All eyes on August jobs report for signal of further trouble for economy
Julian Beltrame, THE CANADIAN PRESS
OTTAWA - On the heels of July's 55,000 job losses, Statistics Canada's latest employment report Friday will be among the most closely watched in years, with repercussions for investors, the economy and the government.
A median of 24 economists surveyed calls for a modest 10,000 bounce-back in August from the previous month's devastating tally.
But the analysts didn't see July's contraction coming and some are not convinced that Canada's economy is ready to start creating jobs again.
"The July number was horrid and it would be surprising to see something so negative for August," said Carolyn Kwan, senior economist with Merrill Lynch Canada.
"But I would not be surprised by another decline. There's no question that the trend in job growth in Canada has been slowing quite significantly."
Economists caution against giving too much credence to any one month's figure, given the possibility of a sampling error in the Statistics Canada survey, but Kwan noted there was nothing in July's figures that would set off alarm bells.
With an election call just days away, Prime Minister Stephen Harper can ill afford similarly painful numbers Friday, particularly on the heels of this week's massive stock market retreat and a recalibration of economic growth that showed the Canadian economy shrank during the first half of the year.
"The economy is the Achilles heel of this government," says Canadian Auto Workers economist Jim Stanford, who has seen massive losses and plant closures in the auto sector over the past year.
Liberal Leader Stephane Dion is already practising his attack lines, such as "Tory times are tough times," and "laissez-faire, don't care," from his post-caucus press conference from Winnipeg this week.
Stanford noted that most leading indicators, including exports, spending and housing, have been trending down, suggesting continued weak labour conditions.
Speaking in Windsor, Ont. while pledging $80 million in aid to protect 800 jobs at Ford Motor Co., Harper acknowledged Wednesday "all is not rosy in the economy," while insisting Canada's fundamentals remained strong.
That upbeat assessment will offer little comfort, however, if large numbers of Canadians become anxious about whether they will have a job in the next few months.
And although August may see a slight turnaround, particularly since the losses were so unexpected in July, Scotia Capital economist Derek Holt noted that the economy has given few signs of encouragement in recent months.
Not only have manufacturing jobs going missing, but construction and the services sector have also seen a sharp slowdown.
Meanwhile, average workers' hourly wages have gone from growing a robust 4.9 per cent in January to 3.8 per cent, barely above the current rate of inflation.
"Everything has turned south within the past two to three months, so I'd really be surprised if companies are laying on payrolls at the same time they are driving that kind of deterioration in the other data," he explained.
Bank of Montreal economist Sal Guatieri, who is looking for a slight bounce-back on jobs, warned that should the optimistic consensus forecast prove wrong for the third straight months, it would signal "very bad news" for the economy going forward.
"Job growth drives the consumer and if jobs are being shed at a dramatic pace, income growth will fall, confidence will slide further and consumers will retrench," said Guatieri said. "You could almost write the economy's obituary."
[ 2008-09-04 ]
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