The February 2008 Canadian employment numbers were recently released by Statistics Canada. How do the latest figures match up against two key benchmark measures?

Results: In February 2008, the year-over-year increase in total employment in Canada was +2.1%. The change in the actual number of jobs from the previous month was +43,000. Both of these numbers demonstrate a labour market that continues to be exceptionally tight.

The year-over-year increase in the total number of jobs in the latest month was 361,000, which is way above the long-term average. Particular strength was shown in the Ontario market, where new construction jobs led the way. The emphasis in Ontario construction markets is switching to non-residential building work, particularly offices and hotels. It is also good news that the new jobs were all full-time, which are higher paying and better quality.

There were further declines in manufacturing jobs in the latest month. Manufacturing as a percentage of total employment is now only 11.6%, versus a cyclical high of 15% late in 2002.

While Ontario had the most notable job gains, labour markets in Western Canada remain remarkably strong. Unemployment rates in all four western provinces are 4.2% or less. The unemployment rate for the country as a whole, at 5.8%, was once again a 33-year low.

Two potential problem areas immediately come to mind. Average hourly wages are increasing at a rapid rate, +4.9%, versus the latest Consumer Price Index gain of only +2.2%. This may cause the Bank of Canada some difficulties with its current lower interest rate policy. Also, the U.S. jobs picture keeps deteriorating. One has to wonder how long the good news can last in Canada, with our most important trading partner catching the economic version of the flu.

Two Key Benchmark Measures: There are two benchmark figures to target with respect to Canadian employment: (1) +1.5% year-over-year job growth; and (2) +17,000 as the long-term average month-to-month increase in the number of jobs. As long as these targets are being approached or exceeded, it is hard to say too much negative about the Canadian labour market. If the latest figures fall short, the economy may still be okay as long as some other key indicators are positive. However, if the latest figures fall short and there are other indications of slowdown, then warning signs start to flash about overall weakness in the economy. Job growth leads to income growth, which drives consumer spending (55% to 60% of Canadian Gross Domestic Product).

Alex Carrick

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