Should Twitter employees turfed from their jobs by their new boss come looking for work in Canada? Friday’s stunning jobs numbers might make you think that was a good idea.
While the U.S. economy, where employment numbers were also released on Friday, created 261,000 jobs, Canada cranked out 108,000 — despite having only one tenth the U.S. population.
As the company’s self-designated“Chief Twit”, Elon Musk was engineering Twitter-wide employment devastation just as Canada was creating jobs.
Expect the unexpected
Musk wasn’t alone. Tech darlings including Amazon, Apple, Lyft and Stripe have announced layoffs and hiring freezes to prepare for a coming recession. In Canada, Hootsuite and Dapper Labs cut staff.
In her economic statement last week, Deputy Prime Minister Chrystia Freeland, this time wearing her finance minister’s hat, repeated her recent warnings that Canada must prepare for recession.
“Canada cannot avoid the global slowdown,” said Freeland, “but we will be ready.”
She also declared that Canada was strong and would get through any economic troubles in good shape; echoing former prime minister Wilfrid Laurier’s 1904 declaration the 20th century belonged to Canada, Freeland put dibs on the 21st.
Fall economic update promises support for struggling Canadians
Ottawa’s recently unveiled fall economic update promises new relief for some of the hardest-hit Canadians, as people across the country struggle with the rising cost of living.
Contradictory signals have become the rule rather than the exception as economists, businesses and political leaders struggle — and sometimes fail — to winkle out a pattern in today’s data to tell us a true story about the future. No wonder the rest of us have trouble doing it.
Friday’s huge job numbers showed how difficult predictions are, even for specialists. Not one of the economists polled by Bloomberg came close. Unemployment data is notoriously variable, and Tu Nguyen, who forecast that jobs would actually shrink, was not the only person to be shocked.
“Wow, we certainly did not expect this,” said Nguyen, an economist with the financial firm RSM Canada. “Despite all the talk about recession … we are certainly not in a recession right now if you look at the jobs numbers.”
Good for some bad for others
So are we getting a recession or not? People who are supposed to be in the know are still debating. The word stagflation keeps popping up, and last week U.S. billionaire Paul Singer warned of hyperinflation, a kind of price-growth-on-steroids that knocks an economy flat.
At more moderate ranges, a preference for inflation or rising interest rates, depends, like Freeland, on which hat you are wearing. Borrowers dislike rate hikes, while workers, shoppers and savers dislike inflation. But since many Canadians are all of those things, it is hard to choose.
For employers considering the need for layoffs, workers desperately trying to catch up with rising prices, for homeowners and market traders, the lack of clarity makes everything harder.
More jobs is generally good news for workers, and the Statistics Canada data showed wages were rising faster — now at a pace of 5.6 per cent. However, that’s still below current inflation, which is running at 6.9 per cent.
But the persistently strong economy signalled by employment data in both Canada and the U.S. seems to be warning us that inflation is not yet sinking back down to the two per cent target range.
CUPE members and supporters rally outside Queen’s Park in Toronto on Friday. If you predict inflation will stay high, expect more labour disputes as wage-earners struggle to catch up. (Carlos Osorio/CBC)
Canada’s next inflation data is still just more than a week away, but last month’s surge in gasoline prices after previous monthly declines could push the consumer price index higher. In the U.S., the most recent inflation number — core inflation, the type with volatile things like gas taken out — has continued to rise.
If prices are going to remain on the upswing, it may not be surprising that on Friday Ontario education workers stood up to a provincial government that had ordered them back to work. Thirty years of tame inflation left employees complacent at first, but more are now grasping the economic principle that a wage increase below the rate of inflation is equivalent to repeated cuts in pay.
When the Bank of Canada’s Tiff Macklem hiked interest rates by “only” half a percentage point last time, some borrowers breathed a sigh of relief, hoping rate increases were coming to a halt.
But borrowers got a rude surprise when Jerome Powell at the U.S. Federal Reserve hiked rates by three quarters of per cent, a rate rise that will inevitably affect Canadian borrowers, too.
The difficulty of making predictions based on economic signals got a real-time demonstration last Wednesday as Federal Reserve chair Powell was speaking to reporters at his monetary policy news conference.
“I notice stocks and bonds are reacting positively to your announcement,” said one reporter. “Is that something you would have wanted to see?”
Powell responded that his intent was not to influence markets, but the world’s most influential central banker then made it clear that anyone who thought the Fed was about to take a break in hiking rates was mistaken.
“There is no sense that inflation is coming down,” he told the assembled reporters as well as the many market players who were listening in on the public feed. “It’s premature to discuss pausing, and it is not something we are thinking about.”
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.
