Canada – now hiring. Record number of jobs gains last month

It would be wrong to downplay the fantastic news that the Canadian economy added a record 108,700 jobs in April, this number is over four times higher than the forecasted growth models of 20-25,000 jobs returning to the market last month. A historic month which reflects the largest single one month job gain ever and a resultant fall of the unemployment rate which now rests at 8.1%. The reduction brings the rate down in line with Germany 8.0% and the UK 8.4% while healthier than the US 10.2%, France 9.8%  and greatly contrasting the crisis level just reached in Spain of 20.0%

As we’ve discussed previously the positive news also triggers the likelihood that we will see Canada’s central bank raise interest rates, perhaps as soon as June 1st. A move that would send a shockwave through the G7 as it would be the first nation to raise rates since the fiscal collapse of the last few years. Under normal circumstances adding that many jobs to the labour market would see a greater fall in the unemployment rate but the ratio only fell marginally as more Canadians went back to actively seeking work.

The foreign exchange rate continues to see the dollar make ground against the US dollar as the rate sits at $1.015 CAD = $1.000 USD after falling back to $1.04-$1.06 last week. Near parity with the US currency has been in place for over a month which shows a 10-12% gain versus the exchange results last Spring. Exporters will watch anxiously to see if this trend lasts while importers will be able to bulk up purchasing that has been long overdue as a result of the recession. Another factor of separation from the US economy is a mortgage market that has remained far firmer due to more restrictive (conscientious) banking and loan methods. All of these factors are showing companies adding staff to fulfill orders, leverage expansion and drive a manufacturing sector back toward normal productivity levels. Retail, construction, information technology and travel/tourism are each showing healthy gains in staffing. Interesting thoughts from Douglas Porter, deputy chief economist at BMO Nesbitt Burns:

“The private sector is clearly beginning to hire in a big way in Canada, and in an important way in the U.S. as well, which suggests that it’s simply not true that this recovery still relies on the artificial stimulus of government spending. Unfortunately, the confidence angle might be attacked because of what’s happening in global financial markets”

Indeed it would take a brave gambler to be entirely confident that the recovery can sustain the type of growth seen since the tail end of 2009, prudence suggests looking at economic indicators each month to monitor the actual trends. The biggest test so far for 2010 may well prove to be the increase in interest rates if this indeed happens, more on that I’m sure in the weeks ahead.

Information for this article courtesy of Reuters