Just when many investors thought it was safe to go back in the water – what with the hope of a resolution to the Greek eco-political debacle -- along came more unfavourable tidings to throw jitters into the nerves of market watchers across this country.
It appeared that Canada’s economy was digging itself out of the rubble of a ghastly third economic quarter, when Statistics Canada came out with a bombshell of a labour market survey. On Friday, the nation’s number-crunchers told us employment fell by 54,000 in October, confounding the experts who predicted a rise of 15,000 jobs. The unemployment rate rose to 7.3% from 7.1% in September.
A report by the Royal Bank illustrated that all jobs lost were full-time with a whopping 71,700 positions cut. Part-time employment rose by 17,700. This marked the first decline in full-time jobs in eight months and only dented the gains recorded earlier in the year. The nation’s biggest bank also pointed out, on net, full-time employment is still up by 198,200 in 2011.
However, says the report, "Canada's labour data continues to be choppy and thus it is too early to draw a direct link to the volatility in global financial markets as the European sovereign debt crisis rages on. To be sure, additional declines in November and December would suggest that Canadian companies are feeling the pinch from falling export demand and are reacting to the uncertainty generated from outside Canada's borders.
The bank’s regular economic report goes on to state that "the impact of the sharp swings in financial asset values on household balance sheets and confidence was a noted concern by the Bank of Canada in their forecast update. It was also a contributing factor to the sharp cut in the projection for fourth quarter growth which the Bank now expects to post a 0.8% rise, a markedly slower increase than July's forecast of 2.9%.
"Volatility in the jobs data may serve to exacerbate the weakening in consumer confidence however given that on net, the economy has still generated a solid increase in employment this year, the hit to consumer spending is unlikely to be severe."
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