CKUA

[Arctec]

Jobs, export surge confirm recovery

HEATHER SCOFFIELD
Saturday, March 10, 2007
A solid jobs report for February and a surge in exports in January confirm the year got off to an energetic start, reversing the slowdown that plagued the Canadian economy for much of last year.

"The trade results are much better than expected, and while some of the improvement is due to lower imports, they still make a solid one-two punch of strength alongside the firmer-than-expected jobs data," said Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc. "The Canadian economy is maintaining solid momentum early in 2007."

Growth in the fourth quarter of 2006 measured only 1.4 per cent at annualized rates -- the lowest in three years -- but December showed signs of a quick recovery, and yesterday's reports confirmed the trend.

The unemployment rate dipped slightly, back to a 30-year low of 6.1 per cent in February, Statistics Canada said yesterday, with the economy adding 14,200 new jobs.

Compared with a year earlier, there were 392,000 more people with paid employment, an increase of 2.4 per cent.

Windsor, Ont., and Saguenay, Que., had the highest unemployment rates among the country's cities, at 9.8 per cent, while Calgary and Victoria tied for the lowest rate of 3.1 per cent.

The February increase of 14,200 is moderate, but it comes after a massive job creation surge of almost 90,000 new positions in January -- leading economists to conclude that the strength in the labour market is undeniable.

"The underlying employment picture remains very healthy in Canada with an average of 42,000 net new jobs created in the last six months," says economist David Tulk with Toronto-Dominion Bank.

As has often been the case over the past year, the services sector was responsible for the bulk of the new jobs, adding 48,500 positions, while the manufacturing sector shed 34,700 jobs, mainly in Quebec.

This is likely because chemical manufacturers in Quebec were hit particularly hard by the strike at Canadian National Railway Co., Mr. Tulk said.

However, the manufacturing labour situation has been surprisingly stable for the past six months, after almost two years of decline.

Quebec and Ontario were the primary beneficiaries of new jobs in the services sector, Statscan noted, with thousands of new positions in finance, insurance and real estate.

In February, full-time positions accounted for 10,500 of the new jobs, while part-time accounted for 3,700 positions. For the past year, most of the gains have been in full-time employment, but part-time employment has been picking up strength since October, Statscan said.

The jobs market probably can't sustain the strength of recent months, Mr. Tulk warned. He expects job creation to average between 15,000 and 20,000 net new jobs for the rest of the year.

A revival of Canada's trade was also evident in data released yesterday by Statscan.

Exports hit a record high of $40.8-billion in January, up 0.9 per cent on the month. And imports slowed, down 2.8 per cent to $34.4-billion. On balance, the trade surplus widened considerably, to $6.4-billion from $5-billion.

"It may still be too early to pop out the champagne corks, but [yesterday's] data on Canadian merchandise trade certainly suggest that the fortunes of Canadian exporters are starting to improve," said Marc Lévesque, chief economics strategist at TD Securities Inc.

Strong exports in January followed two previous months of strength, firmly cementing a positive trend, he said. In real terms, factoring out the effect of prices, exports jumped 1.3 per cent in January, making for a 5.6-per-cent gain over the past three months, Mr. Lévesque added.

Sales to the United States rose 0.4 per cent in January, despite declines in automotive and energy exports, while imports from the United States fell 2.9 per cent. As a result, the trade surplus with Canada's main trading partner jumped to $8.7-billion, the highest in the past year.