Canada's labour market cooling off in-line with the economy

I just took a quick look at the details of the November job report in Canada. You can find the actual release here. Unfortunately, I think the media is going to get the interpretation wrong on this one and focus in on the better unemployment rate figure - it dropped considerably from 7.9% to 7.6% during the month and is now at its lowest point in almost two years.

But this lower unemployment rate needs to be put into perspective as it comes mainly from a contraction in the labour force. Meanwhile, actual job growth was only 15K during November. And what is slightly troubling is that they were all part time jobs, as there was actually a loss of 12K full time jobs during the month. In fact, the 3 month trend rate of job growth in Canada has slipped from about 70K during the summer to a currently paultry 5K.  Combined with the tepid economic growth we saw in the third quarter, its pretty clear that Canada's economic recovery has entered a soft patch that is unlikely to significantly turnaround for at least another 6-8 months.

 In such a sluggish environment, it would be completely justifiable for the Bank of Canada to remain on an "extended hold" with rate hikes until the second half of next year.  

But as soft as the Canadian job numbers were in August, it looks as if the US job numbers were once again, more disappointing. Only 39K jobs were created there and the US unemployment rate ticked up to 9.8%. At this pace, its going to take a really long time for the US economy to re-coup the jobs it lost during the Great Recession and an even longer time for its unemployment rate to return to a "full employment level" of around 5%. This is in sharp contrast to Canada, where all the jobs lost during the recession have already been recouped.