Why Canada's job figures should scare Stephen Harper

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Stephen Harper's strategists should have felt a chill down their spine when they saw the latest job numbers.

A weak Canadian jobs report last week hinted at a particularly damaging narrative for Mr. Harper. The job market is stubbornly soft in central Canada – the critical political battleground – while in the United States, it is gathering steam.

That should make Mr. Harper's Conservatives shiver even in July. They can argue that they've stabilized their political fortunes in 2014 after being gouged by the Senate scandal last year. But more job stats like this will shake the foundations of Mr. Harper's strategy.

This is a leader who for five years has built his political identity on the idea that he's focused unerringly on the economy and jobs, and that in tough times, Canada is doing better than others.

That's the sweet spot for Mr. Harper's Conservatives, who argue that in uncertain economic times, it's too risky to take chances on an unproven leader. Right now, the Tories are running Internet ads with the tag line, "We're better off with Harper."

It's pretty clear from polls and recent provincial election campaigns that economic insecurity is one of the key sentiments driving voters. For a long time, Canadians who fretted saw stories of deeper anxiety in the United States. But that's been changing. June's job figures underlined that.

Canada lost 9,400 jobs and unemployment ticked up to 7.1 per cent. Outside Alberta's oil economy, it's far worse. Ontario lost 34,000 jobs.

Meanwhile, the United States added 288,000 jobs, and unemployment fell to 6.1 per cent. And the trend has been similar for a while.

Stéfane Marion, the National Bank's chief economist, said in Ontario and Quebec, there's been no real growth in full-time jobs over the past year. The U.S. economy, however, has hit a "cruising speed" of 2-per-cent job growth.

That's an unusually big difference between the United States and Canada's industrial centre. "We haven't seen this kind of divergence in 20 years," Mr. Marion said.

It's not unreasonable to argue the United States has been catching up to Canada. But Canada's job market has slowed. Voters have known the economy is uncertain for a while but they may question a soft job market at home when they see things picking up in the United States.

The Conservatives have often repeated an argument that they have the best job record in the G7 since the depths of the recession, but that's starting to get a bit stale, too. Since they were re-elected in June, 2011, Canada's employment rate has grown more slowly than any G7 country except Italy.

Mr. Harper has other economic arguments for the next election. He can argue he's brought the postcrisis deficit under control, and kept taxes low . The Canadian economy did weather the crisis relatively well.

But voters usually care less about deficits than economic security, and a persistently soft job market makes people feel vulnerable. Seeing neighbours and kids unable to find jobs is a concrete indicator. And if they're looking to compare their lot to others, they'll see reports of things improving in the United States.

Mr. Harper knows the main battle for seats that his party faces is in Ontario, and that's where a weak job market has made many feel vulnerable .

There's time for the story to change. Mr. Marion notes the "divergence" between job markets in the United States and central Canada is so unusual you'd expect it to be short-lived. The economy in Ontario and Quebec depends on exports, so U.S. job growth should eventually mean the same in central Canada.

Nowadays, politicians don't need to be reminded that election campaigns can turn on jobs. For Mr. Harper's Conservatives, there's not much worse than a chilly job market in Ontario while things are looking sunny south of the border.