The U.S. economy gained 850,000 jobs in June and the unemployment rate rose to 5.9 percent from 5.8 percent, a sign that the recovery of the world’s largest economy is building momentum after downside misses in April and May.
Economists had expected gains of roughly 700,000 jobs and a drop of between 1 and 2 percent in the unemployment rate as Americans have increased activities like air travel, staying at hotels, eating in restaurants and visiting movie theaters.
The positive employment report, released Friday by the Bureau of Labor Statistics, was cheered by economists.
“There were these very huge predictions early on, and the somewhat disappointing jobs reports since then …have now tempered everyone’s expectations,” said Julia Pollak, a labor economist at jobs site ZipRecruiter.
Economists might have been too optimistic initially, she said, adding that it’s hard to overstate the amount of disruption Covid-19 inflicted on the economy, and the extent to which it upended the career trajectories for millions of workers. All of this adds up to a critical function of the economy that isn’t yet working normally.
“There are all kinds of bottlenecks and frictions in the process of restaffing entire industries,” Pollack said. For instance, she added, a company that laid off all of its administrative personnel would have to recreate its human resources department before rehiring on a large scale.
Economists tend to dislike attaching too much weight to a single month’s report, since it provides a backwards-looking snapshot that, even with seasonal adjustments, can remain volatile.
“I think it’s likely going to be pretty noisy here over the next few months as we go through the dog days of summer,” said said Cliff Hodge, chief investment officer at Cornerstone Wealth.
The trajectory of the labor market recovery over the next few months will give policymakers — and investors — a better sense of what the future holds. “I think we’re going to be looking quite carefully at what the participation rate is doing,” said James McCann, deputy chief economist at Aberdeen Standard Investments. “What the data could do is cement investors’ thinking about when the Fed might announce a tapering of asset purchases,” he said.
Policymakers have mostly agreed that current pockets of inflation are transitory. But if job gains are robust and both unemployment and underemployment undergo sustained decreases, worry about rising wages creating inflationary pressure could persuade Federal Reserve Chairman Jerome Powell and the other members of the central bank to revisit its massive bond-buying program sooner rather than later.
“It could nudge the Fed to act more quickly than market participants have baked in at the moment,” Hodge said.
Weekly jobless claims data released Thursday showed initial applications for unemployment fell to a new pandemic-era low of 364,000, while payroll processor ADP reported on Wednesday private-sector job growth of 692,000 for June. More than 330,000, or nearly half, of those new jobs came from the leisure and hospitality sector. Overall, gains were broad-based, appearing in every sector except information services, which was down slightly.
Small businesses added 215,000 of those jobs, even though the economic activity taking place there — particularly at restaurants and bars, stores and hotels — has been constrained as business owners struggle to compete for workers with big-box retailers and chain restaurants for hourly workers.
“We are fortunate in the U.S. to have ubiquitous access to vaccines, which has led to a massive shift back to locally owned businesses in these sectors,” said Eric Groves, co-founder and CEO of small-business networking platform Alignable. “But with the surge comes a massive imbalance of supply and demand within the hourly labor markets,” he said.
In ordinary economic cycles, sustained wage growth can draw people off the sidelines and back into jobs. In recent months, a confluence of factors has created a bottleneck that has interrupted labor flow and led to increased wages, particularly at the lower end of the pay scale.
“There have been some forces holding back stronger progress, and we expect that to ease,” McCann said. “I think it’s a labor market set to accelerate over the next few months.”
A lack of child care, a skills mismatch and extended unemployment benefits have been frequently cited as potential deterrents keeping would-be workers from jobs, although opponents of rolling the program back before it expires in September say enhanced benefits give people a financial cushion that let working parents care for their kids and give displaced workers the chance to seek out new skills and credentials.
Even as vaccination levels rise, the ongoing fear of contracting Covid lingers for many, Hodge said.
“With the Delta variant, you’re seeing a bit of a resurgence in virus jitters,” he said. “People may still be uneasy about getting back out there and getting to work,” particularly in high-contact service jobs, he added.
“It’s trending in the right direction, but we’re going to see fits and starts, especially as the benefits roll off,” Hodge said. “It’s going to be lumpy, but we think over the coming months, labor will continue to trend in the right direction.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
