Canadian economy expected to gain 12500 jobs in September, say experts

Canadian economy expected to gain 12500 jobs in September, say experts (external - login to view)

OTTAWA The Canadian economy is expected to post modest job growth for September amid the turmoil in financial markets, but trouble lies ahead as the United States appears headed for a deep recession, economists say.

The job numbers, to be reported Friday by Statistics Canada, follow the evaporation of more than $150 billion in value on the Toronto Stock Exchange last week and tightening credit markets, forcing businesses to keep a close eye on costs.

And the US$700-billion bailout of U.S. financial industry, signed by President George W. Bush last week, is not expected to be an instant cure-all.

"The Canadian job market hasn't exactly given a stellar performance this year and that's because the economy itself is in a depressed shape," TD economics strategist Millan Mulraine said, noting the economy shrank in the first quarter and eked out only a small gain in the second.

The average estimate by economists is for the addition of about 12,500 new jobs in the Canadian economy in September, that's down slightly from the 15,200 jobs created in August. For the first eight months of the year the Canadian economy has created 87,000 jobs compared with 221,000 in the first eight months of 2007.

In the last two years, many new jobs have been created in resources industries such as oil and gas, mining and agriculture based in Western Canada, offsetting big losses in the manufacturing sector centred in Ontario and Quebec.

In addition, public sector jobs in education and health care helped boost the employment picture.

Canada's jobless rate, currently stands at 6.1 per cent, close to its lowest level in three decades, though economists expect it to rise to 6.2 per cent for September.

In the 1981-83 North American recession, the worst in the post Second World War period, unemployment hit nearly 11 per cent in the United States and peaked at 13 per cent in Canada, more than twice the current level.

Mulraine forecast the Canadian economy will grow by about 15,000 jobs in September, mostly due to hiring related to the Oct. 14 federal election.

"That's the only reason why we see a big bump for September," he said.

"We expect the trade sector to suffer because of the drop in crude oil prices and other commodities, so that will feed into the usual domestic underlying weakness."

Mulraine noted the creation of permanent full-time jobs by the private sector will be key in Friday's Statistics Canada report.

In the United States, employers chopped payrolls by 159,000 in September, more than double the cuts made just one month before and the ninth straight month of job losses.

So far this year, 760,000 jobs have been lost in the United States.

"This is just more confirmation that the U.S. economy was weakening markedly in September, even before the worst of the financial storm hit," BMO economist Jennifer Lee wrote in a report.

And a weakening U.S. economy could spell bad news for Canada.

The economy has become the main issue in the Canadian federal election, with all the opposition parties attacking the governing Tories for what they say is a do-nothing approach to slowing economic growth.

Prime Minister Stephen Harper and Finance Minister Jim Flaherty continue to insist the economy is fundamentally sound and the financial crisis and housing slump that have battered the United States isn't nearly so severe in Canada.

However CIBC World Markets economist Krishen Rangasmay had a more pessimistic view than most and forecast the economy to lose 5,000 jobs in September.

"We don't see lots of jobs being created over the next few months," Rangasmay said.
Rangasmay pointed to a six-month trend in the Canadian economy that has seen 3,000 jobs disappear.

"It's not pretty," he said. "Until the U.S. economy picks up, which we think is going to happen in the second half of next year, we're expecting some weak numbers not only for September but for the rest of this year."
I would say this prediction from market bone readers is wildly out of sync with reality. The only pick up in the US economy will be in it's speed of decent.

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