17 November, 2013
It was the second month in a row Canada’s jobless rate has been below 7 per cent, its lowest level since the Great Recession five years ago. On the other hand, the U.S. jobless rate nudged higher, to 7.3 per cent from 7.2 per cent, according to a separate household survey. However, that was seen mainly due to the impact of the government shutdown, as 80,000 federal workers went on temporary furlough for 16 days.
Canada’s steady performance was largely overshadowed by unexpectedly strong U.S. job creation data – the U.S. economy added 204,000 jobs, double the consensus estimate, as manufacturing, business services and retail all made solid gains, the U.S. Labor Department said.
Toronto stocks rose while the Canadian dollar slipped against a higher U.S. dollar on the reports.
A strengthening U.S. job market is seen as a positive for Canada as it could lead to higher U.S. demand for Canadian exports, a missing ingredient in the country’s recovery from the Great Recession of 2008.
It also raises the prospect the U.S. Federal Reserve could begin withdrawing billions of dollars in economic stimulus sooner than expected.
U.S. stocks also rose, shaking off an initial drop in futures, as the job creation figures for August and September were also revised higher by 60,000.
Economists had expected the government shutdown to have a more severe impact on the U.S. economy. But “while consumers and businesses reported feeling less confident during the month, it didn’t appear to be enough to change their normal buying and hiring activities,” TD Bank economist James Marple wrote in a note to clients.
Canada’s jobs number, meanwhile, was slightly above the 11,000 consensus forecast. However, average monthly gains for the past six months have been below normal, at just under 24,000, economists said.
Still, October’s numbers were strong enough that the Bank of Canada’s trend-setting interest rate is likely to remain unchanged at 1 per cent into 2015, economists said.