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Economic confidence is rising
Julian BeltrameThe Canadian Press OTTAWA
There is mounting evidence that Canada's economy is springing back to life, bringing with it the spirits of ordinary Canadians -- except, it seems, when it comes to the question of whether or not they'll have a job to go to next month.
As the recession relaxes its steely grip on the country, employment remains among the last of the country's economic wounds to heal, usually because leery firms are biding their time lest the signs of improvement prove a false harbinger of better times ahead.
That's why the consensus is predicting Statistics Canada, which releases its latest employment figures tomorrow, will reveal the country dropped another 36,000 jobs in May, and that jobs will keep disappearing for most of the year and possibly well into 2010.
The expected losses would completely wipe out April's surprising 36,000 pickup, which many economists believe overly flattered Canada's ugly labour market.
"I don't believe the StatsCan report for April reflected material improvement for job markets,'' said Derek Holt, vice president of economics with Scotia Capital. "I think it was just a big head-fake on people declaring themselves self-employed for involuntary reasons.''
After five months of vanishing jobs, April's data shocked most observers -- until it became clear the gains were based entirely on 37,000 new jobs in the self-employment category.
In a recession, that is most likely an indication that the newly jobless were trying to create their own work because regular work couldn't be found, they say.
Not that there aren't signs of life -- the so-called "green shoots'' cited by economists as they scour for hope amid the blackened economic landscape -- appearing in increasing regularity in Canada, as well as in the U.S., Europe and Asia.
Yesterday's correction notwithstanding, North American markets are up close to 40 per cent since the lows of early March. Oil prices have also been moving upwards on the expectation of demand in China.
Canadians have started to notice the brightening sky.
Consumer confidence hit a 15-month high last month, according to a Harris-Decima poll that found only 29 per cent of Canadians surveyed expecting economic times to worsen in the next year, compared to a pessimistic 59-per-cent reading in February.
With the sharp downturn seen at the end of 2008 and beginning of 2009 apparently slowing -- but the economy still in recession -- most economists expect the Bank of Canada to sit on its hands today and keep the trend-setting interest rate at the historical low of 0.25 per cent.
But they also see little chance of central bank governor Mark Carney priming the pump with additional stimulus, such as resorting to increasing the money supply through so-called quantitative easing -- a tactic that essentially amounts to printing more cash.
"The significant rise in the Canadian dollar has increased the chances they may move to ease policy further, but at this point we don't think they are willing to do that yet,'' said economist Benjamin Reitzes of BMO Capital Markets.
"If the dollar keeps rising, however, it may provide a significant enough downside shock to the economy for them to feel that further easing is warranted.''
A strong dollar is particularly damaging to Canadian manufacturers, already on their knees from the recession, by making their products less competitive on world markets.
But even the dollar movement yesterday pointed to the central bank taking a time out. After a torrid climb from the 77-cent US levels, the loonie experienced the first significant pullback in weeks, diving 2.29 cents to close at 90.22 cents US.
