It was the best of times, said the data. It was the worst of times, said our anxiety-ridden minds.
The data show that Canada has recovered all of the jobs lost during the pandemic. All, and then some. Canada gained 154,000 jobs in November, and the unemployment rate fell for the sixth month in a row, to just 6 per cent. There are now 186,000 more Canadians working than in February of 2020. Statistics Canada’s latest labour-market report, released last Friday, showed more full-time jobs, more part-time jobs and more hours worked. Total hours worked are back to prepandemic levels.
And this isn’t a statistical illusion, with full-time jobs replaced by involuntary and impecunious self-employment. On the contrary, demand from employers is so strong that Canadians have been moving from self-employment to employees at a faster clip than before the pandemic. Since August, the number of employees in Canada has grown by 371,000, including 275,000 in the private sector.
Over the past two years, wages are up by 7.7 per cent. Those in their jobs for less than three months have been the biggest gainers, with an average raise of more than $2 an hour, or 10 per cent.
And what about the she-cession? There isn’t one. Employment among core working-age women, those 25 to 54, rose by 66,000 in November. The percentage of core working-age women who are employed is almost 81 per cent – a full percentage point higher than at the start of the pandemic. That’s the highest level in Canadian history.
There are downsides in all of this – notably labour shortages and the threat of inflation. However, it’s important to recognize that these are, for the most part, side effects of remarkable and somewhat unexpected good news.
After much of the economy was put on ice in early 2020, triggering a contraction sharper and deeper than the Great Recession of 2008-09, the assumption was that climbing out of this crater would take years. Instead, even though the pandemic is still very much around, the pandemic recession isn’t.
After the Second World War, Canada enjoyed a long economic boom, sparked by stimulative policy, the unleashing of idle resources and an explosion of confidence in the future. The past few months have had all of that – minus the exuberant confidence. It may have to do with the fact that, while previous generations got a clear end to their war, we’ve as yet had no equivalent to VE Day. We’re still battling a dangerous and active enemy.
And so, after nearly two years on edge and on guard against an omnipresent virus, our collective psyche remains in a bit of a catastrophizing state. We’re all suffering from pandemic PTSD. Or, given the pandemic isn’t yet post, TSD.
Yet the economic data, however wrong they feel, are right. Despite the pandemic devastating sectors such as travel and tourism, it’s been some time since the overall job market was so favourable to anyone looking for work. Statscan’s latest info shows that demand from employers is pulling record numbers of low-skilled workers – those with a high-school diploma or less – into the labour force.
The United States also has labour shortages, and an even lower official unemployment rate. But unlike Canada, part of the U.S. story is that several million workers have dropped out of the labour force. Last month, Canada had more jobs than in February, 2020; in the U.S., 3.9 million fewer people were working.
A favourite aphorism on Bay and Wall streets is that the stock market “climbs a wall of worry.” Since late March of 2020, worries have been towering – and markets have climbed them. There remain anxieties aplenty, from whether Omicron could re-energize the pandemic and kneecap the economy, to the reverse, namely whether the economy will get so hot that the Bank of Canada will have to slow it by raising interest rates.
Worrying about all that might go wrong is the job of central bankers, governments and editorial writers. But it’s also important to put worries in perspective. The threat of inflation, with too much money chasing too few goods and too many unfilled job openings, is real. It’s also infinitely preferable to its opposite: deflation, a collapse in demand and too many unemployed people chasing too few jobs.
For the economy, December, 2021, is far better than March, 2020. Even if it doesn’t feel that way.
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Firms see increasing labor shortages and wage pressures – Bank of Canada survey
Canadian firms see labor shortages intensifying and wage pressure increasing, with strong demand growth and supply chain constraints putting upward pressure on prices, a regular Bank of Canada survey said on Monday.
The central bank’s Business Outlook Survey Indicator reached its highest level on record in the fourth quarter, which was conducted before the Omicron coronavirus variant began spreading widely.
The data will play into the Bank of Canada’s calculations as it ponders when to raise rates. The bank, which has said it is paying close attention to wage inflation, is scheduled to make its next announcement on Jan 26.
Last October it said it could start raising rates as soon as April 2022, but some investors expect a hike this month. [BOCWATCH]
“The combination of strong demand and bottlenecks in supply is expected to put upward pressure on prices over the next year,” said the survey.
“In response to capacity pressures, most businesses across sectors and regions are set to increase investment and plan to raise wages to compete for workers and retain staff.”
Last month the central bank said slack in Canada’s economy has been substantially diminished.
Inflation expectations for the next two years continued to increase, with two-thirds of firms now expecting inflation to be above the central bank’s 1-3% control range over the next two years.
Most firms, in response to a special question, said they expected the currently elevated inflationary pressures to dissipate over time, with inflation returning to the 2% target over 1-3 years.
Canada’s annual inflation rate was at an 18-year high of 4.7% in November. The December data will be released on Wednesday, with analysts surveyed by Reuters expecting it to hit 4.8%.
The Canadian dollar was trading 0.4% higher at 1.2504 to the greenback, or 79.97 U.S. cents.
(Additional reporting by Fergal Smith in Toronto; Editing by Chizu Nomiyama)
China's economy grows 8.1% in 2021, slows in second half – Yahoo Canada Finance
BEIJING (AP) — Chinese leaders are under pressure to boost slumping economic growth while they try to contain coronavirus outbreaks ahead of next month’s Winter Olympics in Beijing.
The world’s second-largest economy grew by 8.1% last year, but activity fell abruptly in the second half as the ruling Communist Party forced China’s vast real estate industry to cut surging debt, official data showed Monday.
Growth sank to 4% over a year earlier in the final three months of the year, fueling expectations Beijing may need to cut interest rates or stimulate the economy with more spending on public works construction.
That slump is likely to worsen, leading to “more aggressive measures to boost growth,” Ting Lu and Jing Wang of Nomura said in a report.
On Monday, the Chinese central bank cut its interest rate for medium-term lending to commercial banks to the lowest level since early 2020, at the start of the coronavirus pandemic.
Asian stock markets ended the day mixed following the dual announcements. China’s benchmark Shanghai Composite Index gained 0.6% while the Hang Seng in Hong Kong lost 0.7%. The Nikkei 2225 in Tokyo rose 0.7%.
Lingering Chinese economic weakness has potential global repercussions, depressing demand for steel, consumer goods and other imports.
China rebounded quickly from the pandemic, but activity weakened last year as Beijing tightened controls on borrowing by real estate developers, triggering a slump in construction that supports millions of jobs. That made consumers nervous about spending and investors anxious about possible defaults by developers.
Consumer spending has suffered after authorities responded to virus outbreaks by blocking most access to cities including Tianjin, a port and manufacturing center near Beijing, and imposed travel controls in other areas.
Their “zero-COVID strategy” aims to keep the virus out of China by finding and isolating every infected person. That has helped to keep case numbers low but is depressing consumer activity and causing congestion in some ports.
The ruling party has stepped up enforcement ahead of the Feb. 4 start of the Winter Games, a prestige project. Athletes, reporters and officials at the Games are required to stay in sealed areas and avoid contact with outsiders.
Growth in consumer spending, the biggest driver of economic growth, fell to 1.7% over a year earlier in December from the previous month’s 3.9%.
“The prospect this year for consumer spending to rebound back to pre-pandemic levels has certainly dimmed,” David Chao of Invesco said in a report. “All eyes are on whether policymakers will evolve their zero-COVID pandemic policies.”
Officials have urged the public to stay where they are during the Lunar New Year holiday instead of visiting their hometowns. That will cut spending on travel, gifts and banquets during the country’s most important family holiday.
Forecasters have cut this year’s growth outlook to as low as 5% due to the debt crackdown and coronavirus.
“Downward pressure on growth will persist in 2022,” Tommy Wu of Oxford Economics said in a report.
Compared with the previous quarter, the way other major economies are measured, the Chinese economy grew 1.4% in the final three months of 2021. That was up from the previous quarter’s 0.2%.
Chinese exports, reported Friday, surged 29.9% in 2021 over the previous year despite a global shortage of semiconductors needed to make smartphones and other goods and power rationing imposed in major manufacturing areas.
Exporters benefited from reviving global demand while their foreign competitors were hampered by anti-virus controls. But economists say this year’s trade growth is likely to be weak and export volumes might shrink due to congestion at ports.
“With supply chains already stretched to capacity, last year’s boost from surging exports can’t be repeated,” Julian Evans-Pritchard of Capital Economics said in a report.
Auto sales fell for a seventh month in November, declining 9.1% from a year earlier, reflecting consumer reluctance to commit to big purchases.
Chinese leaders are trying to steer the economy to more sustainable growth based on domestic consumption instead of exports and investment and to reduce financial risk.
In mid-September, factories in some provinces were ordered to shut down to meet official targets for reducing energy use and energy intensity, or the amount used per unit of output.
One of the country’s biggest developers, Evergrande Group, is struggling to avoid defaulting on $310 billion owed to banks and bondholders. Smaller developers have collapsed or defaulted on debts after Beijing reduced the amount of borrowed money they can use.
Chinese officials have tried to reassure investors over the risks of wider problems, saying any impact on lending markets can be contained. Economists say a potential Evergrande default should have little effect on global markets.
National Bureau of Statistics (in Chinese): www.stats.gov.cn
Joe Mcdonald, The Associated Press
A Moment with the Mayor: The need for economic recovery – City of Lloydminster
I have received many questions on the state of our local economy from residents. At the root of most of the questions is a desire to know what the City is doing to help restart the economy.
Lloydminster’s economy is large and diverse, with our two major industries being oil and gas and agriculture. Both industries are greatly affected by world prices, world political conditions and agriculture is also significantly affected by global weather.
Those who have spent many years here and worked within the oil and gas sector likely don’t recall a price of oil as high as it was a few years ago. On the flip side, in the late 1990s, oil was selling for $10 a barrel, and things were tough for everyone. Today, we have seen a huge rebound for oil prices from less than $40US per barrel to today, the price hovering around $80US per barrel.
Want ads are present throughout our community’s oil and gas service companies and throughout the Western Canadian Sedimentary Basin. This is driven by a price, something set at the world level on a daily basis by the market and traders. A similar story in agriculture is that commodities are trading at record prices, such as canola and wheat. This is excellent news for producers and the farm, but again the prices are not being set by producers but by the world market and traders. Many farmers have shared with me the great news of these higher commodity prices, followed by the downside of the increased cost of inputs. Fertilizer has doubled in price from last year and is still rising. Pesticide prices are increasing rapidly, and supply shortages are all the talk.
Our economy is based on a regional trade and service centre with people travelling considerable distances to access medical professional and retail services and goods. The City’s Economic Development team continues to support local businesses by helping them deal with today’s challenges. We strive to help them grow their businesses today and into the future and look ahead and foster new business opportunities, big and small, to add to our community and surrounding area. Our economy is building and growing each and every day.
The City will continue to help lead in welcoming new businesses in all sectors of the economy. We’re well-positioned with great highway and railway access and a diverse labour pool to take advantage of the opportunities that lie ahead of us in 2022 and beyond.
Mayor Gerald S. Aalbers
City of Lloydminster
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