Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Report on Business

Economy Lab

Delving into the forces that shape our living standards
Best Business Blog, EPPY awards, 2011 and 2012

Entry archive:

Economy Lab has moved

Only Globe Unlimited members will now have access to a wide range of insightful commentary
and analysis on the economy and markets previously offered on this page.


Globe Unlimited subscribers will be able to read these columns,
written by some of Canada’s most deeply respected economists,
such as Christopher Ragan, Sheryl King, Andrew Jackson, and Clement Gignac,
as part of our ROB INSIGHT section.


All of our readers will still be able to browse the Economy Lab archives and read our
broader coverage of economic data and news by accessing their 10 free articles a month.


Learn more about Globe Unlimited and how to subscribe.

Economy Lab

Unemployment forecast to remain high Add to ...

The economy may have created all of the jobs lost to the recession in straight number terms. But the unemployment rate is still expected to remain elevated for some time yet.

A new forecast by CIBC World Markets, for example, projects the jobless rate will be 7.5 per cent this year and a still-high 7.1 per cent in 2012.

Government spending helped pump up the economy during the slump, but this year, said economists Benjamin Tal and Emanuella Enenajor, will see the public sector pull back.

"Significant reductions in spending will come by late 2011 when infrastructure stimulus projects wrap up," they said in a report.

"Additional cuts to program spending should see compensation expenses drop on wage restraint, employment attrition and select job cuts. As was seen during the 1990s period of budget tightening, a one-percentage-point drop in the deficit-to-GDP ratio meant an approximate 1-per-cent reduction in the public sector headcount, suggesting the labour market could lose around 35,000 government positions this year."

Other forecasters also expect job creation to be gradual after the bounce back.

Adding to those fears is the construction sector, which accounted for a hefty portion of labour market gains.

But, said economist Adrienne Warren of Bank of Nova Scotia, that's about to change.

In a report on why the renovation market will cool this year, Ms. Warren noted the "far reaching" potential impact on the broader economy.

"The renovation industry is labour intensive, and a large share of its materials are sourced domestically," she said. "The broad construction sector has accounted for 18 per cent of all jobs created in Canada over the past decade, more than double the sector's share of overall employment."



Follow Economy Lab on twitter

 

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories