Good news for unemployed; jobs to be more plentiful in 2010, economists say

The Canadian Press ~ The News
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OTTAWA - It won't be like two years ago, but the Canadian economy is again poised to start churning out jobs instead of burning them.
Following the pre-Christmas surprise that 79,000 jobs were created in November, economists expect December's numbers, which will be announced Friday morning, to again be positive.
And the outlook for 2010 is even rosier, with projections in some quarters that more than 300,000 new jobs will be created.
The consensus of 22 economists surveyed this week forecast a 20,000 gain in December - with some going as high as 40,000. That would be the second consecutive month of job gains, despite a so-so economy that only began exhibiting the first significant signs of growth at the tail end of 2009.
Export Development Canada's chief economist, Peter Hall, believes Canadian workers may benefit from, of all things, the fact that employers cut back so drastically last fall and winter when the global recession came ashore. More than 357,000 jobs disappeared in five months.
"It appears that business response to the recession was more immediate than usual and, as such, employment is not lagging the cycle to the same degree," he said in an analysis.
"Time will tell, but it is possible that hiring will resume more quickly than usual when the economy starts to grow again."
Don't read too much into Friday's data, advises Scotiabank economist Derek Holt, particularly if it comes out negative - as he suspects it might.
November's outsized gain, particularly in the education sector, leaves the Statistics Canada data vulnerable to a make-up low number for December, he says. Smoothed out over the past several months, the economy has been adding about 25,000 jobs a month.
The more telling story is that 2010 will bring a new chapter for employment in Canada, economists say, reversing the job destruction of the past year. At one time during the downturn, the economy had shed 450,000 full-time jobs.
Holt is going out on the limb in forecasting a 300,000-plus gain in Canada and a 2.8 million pick-up in the U.S., which has not seen a positive employment report in two years.
He agrees with Hall that panicky employers overdid the shedding of jobs during the downturn and now that production appears to be expanding sharply, employers will have to bring some of those workers back.
This week saw two separate reports that showed manufacturing in the U.S. basically going "vertical" in December, notes Holt. And with the exception of the high-tech crash at the turn of the century, Canada's employment profile has closely matched what is happening south of the border.
"When they start up their factories, the order comes across the border to do likewise in order that all fit into the same supply chain picture," he explains.
The employment picture is also being boosted by massive stimulus spending in both the U.S. and Canada, which is expected to most impact the economies in the latter part of 2009 and early 2010.
As with the economy as a whole, the longer term prospect for labour markets remains cloudy, says Holt.
Still, the apparent turn-around in Canada's labour markets has occurred quicker than many had thought.
Last year at this time, many analysts and policy-makers believed employers would keep unloading workers until at least early 2010, even after growth had resumed, and projected an unemployment rate above 10 per cent.
Now it appears the rate may have peaked in August when it shot to 8.7 per cent, says Avery Shenfeld, chief economist with CIBC World Markets.
Shenfeld said a popular misconception is that employment lags the economy coming out of recessions. The reality, he says, is that only the unemployment rate does.
"Typically, when you want to increase output, you have to hire someone to do it."
The unemployment rate tends to lag, he explains, because during a downturn many stop looking for work and hence vacate the labour market. As conditions improve, they start looking for work again and so to cut into the unemployment rate, job gains must not only better normal population growth, but also the return of tens of thousands of disaffected workers.
Shenfeld predicts the unemployment rate may not dip below eight per cent until 2011 even with job gains of over 200,000 this year.

Organizations: Export Development Canada, Scotiabank, Statistics Canada CIBC World Markets

Geographic location: Canada, OTTAWA, U.S.

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