Stats Can released the Jan 2011 edition of the Canadian Economic Observer and reports that both output in October and employment in December posted modest gains, a further indication the economy was picking up after its recent stall.
The upturn in demand was led by exports. This accompanied a noticeable improvement in the US economy in the fourth quarter, especially retail sales. Overseas, growth remained buoyant in emerging markets, which has been important in supporting higher commodity prices, notably for metals.
Labour markets
Employment rose by 0.1% in December, as full-time positions (which account for 81% of all jobs) expanded by 0.3%. Most of the increase in jobs was among youths, which recouped some of their losses over the previous three months. The labour force kept pace with employment, leaving the unemployment rate unchanged at 7.6%.
Manufacturing dominated job growth with their largest monthly percent gain on record back to 1976. About half of the increase represented a rebound from a sudden drop in November. Conversely, construction gave back some of its recent gains. Services employment dipped 0.1%, as a large gain in transportation was offset by losses in trade, business services and health care.
Central Canada dominated job growth, not surprising given that it accounts for nearly three-quarters of manufacturing jobs in Canada. Ontario and Quebec also contributed most of the growth in transportation. Meanwhile, employment edged down on the prairies and in BC, mostly due to losses in construction.
Leading indicators
The composite index rose 0.3% in November, the same as in October. Six of the 10 components posted gains, while three were unchanged and one declined.
The housing index recorded the largest turnaround, increasing 2.0% after six straight declines averaging almost 3% a month. Both housing starts and existing home sales firmed after sizable retreats from their highs in the spring. The upturn in housing was reflected in a levelling off of furniture and appliance sales, after four straight declines. Spending on other durable goods continued to advance steadily.
Manufacturing demand continued to improve slowly. New orders rose 0.7%, as gains for investment goods offset a slowdown for autos. The ratio of shipments to inventories was unchanged at 1.93 for the third straight month, as the growth of inventories has caught up to the recovery of sales. However, manufacturers remained focused on raising productivity and not labour inputs. The average workweek equalled its lowest level over the past year, and employment did not begin to recover until December.
Elsewhere, the Toronto stock market continued to trend up with a 2.8% gain in November, driven by the strength in commodity prices. The US leading indicator again rose slowly, up 0.2%.
Output
Monthly real GDP grew by 0.2% in October, resuming the growth established in August after a 0.1% setback in September. Goods and services grew at an equal pace.
Goods production increased solely due to strength in mining. Metal mining expanded by 4%, bringing growth in the last four months to over 20% and in the past year to a 48% (just shy of its record 49% gain in March 1984). Copper and nickel mines led these increases in response to rising exports, supplemented by the end of a long labour dispute. Oil and gas production partly recovered its losses in September, while exploration and development rose sharply as energy prices firmed. Production of non-metallic minerals fell, led by a third straight decline for potash.
Manufacturing output fell 0.6% after a 1.1% drop in September. All of the decline originated in a 10% decline in petroleum, partly as a refinery was mothballed. Elsewhere, auto assemblies rebounded 9% in response to stronger sales in the US and before some plants stopped producing in November to accommodate re-tooling their operations. Resource-based industries outside of petroleum raised output, led by smelting and refining and lumber.
Construction output fell 0.5% after back-to-back increases. Residential construction dropped 1.7%, its largest decrease since the recession. Non-residential building and engineering both continued to advance.
source: Verico Mortgage Magazine
Bob Hanscom Mortgage Agency
A Family-Run business since 2000
Bob Hanscom Mortgage Agency
A Family-Run business since 2000
