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Briefing highlights

  • Jobless rate holds steady but ...
  • Canada gains as OPEC cuts back
  • A scene I’d love to see
  • Markets tremble on trade fears
  • Canadian dollar above 78 cents
  • All eyes on Freeland’s NAFTA meeting

Jobless rate steady but ...

Canada created 32,000 jobs in March, and unemployment held steady at 5.8 per cent.

But let’s look beyond the top numbers in today’s monthly report from Statistics Canada.

Behind the numbers:

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Those 32,000 jobs were driven by full-time employment, with more than 68,000 full-time positions won and almost 36,000 part-time lost.

Employment is now up 1.6 per cent from a year ago, all of it of the full-time variety. The number of unemployed is now down by 12 per cent. Hourly wages are rising at an annual rate of 3.1 per cent.

“The two big winners were the two big provinces, with Quebec (+16,000) and Ontario (+10,600) leading the way, but Alberta (+8,300) continues to show major progress,” said Bank of Montreal chief economist Douglas Porter.

“While the two big provinces saw their jobless rates hold steady at low levels (5.5 per cent for Ontario and 5.6 per cent for Quebec), Alberta’s tumbled another four ticks to 6.3 per cent, and is now down a honking two percentage points in the past year alone.”

Employment is now down by 20,000 in the first quarter, led by a big January loss, marking the first quarterly drop since 2010, noted Dawn Desjardins, Royal Bank of Canada’s deputy chief economist.

Not only that, in March alone “all of the gains were in full-time employment, but the bulk of the net change was in self-employment,” said Toronto-Dominion Bank senior economist Brian DePratto.

And let’s not forget that 1.142 million people still can’t find work, though that is down from the February level.

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Let’s also not forget the marginalized, even though their situation may be improving: Statistics Canada’s R8 measure of unemployment, which includes discouraged job seekers, those waiting for recall or replies, and involuntary part-timers, stood at 9.1 per cent in March.

These are people many of us tend to forget, though, as Mark Chandler noted, that’s down from the 10.2-per-cent level of a year earlier and at about its historic low.

Yes, this is a good thing, but we should not forget these people.

Also worth noting is that the rate is at 8.2 per cent when adjusted for seasonal factors, said Mr. Chandler, head of Canadian rates strategy at RBC Dominion Securities.

“Looking at the quarterly averages, the data look somewhat disappointing,” said Arlene Kish, director of Canadian economics at HIS Markit.

“Specifically, the private sector failed to make any headway in terms of adding to payrolls,” she added.

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“Plus, Canada continues to bleed part-time positions. However, there are fewer unemployed individuals. Regionally, Saskatchewan and Newfoundland are struggling with jobs losses and a shrinking labour force when you compare year-ago year-to-date figures.”

Over all, economists believe the Canadian jobs market is solid, if slowing.

“Despite a clear cooling in the broader growth figures, the Canadian labour market remains healthy, with solid full-time job growth, a low-low jobless rate and wages firming above 3 per cent,” said BMO’s Mr. Porter.

What does it mean for policy?

“The absence of any acceleration in wages or drop in the jobless rate should be enough to keep the Bank of Canada on hold for now, particularly given only muted GDP growth in the most recent two months of data,” said CIBC chief economist Avery Shenfeld.

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Over a barrel

Canadians are muscling in, gaining more ground in the U.S. oil market amid OPEC quotas.

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The latest numbers from the U.S. Energy Information Administration highlight a “fast change” in the makeup of crude imports as the quota agreement among OPEC and other countries mean a decline in their exports, AltaCorp Capital said in a recent report.

As this chart shows, OPEC accounted for 34 per cent of the eight million barrels a day of crude imports to the U.S. as of December. That marked a steep drop from the 42-per-cent share the cartel held a year earlier.

At the same time, Canada’s share climbed to 47 per cent from 42 per cent, with Colombia also gaining.

Note, too, as The Globe and Mail’s Jeff Lewis reports, how Canada is gaining from Venezuela’s deep economic troubles.

Imports of Canadian heavy crude to Texas Gulf Coast refineries eclipsed those from Venezuela for the first time in January, bumping Venezuela from the top of the list as the major supplier to the key hub.

Indeed, “the precipitous decline in Venezuelan oil production over the past two years has created opportunity for heavy oil producing nations, such as Canada, to deliver the barrels absent from the market,” AltaCorp said.

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For the energy patch, there’s also the fact that “the landed cost of Canadian crude oil to the U.S. remains the lowest among the major exporters,” AltaCorp said, at US$51.89 a barrel compared to a group average US$62.75.

“This price level, along with the geographic advantage of importing Canadian crude oil, and the opening for greater market share in the U.S. should provide some support to the price of Western Canada Select in the coming months as takeaway capacity constraints become relieved,” AltaCorp added.

Indeed, the picture for that Western Canadian price, for a blend of heavy crude and oil sands bitumen, is also brightening as its discount to West Texas intermediate oil narrows, as Mr. Lewis reports.

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A scene I’d love to see

Photo illustration

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Stocks sink

It does seem likely that somewhere in the middle of the absurdity, the U.S. will adopt a sotto voce, de facto soft(er) dollar policy

— Kit Juckes

Global markets are tumbling again after President Donald Trump decided he wouldn’t leave well enough alone, and a disappointing U.S. jobs report added to the angst.

Stocks rebounded Thursday as fears of a U.S.-China trade war eased, only to sink this morning after Mr. Trump floated the idea of an additional US$100-billion in additional tariffs on Beijing.

“The message from the White House has been mixed at best this week, with White House adviser Larry Kudlow and other officials playing down any trade war fears, which worked to boost the markets,” analysts at London Capital Group said in their morning report.

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“However, much of the good work by Kudlow & Co. was undone by Trump on Thursday even, who is showing an increasingly hard-line approach.”

Here’s a look at North America:

“With a shortage of grownups around to send everyone to bed, parenting experience suggests that at some point, a toy will be thrown and tears, probably accompanied by some crying and recriminations, will ensue before exhaustion sets in and life moves on to a different topic,” said Kit Juckes of Société Générale.

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All eyes on NAFTA

Foreign Affairs Minister Chrystia Freeland meets in Washington with the top U.S. and Mexican trade officials as expectations for a new NAFTA rise.

As The Globe and Mail’s Adrian Morrow reports, the Trump administration is playing down speculation of a deal, but the three sides to the North American free-trade agreement are trying to have an overhauled trade pact in place that could be signed next week at the Summit of the Americas in Peru.

Ms. Freeland meets today with U.S. Trade Representative Robert Lighthizer and Mexico’s Economy Minister Idelfonso Guajardo.

Foreign Minister Chrystia Freeland speaks during a joint news conference on the closing of the seventh round of NAFTA talks in Mexico City, March 5, 2018

Edgard Garrido/Reuters

“Even as trade tensions between the U.S. and China have escalated materially in the past week, the tone of the news flow around NAFTA has quietly improved over the past several weeks,” said Daniel Hui of JPMorgan Chase.

“Our baseline has long been that a NAFTA crash-out would be avoided, even if a successful renegotiation would require more time (e.g. early 2019) than official guidance (by March this year),” he added.

“However, we were concerned that more worrying aspects of the U.S. administration’s trade agenda (e.g. with China) might poison prospects for a successful NAFTA negotiation. But several developments on the NAFTA front in recent weeks make us question the extent to which [the Canadian dollar] is currently discounted.”

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