Jobs data likely to signal if economy tipping into recession, or not
Ottawa, ON -- Ordinary Canadians, investors and economists were expected to be paying closer attention than usual on Oct. 7, 2011, when the latest employment reports were issued in Canada and the US.
Ottawa, ON — Ordinary Canadians, investors and economists were expected to be paying closer attention than usual on Oct. 7, 2011, when the latest employment reports were issued in Canada and the US.
The jobs number is indicator No. 1 for gauging how the economy is performing and whether it will expand or continue to sag.
For the 1.4 million unemployed Canadians, any rise in the 7.3% jobless rate will signal tougher times ahead in finding work. And many may decide to drop out of the workforce entirely if job prospects worsen.
In the US, the current 9.1% jobless rate has been flat or rising for months and is well above the 5.7% rate the country averaged between 1948 and 2010.
The consensus is for a 50,000 pickup in jobs in the US and a 15,000 bounce-back in Canada. But given the turmoil in markets that began in August, Scotiabank economist Derek Holt says the risk is mostly to the downside.
That’s because the vast majority of consumer and business confidence readings, as well as the big losses in equity markets across the world, suggest that the global economy is on the edge of a new recession. In some advanced countries like the US and parts of Europe, they may already be in one.
”The US report will be watched very, very closely for any signs the economy is on the cusp of a recession,” Holt said.
The early indication, through unemployment claims and the less-watched Oct. 5 ADP survey, is that the US economy was still inching forward in September.
Money markets will also be paying close attention to the Statistics Canada employment report for September, after two months of flat growth in the wake of a fast start to the year.
Unlike the US, there are few advance indicators of what the Canadian jobs report will bring. A purchasing managers’ index issued Oct. 6 was mostly positive except the employment component, which fell sharply by five points to 47.2.
Bank of Montreal economist Jennifer Lee said Canadians shouldn’t expect strong jobs growth either in the US or Canada until employers become more confident about the global economy.
”There’s so much uncertainty now, a lot of companies are holding back,” she said.
Still, two positive jobs reports Friday morning — even if they are small gains — would be welcomed by markets, particularly following recent signals from European policy-makers they are considering new measures to deal with the government debt crisis.