Fernando Morales/The Globe and Mail
Statistics Canada's jobs report for June sure could have been worse, as many economists were expecting.
An employment gain that was almost twice the median estimate, coupled with fresh evidence that more unemployed Canadians are bullish enough on the economy to start looking for work, offer hope that the Goldilocks recovery of the past few months may be giving way to something that's a little more reliably healthy.
In economics, though, the devil is always in the details, and there are a number of reasons why the jobs report was a long way from unambiguously positive.
For starters, even though self-employment was way down, there's good reason to be skeptical that the quality of jobs being created is improving. Not only were most of the gains in services rather than goods-producing sectors of the economy, but part-time job gains outpaced full-time gains after the latter had posted a few solid months in a row. Plus, the annual pace of wage growth slipped to 2 per cent, well below the current rate of inflation and the slowest year-over-year pace since December.
That will take some pressure off of Mark Carney, the Bank of Canada Governor, to start tightening monetary policy even as he sees ``considerable headwinds'' facing the economy. But it's a bad omen for consumer spending, because if households are preoccupied with paying down debt at the same time that their incomes are relatively stagnant, it's hard to imagine many buying big-ticket items for a while.
Moreover, total hours worked rose at the slowest annual clip since the first quarter of 2010 -- 1.2 per cent -- which suggests many people who are returning to the work force may be doing so only because they've swallowed hard and taken something that doesn't really replicate the job they lost during the recession.
``It is hours worked times wages that gets people paid, so the fact that both wage growth and hours worked are moderating offers a very different take on what is influencing household spending than any upbeat perspectives on the headline job prints,'' Scotia Capital economists Derek Holt and Karen Cordes Woods wrote in a morning commentary.
Also, while the private sector and the public sector both saw job growth in June, governments everywhere are cutting back and it seems extremely unlikely that the public hiring seen during the month -- largely linked to temporary work on the 2011 Census -- will be repeated.
Craig Alexander, chief economist for Toronto-Dominion Bank, reckons that the three-month moving average for job creation, currently at a ``remarkably healthy'' 36,300 evenly split between full-time and part-time work, will slow to an average of about 15,000 over the next year as the economy grows at an underwhelming annual pace of 2 to 2.5 per cent.
That growth projection may even be on the high side, when you consider the troubling labour-market news from Canada's No. 1 export market on Friday.
According to a report from the U.S. Labour Department, American employers added 18,000 workers in June, the smallest amount in nine months. Worse, the unemployment rate climbed, to the surprise of most economists and the tremendous disappointment of Wall Street, and as it turns out the previous month's gain was less than half the initial estimate. And private-sector hiring was the weakest since May of 2010, just as the public sector is poised for some nasty belt-tightening.
So, all told, Friday's numbers could have been worse, but ....