...against fictions and other tall tales

Saturday, 7 January 2012

Canada's unemployment rate rises to 7.5%

Canada's unemployment rate rose for the third consecutive month in December. According to Statistics Canada's Labour Force Survey, while employment rose slightly in December (up 18,000), the unemployment rate edged up to 7.5% as more people participated in the labour market.

Unemployment rate, Canada, Souce: Statistics Canada
The most significant part of this month's figures is the very large rise in the unemployment rate in the province of Quebec. Employment in Quebec decreased for a third consecutive month, down 26,000 in December. Full-time positions in the province decreased by 34,000 while part-time work rose by 8,800 jobs. As a result, the unemployment rate rose 0.7 percentage points to 8.7% from a month earlier. If we compare with a year earlier, employment in Quebec is down 1.3% (-51,000), with half of this decline (25,700) occurring in December. All in all, this was a bad month for Quebec's labour market.

I cannot think of a better time than now for the large contingent of recently elected New Democratic Party MPs from Quebec to call upon the federal government to address this recent spike in unemployment.


  1. What a way to start the day! and the YEAR, Circuit. Great Nod! Two home runs and one great pitch. The pitch on unemployment is timely. Parliament should look at the improvements in the US. The Quebec figure is not surprising; I personally feel that prior stats were out-of-syn.

    Your BoC commendation is a remarkably well-structured analysis of stock-flow application. I also commend the BoC for anchoring the sectoral account optic, and re-editing their logs. There is much insight in your post. JH will enjoy.

    Finally, the conversation between Ram, JL, Sen and you is healthy. I'm a bit off course
    to engage. I'm certain the operatives will engage soon. Touches an old coastline we explored when instruments weren't even invented over 30 years ago. Your posts take us seadogs down memory-lane lol!!

    Keep that course

  2. Thanks Swells. You're probably right about the QC figures. There must have been a lag. This is bad news, as unemployment now is higher than it was a year ago in QC. I believe it is the only province (with PEI) in such a situation. A few others are at breakeven point.

    Yes, the US figures are not bad, but I still consider them extremely weak for a 'recovery'. Normally, monthly growth should be north of that. But given the situation in Europe, I also consider this as positive.

    By any chance, I'd be much obliged if you had anything to add to my exchange with JL following my Dec 31 post. It concerns the BoC/GoC's options to improve exports. In the past, I recall you mentioning there might be a role for the CB in that regard.

    BTW, do you think austerity closer to becoming reality in the US now that Lew is WH CoS?

  3. nice post circuit! it's important to highlight the approach BoC has undertaken to steer its discourse. Nod also to Gov. Carney and the BoC!! shows the stuff Good Persons and Things are made of.

    GoC has to intend an approach to spending that consumers can easily entertain: it has to focus on manufacturing output. it has to subsidize growth in s&m enterprises by promoting incentives to create jobs. BoC can continue to ease on rates across the board, let the loonie slide-cheap exchange is the greatest boon to an export boom lol; the balance of payments is not an immediate issue. it will adjust itself quite rapidly. anyone remember the loonie at .65usd. best years for the country.
    with Pres Obama, there will be no austerity as the europeans intend it. not with over 20m 'unemployed.' he can finetune the public sector, redistribute budgetary allocations and reprogram state and munis, but he won't 'cut', he'll keep on spending.

    finally mmt talk on tax is misleading. taxation, through government fiscal policy, does what the monetary authority (MA) won't do, but could do. GC makes a great point on that as you yourself highlighted.

    although MA can effect the money supply (MS) directly to stem inflationary pressures ensuing from the creation of money, it doesn't want to affect sovereign financial and exchange parameters that govern the country's macro comparative financial and commercial relationships with the rest of the system (bal trade/payments etc)

  4. JH, thanks for your comments. I agree that a focus on manufacturing is a good strategy moving forward. I can't think of an easier sell for Flaherty. Here's good analytical support from StatCan. The report concludes that Canada's productivity in manufacturing slowed mainly due to low levels of capacity utilization. The GoC should take note.


    But as you mention, an important ingredient would be for a cheaper exchange rate. Could the monetary authority continue to be 'accommodating' in the long haul?

    As for MMT and taxation, thanks for the excellent insight. So I take it that taxation by govt is an alternative to rate hikes, especially when exchange rate considerations come into play. Is this achieved via coordination, or is this pursued in more ad hoc fashion?

  5. ps. i sent a rather lengthy comment with As to your Qs on jan 19, 7:09pacific. ???

    1. My sincere apologies, JH. It seems that your comment got lost in cyberspace. Unlike previous missing comments that I was able to locate in the past, I have unfortunately no trace of yours. Know that I always look forward to your commentaries and am doubly apologetic in this case, as you mention that it was a lengthy note written in response to a question of mine. Feel free to breakdown lengthy comments into multiple short ones, as it may mitigate the chance of losing entire comments. I'd be more than obliged if you could post your comment again. Kind regards.

  6. bullet the points:
    -the MA (monetary authority) must always be accommodating. when inflationary pressures are minimal, accommodation is commonsensical. on the other hand, some measure of inflation, especially wage inflation is good for growth. more fiscal resolve is necessary under growth conditions;
    -deficits are never funded by taxation; liquidity in the system is managed by taxation. a colleague used to refer to taxation as a CB's political safety valve. it doesn't directly affect the IR structure or exchange parameters of the country. TR/CB operations are posting adjustments to the balance sheets of the parties during fiscal periods signalling intentions to markets to react appropriately;
    -the Canadian exchange should remain low. there is no disadvantage of having low exchange for a non-inflationary economy...check post-crisis Iceland;
    -in a global financial system that underscores relationships between sovereigns, especially flexible currency sovereign issuers, in order to monitor speculative operations, ad hoc management is seldom recommended, even on overnight operations. the volumes pervading the system are overwhelming and geo-logistics too complex for regionals to handle. one needs coordinated CB measures and actions. on the domestic scene, Finance and BoC have open channels of communication and recognize intervention. Parliament is never blindsighted by BoC. the notion that some have of "quasi-independent CBs" may be a truism;
    -we definitely have "transcended Bagehot's realm", but publish your book after 2015. the next few years will reveal precedents unforeseen even by Parquez and Godley. enjoy the fireworks Circuit.

    1. Thanks for the bullets. I like the characterization of taxation as a safety valve. As for Canada, it sure looks like inflation is a non issue for the next year or so. A wise move would be for more action on the exchange rate. As I've mentioned in previous posts (as others, including yourself), improving exports should be actively pursued. Regarding the final bullet, are you making reference to the sheer madness of austerity and its outcomes for the next few years. Or perhaps you are envisioning more unconventional (innovative?) policies from the CBs. I gather it is the former?

    2. @jhcraw Nod!
      One query: You refer to the notion of quasi-independent CBs as a truism. Is the BofC quasi-independent? Isn't the Fed independent?

    3. the Fed is independent since 1913 for the right reasons, as opposed to BoC which is legally not: Bank of Canada Act art 14.2 (Finance Minister's directive after consulatation) is explicit about ministerial discretion with Cabinet authorization. however, note that this discretion has never been exercised nor seriously considered as far as i know. here Canada trails politically although i like to think BoC de facto independent, not de jure.
      unfortunate recent development under a mistaken pretext is UK's osborne considering legislation to restrict BoE parameters under certain conditions.

  7. Thanks for your prompt answer. You conclude that the Fed is independent for the right reasons. But doesn't the independence challenge the tenet of some MMT-ers that an independent CB is undemocratic. Why do you favor the independence?

  8. that is a fundamental question. i find it difficult to appreciate how any Government can manage monetary policy within the public ethos when its main interest is being re-elected, as a result of which it manages monetary policy as an ancillary of fiscal policy. the time spans of the agent and the measures are non-synchronous.
    to those non-enlightened mmt-ers i suggest that an independent CB is the only option to secure long term democracy in the face of misconceptions and misgivings of wanting governments. the design of policy is best performed by the 'weberian' militia of the civil service: local and party interests and opportunities are usually lost in the maze of the many.
    as far as the Fed, i concur with one of your interlocutors who commented a while back that after Volcker, Bernanke is the best. in his own manner, he has demystified the rhetoric, enhanced transparency and demonstrated a reasonable dosage of agonistic modesty and courage amidst the confusion.