Employment number misses consensus; US consumers cutting back….will Canadians follow?; Another great CMHC video

Employment misses consensus

Stats Canada released their most recent employment numbers today.  The headline stat reported in most media outlets is the 15,000 net new jobs created in February.  However, aside from that stand-alone headline, the report is actually very weak.  Let’s look at the good news and bad news contained in the report.

Good news:

  • Net employment gains amounted to an increase of 15,000 new positions in February.
  • The three month gain in employment is not at 115,000 positions.
  • Youth employment was a big driver of gains.
  • The public sector added 10,000 new positions.
  • Unemployment held steady at 7.8% (not sure if that should be good news or bad news…)

Bad news:

Unfortunately, there are a number of weak readings in this report…

  • Market expectations were for a 25K increase in employment.
  • Part-time employment rose by 39,000 in February but was offset by a decline in full-time work (-24,000).
  • In the past 12 months, the growth in part time employment has been 5 times faster than the growth in full time jobs.
  • The number of ‘self-employed’ workers increased by 26,000.
  • Private sector jobs decreased by 20,000.
  • Total full time employment has not returned to pre-recession levels…..and that’s not adjusting for population increase.

  • Private sector employment is still below pre-recession levels

  • Construction employment has significantly outpaced general employment gains coming out of the recession.  I have significant doubts that this will continue through 2011.  This is particularly problematic as the industry employs 1.2 million people.

Provincial highlights:

  • Ontario- Employment in Ontario edged down in February.  The unemployment rate also edged down to 8.0%, the result of fewer people participating in the labour force.
  • Alberta-  Employment in Alberta increased for the second consecutive month, up 14,000 in February. As a result, the unemployment rate edged down by 0.2 percentage points to 5.7%.
  • BC- The unemployment rate jumped to 8.8% as more people entered the workforce.

It will be interesting to see if the Canadian economy can continue to add jobs at the stable pace it has for the past year in the face of declining construction and slowing consumer spending.

US consumers cutting back amid rising fuel prices

Protesters and government regimes are not the only casualties of the growing revolutionary currents in the Middle East.  As gas prices have soared of late, consumers have begun quietly retrenching.  While data always trickles in first from south of the border, it will be interesting to see if the rise in gas prices will sap our domestic consumer spending in lock-step.

One-in-Three U.S. Consumers Have Already Cut Spending Because of Rising Gas Prices

One-in-three U.S. consumers (32 per cent) has already significantly reduced discretionary spending because of the increase of rising gas prices, according to the monthly RBC Consumer Outlook Index. With the national average price at approximately $3.20 per gallon at the time this survey was conducted (February 25-28, 2011) another one-in-five (18 per cent) say they would reduce spending if gas prices climb to $3.75 per gallon. Four-in-10 (41 per cent) place their pain threshold at $4.00 per gallon or more.

Interestingly, since the time of the survey, the average gas prices in the US have in fact surged by an additional 10% to an average of $3.50 as of March 1.

The debate continues as to whether or not high gas prices are net beneficial to an oil exporter like Canada.  But with consumer spending making up such a hefty chunk of our GDP, I strongly suggest that it is a negative on balance.  It remains to be seen just how stable these high prices will be and whether Canadian consumers will adjust their consumption accordingly.

Another great CMHC video

After we released the latest video primer on CMHC, we were alerted to another interesting video on the topic by one of the faithful readers.  Enjoy!


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17 Responses to Employment number misses consensus; US consumers cutting back….will Canadians follow?; Another great CMHC video

  1. Sams Mango says:

    Nice Video Ben – that is real estate porn!

    Why is she dressed like that?

  2. Liam from Calgary says:

    Yahoo!! High oil prices, Alberta booming again, Home prices rising.
    For all you doom and gloomers, Your WRONG, get over it

  3. Sams Mango says:

    Ben Question – you have always said that jobs are a result of the house boom and with a bust, jobs would go. But from your employment index graph, since 1998, not a single private job has been created, infact all the jobs have come from government hiring. So where are all the jobs that have been created by the housing boom? Did they create the trash collector, property tax collecter jobs? Did a whole bunch of construction workers just work for cash?

    The reason I ask this is because if we have a bust – where is the job destruction going to come from? I don’t see any private creation.

    • “from your employment index graph, since 1998, not a single private job has been created”

      Where do you get that stat from?

    • Alex says:

      Mango, there’s no “reply” button under your last comment to me in the prior blog post, so I’ll do it here and hope Ben doesn’t delete it for being out of place.

      First of all, since you opted to get personal by advising me to “chill out” before I have a “heart attack,” well, sure, I’ll play that idiotic little game too.

      Dude, you make no sense. Whatsoever. At any time. You say Global’s news department has no mandate to provide NEWS and FACTS in its newscasts? WTF? You say it’s a private company and can therefore do what it wants? You ask the ludicrous question, “Who cares if the Global story is not news?” Are you freaking serious?

      And then you equate a company that flogs breast enhancement surgery on late night infomercials to “trusted” media news outlets potentially slanting their coverage of real estate to benefit their prime sponsor?

      But you weren’t done, were you? You then drew a parallel between my Global BC commentary to Canadians having a “sick sense of entitlement where they must let everyone know how they feel or force views.” Man, that’s just what Canadians *aren’t* known for. Except you of course, because that’s precisely what you’re doing by posting here.

      And “entitlement?” Well, yeah I do have a sense of entitlement. I feel I’m entitled to watch a newscast and get a neutral perspective.

      My advice, Mango? Your arguments to this point, including whatever it is you’re babbling about above, rely on some warped perspective of the world created in your own mind. Furthermore, they do a complete disservice to anyone on the “bullish” side of ths housing debate.

      So maybe – and I say this only because you made it personal – you should just go back to flogging overpriced real estate to the last of the greater fools. If you can find one.

      And those are the last words I waste on you.

      • Sams Mango says:

        did you hair fall out while you typed that? Why don’t you turn your tv off or change the channel?

        when you adverts pitch get rich ponzi schemes, do you write to your loca station? You must have plenty of time to waste chasing around new anchors.

        Remember, it’s only overpriced to people who can’t afford. You are among them clearly.

  4. “Since 2008. Your light blue is basically flat, no?”

    2008 is not 1998 my friend. And yes, the line is essentially flat. While there has been growth coming out of the recession trough, you’ll note that it is highly correlated with rising house prices also coming out of the recession……just as it was correlated with falling house prices during the recession. So as you can clearly see, when the market was busting, the jobs were vanishing. When the market reversed course on the back of unprecedented monetary stimulus and record low interest rates, employment gained.

    The big question now is what does the future hold….

    • Sams Mango says:

      yes, I had a typo of 1998. But not only has the government dropped rates to cast a larger affordability net, but they also have been the marginal job giver. This is why cad banks are booming in earnings. They are not creating jobs, keeping costs down and printing more biz.

      This is actually very bullish for the stock market, government keeps people working and paying the bills to the banks, private sector fires full time and brings cost lower with labour on demand (part time)…

      who knows how it ends Ben, but at least you know what you are missing.

    • jesse says:

      “They are not creating jobs, keeping costs down and printing more biz”

      “Canadians, individuals, should be comfortable that they can service their debt at higher interest rates, and the banks that lend to them should also be comfortable about that.”
      – Bank of Canada Governor Mark Carney

      What do you think would happen if banks continue to lend money based solely on prevailing interest rates, without consideration for the entirety of loans past their term? If banks don’t start tightening their approval criteria in the next few quarters, look for counter-cyclical capital requirements to be pushed up the agenda. From what I’m seeing banks have no interest in changing their ways, and arguably it’s not their job.

  5. Sams Mango says:

    Thanks Jesse. The perfect storm is here for corporates in general with that hiring pattern. Mom and pap getting crushed whe large firms enjoy borrowing at zero. Now that many holes in the books have filled via the savers lending money for nothing. I would expect the new marginal biz to be crappy. That whole process will take time and I feel we are in year three of the bull real estate cycle.

    This skip payment stuff is very scary. When banks cant bring in loans on already cheap credit, and are reaching with this crap, I sense we are at very early stages on sub prime lending.

    • jesse says:

      For there to be increased subprime lending, we should be expecting the government to be relaxing, not tightening, the lending rules. In the past year, for high ratio insured loans, they have:
      – limited investor loans
      – reduced amortizations from 40 to 30 years
      – changed add-to-income calculations for secondary rental income
      – eliminated non-amortizing high-ratio loans
      – required qualification at higher longer-term rates
      – reduced LTV on stated-income loans

      If “subprime” on high ratio loans are increasing in Canada, they are pretty cleverly hidden. Now… would you believe banks are issuing low ratio loans without the above restrictions? They wouldn’t do that, would they? Maybe we should be dusting off the old “we’re all subprime now” mantra.

  6. Sams Mango says:

    It would be great if we could make an undercover video and walk into a bank and g e the worst income story and see what happens

  7. Pingback: Employment number misses consensus; US consumers cutting back … — Debt Free Forever!

  8. Pingback: B of A / Merril Lynch on Canadian housing…part 2 | Financial Insights

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