Statistics Canada and the U.S. bureau of labour statistics published their December unemployment numbers and there are signs of potential trouble in both sets of numbers. The unemployment rate rose in Canada to 7.2% and fell in the U.S. to 6.7 %. But the number of people in the labour force seeking work fell by a large amount in the U.S. and the total number of new jobs created in December was well below expectations, with only 75,000 additional jobs being added well below the number added in previous months. Revisions may improve that picture but for the time being its not a positive sign. The headline number is attractive-6.7 %seasonally adjusted(non seasonally adjusted its even better 6.5%) unemployment is the lowest rate in 6 years for the U.S. and it looks much better than the Canadian rate which is now .5 % points higher at 7.2 %. Any thought s at the Bank of Canada about raising interest rates will have to be put on hold. Instead they ought to consider lowering them. Equally important the trend in Government to promote cut backs needs to be reversed. While the national rate rose to 7.2 % in Canada the rate rise was substantial in both Ontario and Québec the manufacturing heartland of the country. Quebec’s rate rose to 7.7 % and unemployment in Montreal was 8.0% while Ontario’s rate rose to 7.9 %. On a provincial basis the Canadian rate of unemployment was as follows( the second number is the participation rate): Newfoundland +Labrador 10.8 % 61.2 %; PEI 11.5 % 68.8 %; Nova Scotia 9.2 % 63.3 %; New Brunswick 9.7 % 63.3 %; Quebec 7.7% 65.3% ; Ontario 7.9% 66.3%; Manitoba 5.5% 68.2%; Saskatchewan 3.5 % 69.6 %; Alberta 4.8% 72.9%; B.C. 6.6% 63.8 %.
In the U.S. the key factor which explains the fall in the headline rate to 6.7% was the fall in the number of workers in the labour force. Some 74,000 net new jobs were added in the U.S. to the payroll but this is well below the revised 241,000 jobs added in November. It may well turn out that the December numbers will be revised upward or that they are largely due to the very bad weather that prevailed for a major part of the month. The broad measure of unemployment U6 remained at 13.1 %.So while the headline rate of 6.7 % is welcome news, labour participation rates need to rise and net new jobs need to be substantially increased over this month’s lower level in the coming months to maintain the positive momentum.This may well happen. In December’s report the government sector lost 13,000 jobs, health care a thousand and construction employment fell by 16,000 clear indications that the sequestration continues to impede even lower unemployment.