These are stories Report on Business is following Friday, Dec. 7, 2012.
Jobless rate dips
Everyone is hailing today’s jobs report from Statistics Canada, and rightly so.
But let’s not forget that the nation’s young people have gained no jobs in the past year.
As The Globe and Mail’s Richard Blackwell reports today, Canada’s economy churned out 59,000 jobs last month, according to Statistics Canada.
The unemployment rate dipped to 7.2 per cent from 7.4 per cent.
And, in a strong sign, the bulk of the new jobs were full-time, and in the private sector, which accounted for 48,000 positions.
Over the course of the past 12 months, private sector employment is now up by 1.7 per cent, or 187,000 jobs. Employment in the public sector has gained at a faster pace, 2.1 per cent or 76,000 positions.
Youth unemployment also fell, to 14 per cent from 14.7 per cent, as 16,000 jobs were created among that group.
But let’s look closer at the past 12 months.
Employment among men between the ages of 25 and 54 has climbed by 68,000 from a year ago, or 1.1 per cent. Gains among women in that age group, and in that period, have amounted to 66,000 or 1.2 per cent.
But for those between the ages of 15 and 24, employment is about 1 per cent below the levels of a year ago, at just about 2.4 million. Almost 400,000 are without jobs.
Look closer still: Full-time employment among Canada’s youth is down by 2.5 per cent from a year ago, while part-time work is up a shade.
One wonders how much better it will get for the country's young people, given that the over all jobless rate is projected to remain above 7 per cent. Toronto-Dominion Bank, for one, projects average monthly job creation in Canada of 15,000 positions next year.
Looking ahead, the job market will be facing several headwinds," said TD economist Dina Ignjatovic.
"The public sector is dealing with spending constraints which is likely to limit hiring prospects, while the private sector will continue to be faced with a slower growing economy."
Over all, today's report shows strength, a good sign given that the economy stalled in the third quarter of the year.
“When it rains it pours, as Canadian employment rebounded from a drought with a strong gain in November that suggests that the Q3 economic slumber did not portend something worse for the final trimester of the year,” said chief economist Avery Shenfeld of CIBC World Markets.
“While these numbers are choppy, the gain of 59,000 positions, nearly all of which were full time, took the unemployment rate back down two ticks to 7.2 per cent, reversing most of the earlier upswing,” he said in a research note.
“Less desirable was that the jobs were all in the service sector, led by wholesale/retail trade and hospitality, two lower paying sectors, although there were good gains for professional services as well.”
The U.S. jobs market also picked up some steam, with an increase of 146,000 jobs, according to the Labor Department today.
As in Canada, the jobless rate dipped, to 7.7 per cent. What's notable there is that it's the lowest rate of unemployment since late 2008, The Globe and Mail's Kevin Carmichael writes.
"Superstorm Sandy appears to have disrupted employment less than anticipated in November," said senior economist Sal Guatieri of BMO Nesbitt Burns.
"However, the better-than-expected report doesn’t alter the view that the economy is grinding out just moderate job gains, as businesses continue to worry about the uncertain outlook for fiscal policy. Despite the further drop in the unemployment rate, the Fed will likely announce new stimulus measures next week."
Germany cuts forecasts
Europe’s economic engine is sputtering, adding a new measure of uncertainty to a region beset by mounting troubles.
Germany’s Bundesbank today put a chill into markets by slashing its outlook for economic growth, projecting gross domestic product will grow by just 0.4 per cent next year.
That’s well down from the forecast of 1.6 per cent in the summer.
The central bank also expects Germany will close out this year with growth of just 0.7 per cent, also down from its earlier projection.
The new forecasts for Germany, whose economy is key to the embattled euro zone of 17 countries, and which has helped push and fund the region’s bailouts, come just one day after the European Central Bank slashed its projections for the region.
“The cyclical outlook for the German economy has dimmed,” the Bundesbank said today.
“Enterprises are cutting back their investment and hiring fewer new staff,” it said in a statement, though it does see a brighter picture down the road.
“The main drags are not only the adjustment recessions in some euro area countries but also the slowing of the global economy. Nonetheless, in its latest projection the Bundesbank does not foresee a protracted slowdown but instead anticipates a return to a growth path soon. This is predicated on the assumption that the global economy regains momentum and the euro-area reform process progresses further.”
Bundesbank president Jens Weidmann predicted there will be no “major damage to the employment” levels of the country.
“The Bundesbank projects that the labour market will come through the economic slowdown in good shape,” the central bank said.
“Working hours will once again act as a cyclical buffer. The unemployment rate could edge up to 7.2 per cent in 2013 before falling back to 7 per cent in 2014.”
If all goes according to the forecasts, and the banking and debt troubles of the euro zone do not escalate, Germany’s economy should rebound in 2014 with growth of 1.9 per cent, the Bundesbank added.
Yesterday, as The Globe and Mail’s Eric Reguly reports, the ECB cut its forecasts for the monetary union, projecting the economy will contract by 0.5 per cent this year and 0.3 per cent next year. A return to growth of 1 per cent was forecast for 2014.
Senior currency strategist Elsa Lignos of RBC in Europe said new forecasts were expected to be lower, given the earlier ones were six months old, but the latest projection for growth in 2013 is less than half the 1 per cent expected by markets.
A separate reading showed industrial production declining 2.6 per cent in October from September.
Scotiabank profit climbs
Bank of Nova Scotia’s profit climbed 31 per cent in the fourth quarter, driven by higher loan growth in Canadian banking and increased trading revenues, The Globe and Mail's Grant Robertson reports.
Canada’s third-largest bank earned $1.52-billion or $1.18 a share, compared to $1.16-billion or 97 cents a year earlier.
”The bank is well positioned to continue to deliver growth in all business lines," said chief executive officer Rick Waugh.
"Earnings have remained resilient despite the moderated global economic growth. The bank’s diversified platforms, sustainable revenues, high profitability, strong capital and its focus on adding new customers, particularly in the higher growth markets, should continue to support growth in 2013 and beyond.”
China approves Glencore-Viterra deal
China’s government has cleared the way for Glencore International PLC to swallow up Canada’s Viterra Inc., just days, or perhaps hours, before Canada rules on a massive Chinese takeover of Nexen Inc.
Because the Canadian agribusiness giant operates in China, approval was required by the ministry of commerce for the $6-billion deal.
That’s all Glencore and Viterra were waiting for.
“Glencore now expects the effective date of the arrangement to be Monday, Dec. 17, 2012 , as a result of Viterra and Glencore having agreed to extend the date for completion of the arrangement,” the company said.
As The Globe and Mail’s Shawn McCarthy and Nathan VanderKlippe report today, the Canadian government is expected to rule by late Monday, and possibly as early as today, on the proposed takeovers of Nexen by China’s CNOOC Ltd. and of Progress Energy Resources Corp. by Malaysia’s Petronas.
- Glencore’s $6.1-billion Viterra takeover cleared by China
- Ottawa poised to rule on Nexen, Progress Energy foreign takeovers