebuilding sector, consistent with the slowing trend in residential building permits seen in recent reports,” said economist Emanuella Enenajor of CIBC World Markets, noting that condo construction drove the decline.
“Today’s data suggest homebuilding is set to swing from an economic positive in 2012 to a drag in 2013.”
No comments:
Post a Comment