Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Canada’s most-awarded
newsroom for a reason
Stay informed for a
lot less, cancel anytime
“Exemplary reporting on
COVID-19” – Herman L
$1.99
per week
for 24 weeks
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

The U.S. reported impressive jobs creation numbers for April, but there's a long way to go to make up for the 8 million positions lost in the financial crisis.

Mark Lennihan/The Associated Press

The risk-factor for Friday's U.S. jobs report is high.

The U.S. economy is forecast to have created 533,000 jobs during May, according to a survey of economists by Bloomberg, but much of that is expected to represent temporary hiring by government for the census. About 290,000 jobs were generated during April, according to the non-farms payroll data.

There is also every reason to expect that at least some speculators are leaning in the wrong direction with a high estimate for job creation during May of 750,000 and a low-ball forecast of 220,000, according to Bloomberg data.

Story continues below advertisement



What are the expectations? Investors will be focusing on private-sector hiring buried in the data. Although economists expect that will increase for the fifth consecutive month, it appears hiring slowed during May as evidenced by the failure of the initial jobless claims data to fall and indications that hiring by the manufacturing sector has slowed.

"We would not be surprised to see upwards of 400,000 new positions in this one category [census hiring]alone," said Meny Grauman, an economist with CIBC World Markets Inc., He expects private-sector hiring will reach 150,000 in May, having sharply lowered his estimate by 50,000 jobs this week.

CIBC World Markets expects the monthly employment gains will average 150,000 to 200,000 jobs during the second half of 2010 and into 2011. "It would be an historically slow recovery," Mr. Grauman said. "In past recoveries you would see double that monthly gain."

That rate of job creation would not make a big dent in the unemployment rate until well into 2011, Mr. Grauman said. "Although U.S. economic fundamentals look good, the recovery looks like it is ahead of plan. We expect the recovery in the U.S. will slow down in the second half of 2010 and into 2011."

CIBC World Markets expects the U.S. house construction industry, a big employer, will take a long time to recover and it thinks U.S companies will be able to meet increased demand by extending the hours worked by their current employees instead of hiring new ones.

The U.S. unemployment rate today is expected to decline to 9.8 per cent during May from 9.9 per cent in April, according to Bloomberg.

How will the market react? For those bullish about the stock market, it will all depend on U.S. jobs. That will be critical both for the housing recovery and the retail sector.

Story continues below advertisement

And the third quarter of 2010 could be pivotal. "The bulk of fiscal-led stimulus dollars will be spent then and the patient will be taken off life support," said Paul Taylor, chief investment officer for BMO Harris Private Banking. "Will this become a self sustaining recovery?"

The outlook is good, Mr. Taylor said. "We have [already]seen job growth, which is the catalyst for organic growth. ... As we get into the latter half of 2010 there will be meaningful job growth," he said. He expects the economy will create 250,000 to 300,000 jobs a month, which is what is needed to significantly reduce the unemployment rate. Over the next three years he expects a modest average annual growth rate in the U.S. of 2.5 per cent to 3 per cent with the growth slowed because of high debt levels.

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies