'Disappointing' Canadian jobs tally forecast

Uneven is the best way to describe Canada's jobs recovery. One month the economy generates tens of thousands of new jobs; the next month, nothing at all.

The jobless rate remains stubbornly high at 7.6 per cent, down only a little more than one percentage point from the recession peak of 8.7 per cent in August, 2009.

This Friday, Statistics Canada releases its Labour Force Survey for May. And economists are anticipating a relatively flat month. The jobless rate will remain unchanged and the economy will add roughly 25,000 jobs, according to a Bloomberg survey of economists.

If they're right, it would be roughly in line with the monthly average of 28,000 over the past 12 months. In April, the economy added 58,300 jobs.

"Don't be shocked by a disappointing Canadian jobs tally," warns deputy Bank of Montreal chief economist Doug Porter. He's expecting a gain of just 5,000 jobs and bump up in the jobless rate to 7.7 per cent.

There's a lot of uncertainty hanging over the rest of the year and beyond. U.S. economic troubles, European debt woes, the high loonie and worries about Canadian household debt could hold back the Canadian economy and slow the hiring plans of business.

Finance Minister Jim Flaherty, who reintroduces his March 22 budget on Monday, is sticking to his forecast of a steady improvement in the jobless rate over the next few years. In March, the Finance Department forecast the jobless rate would average 7.5 per cent this year, falling to 6.4 per cent by 2016, based on a survey of outside economists.

But last week, parliamentary budget watchdog Kevin Page offered a gloomier forecast, predicting the jobless rate would stay at more than 7 per cent for the next five years.

"Despite this strong growth, the unemployment rate remains elevated and average weekly hours worked remains below prerecession levels," the Parliamentary Budget Officer pointed out in his first economic forecast.

"Looking ahead, PBO projects that sluggish U.S. growth combined with the Canadian dollar remaining above parity will subdue near-term growth in the Canadian economy and restrain the decline in the unemployment rate."

This week, Statistics Canada might say something similar about the month that just was.