World Credit Watch: February 2012

FACTS: Total employment edged up in January (+2.3K) following an increase of 21.7K jobs in December. Losses were observed in full-time jobs (-3.6K) while part-time jobs posted an increase of 5.9K.

The goods-producing sector increased 9.3.K, following an increase of 14.5K the previous month. Within the goods-producing sector, manufacturing (+10.1K) and utilities (+6.4K) were the top performers. The services producing sector (-7.0K) lost almost all of December’s gains (+7.1K).

Among services producing sector, Educational services (+22.8K) was the top performer while Professional, scientific and technical services (-44.8K) lagged. At the provincial level, five provinces posted an increase in employment. Quebec experienced the largest gains (+9.5K) while Ontario (-7.5K) lagged. The unemployment rate increased to 7.6% from 7.5% a month before.

OPINION: Canadian employment remained essentially unchanged in January, a performance well below consensus expectations for a 22K gain.

One silver lining of this report is the performance of the private sector (+19.7K). This sector increased headcounts for a third month in a row thanks to solid performance of the manufacturing sector which benefits from improvements south of the border. Despite this rebound, private sector jobs in Canada still remain below last July’s peak due to the massive jobs destruction in the Finance, insurance, real estate and leasing (FIRE) sector.

Over the last six months, the FIRE category experienced by far its worst performance on record (-72K). This combined with significant losses in the construction sector (-44K) could indicate a cooling housing market in Canada, something that’s not yet corroborated by data on housing starts, resale sales and home prices.

We will have to wait another month of data to conclude on this puzzling situation. Otherwise, despite the fact that Quebec experienced the best performance among the provinces, the rebound remains disappointing given the drop of the previous months. Private sector jobs were down again in the Province in January (-1K), the sixth decline in a row. However, we continue to expect that LFS (household survey) for that province should converge to the SEPH (establishment survey) in the coming months, the latter showing a much better employment situation.