Economic Indicators Review: Canada

– GDP for the month of November showed a 0.3% increase, one tick higher than consensus expectations. That was the best performance in 7 months. The goods sector saw a 0.6% increase in output with gains in almost all sub-sectors, including a 0.7% advance in manufacturing. That said, output in the goods sector is now at the same level it was at the end of 2011. The services sectors rose just 0.1% in November as gains in retail and wholesale offset declines elsewhere. Industrial production rose a sharp 0.8%, in line with the manufacturing rebound. With November's gains, Canada is on track for Q4 GDP growth of around 1% annualized, in line with the Bank of Canada's latest estimates for the quarter. So the stronger-than-expected November data is unlikely to prompt a rethink at the BoC of its recent dovish turn. In any case, the output gap isn't closing until at least the second half of next year.


The Survey of Employment, Payrolls and Hours (SEPH) which polls establishments and lags the more closely watched Labour Force Survey by roughly two months, showed that Canada gained just 3,100 jobs in November. That came after large job losses in the prior two months, taking the net jobs tally over the September-November period to -48,000. Average weekly earnings rose 0.5% in November, taking year-on-year gains to 3.2%. Earnings are currently tracking +2.1% annualized, less than half the pace seen in Q3. Average weekly hours worked rose 0.3% to 33.2 (from 33.1 in October). Annual wage growth in sectors including mining/oil/gas (+4.9%), forestry (+9.5%), management (+9.5%) and construction (+6.6%) were above the national average.

Statistics Canada revised the Labour Force Survey data using its latest estimates for seasonal factors. The revisions were minor, trimming the jobs count for 2011 and 2012 marginally, while raising the 2010 tally. That left overall jobs created over the last three years roughly unchanged at 808K, with 310K coming in 2012 alone (versus 312K before revisions). The 2012 tally was trimmed a bit, because the 12.3K downward revision to the goods sector (to 74K) was a bit larger than the 10.7K upward revision to the services sector (to 236K). But the composition of jobs improved a bit for 2012, with slightly more full time jobs (+1.9K to 309K) and more paid jobs (+5.2K to 340K).

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