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Jobs lost

They called it the “Target effect” when the giant U.S. retailer came to Canada a couple of years ago and helped drive down consumer prices.

A new version might be: Driving up job losses.

The impact of Target Corp.’s shutdown in Canada, along with the loss of jobs at Future Shop, appears to be showing up in the latest jobs numbers, as The Globe and Mail’s Tavia Grant reports today.

Canada lost 19,700 jobs in April, according to Statistics Canada, as full-time work climbed by a healthy 46,900 but the country shed 66,500 part-timers.

The unemployment rate held steady at 6.8 per cent.

Statistics Canada’s “trade” measure, which includes the retail sector, lost 20,500 positions, a figure observers linked to the hit from Target and Future Shop.

“The reported closure of several stores by a couple of major retailers likely had a negative impact on employment -- which was captured by the 21,000 decline in the ‘trade’ category,” said National Bank senior economist Krishen Rangasamy.

My colleague David Parkinson scoured the numbers and found that 14,200 jobs were lost among “retail salespersons, sales clerks, cashiers, including retail trade supervisors,” not seasonally adjusted.

Job losses were expected, but April’s cuts were deeper than anticipated.

“Consensus was looking for at least a small setback, given some expected pullback from March’s good gain and from Target’s closure in this report -- in fact, employment in retail and wholesale trade fell 20,500, not far from the estimated 17,500 job loss at the retail chain,” said chief economist Douglas Porter of BMO Nesbitt Burns, referring to the consensus among economists for today’s report.

“We had expected a weak report with the one-two punch of the Target layoffs and some payback from March’s artificial strength,” he added.

Notably, too, the jobless rate in Alberta also held steady, at 5.5 per cent, as gains in part-time work far outpaced the loss of full-time positions in the oil-shocked province.

Jobs were also cut by budget-wary governments.

Here’s another noteworthy tidbit: The number of hours worked picked up by 0.3 per cent from March, “a much stronger showing than in previous months and a sign of stronger wages and salaries growth,” said David Madani of Capital Economics.

Over the course of the past year, employment in Canada is now up 0.8 per cent, or by 139,000 positions, all in full-time work.

In the United States, the picture was somewhat mixed.
“Although non-farm payrolls increased by a relatively healthy 223,000 and the unemployment rate edged down to a seven-year low of 5.4 per cent, April's employment report was otherwise something of a mixed bag,” said Paul Ashworth of Capital Economics.

“All things considered, any lingering possibility of a June rate hike from the Fed is now off the table, with September probably the most likely lift-off date now.”

How markets are reacting to the U.K. election

Markets climb

British stocks flew off the shelves today as investors welcomed the election return of the U.K. Conservatives.

As our European correspondent Eric Reguly writes, questions remain, but markets are giddy for now in the wake of the sweep by Prime Minister David Cameron.

London’s FTSE 100 rose 2.3 per cent.

“Traders had an extra bounce in their step as they made their way into the city today, as a Conservative majority clears up a lot of the uncertainty that had hung over the country,” said market analyst Alastair McCaig of IG in London.

“Although far from perfect it does offer a known quantity, and without the complications of a Lib-Dem coalition it may well pave the way for a slightly faster paced U.K. recovery,” he added in a research note.

“These positives are outweighing the worries over the Conservatives bringing about an EU referendum as this has been perceived as a vote-winning decision more than anything else, and the markets can worry about that much closer to the time. Considering how blasé both currency and equity markets had been in the run-up to this election, any hangovers should be long gone by the time Monday rolls around.”

Other markets also rose.

In Asia, Tokyo’s Nikkei gained 0.5 per cent, and Hong Kong’s Hang Seng 1.1 per cent.

And elsewhere in Europe, Germany’s DAX and the Paris CAC 40 climbed by 2.5 per cent or better.

North American stocks also rose, buoyed, too, by the U.S. jobs report.

Cineplex hikes dividend

We’re paying more for popcorn, and Cineplex shareholders are reaping the benefits.

The movie chain today hiked its annual dividend to $1.56 a share, from $1.50, as it unveiled a rise in first-quarter profit and a record take from concessions.

First-quarter profit climbed to $10.5-million, or 17 cents a share, from $5.1-million or 8 cents.

Revenue rose to $289.8-million from $280-million, though box office revenue per patron dipped to $8.90 from $9.04.

Concession revenue per patron, however, rose to a record $5.18 from $5.05.

(Which is interesting because given the amount I tend to pay for popcorn and pop, other people must be bringing their own.)

Loonie projected to fall

Analysts are out in force warning investors that the loftier loonie is headed for a fall.

Not that the recent range of 82 cents U.S. to about 83 cents is anything to brag about, but currency watchers expect the Canadian dollar to head back below 80 cents.

Last week for example, Bank of Nova Scotia projected the currency will hit almost 85 cents soon, but slip to close out the year at 79 cents.

Then earlier this week, Bank of America Merrill Lynch said the loonie is still overvalued by almost 3 per cent, and, like Scotiabank, predicted an end-of-year value of about 79 cents.

And just yesterday, Société Générale said it expects a Canadian dollar worth just 77.5 cents by September.

The loonie has had a lot going for it lately, including a rally in oil prices, a softer U.S. dollar and a brighter outlook from the Bank of Canada.

"The outlook on oil is likely to prove less supportive while the probability of better U.S. data should increase after a long series of negative surprises," Société Générale's Sébastien Galy and Stéphanie Aymes said in their report.

"The supply of oil has been steadily receding as the peak of production in shale was delayed by the time it takes between the first drilling and exporting oil," they added.

"This is leading oil higher until such point as it becomes attractive for more shale production to come on line and this particularly as production costs are likely rapidly declining as demand cools. Levels close to [$70 U.S. a barrel for West Texas Intermediate] should trigger this."

Foreign investors have been hurt, having pumped money into the Canadian oil boom while Canadians spread their rising wealth abroad "moderately," Mr. Galy and Ms. Aymes said.

"This meant that as oil rose the CAD was naturally pressured higher with positive portfolio flows also increasing this trend," they said, referring to the Canadian dollar by its symbol.

"With the recent collapse in oil prices, foreigners have seen a collapse in the value of their CAD holdings with a limited time to reduce their exposure," they added.

Bank of America Merrill Lynch, by the way, has changed its forecasts to peg the loonie a bit higher than it had earlier.

"However, the Bank of Canada's optimistic presumption for a seamless transition from energy to non-energy sector-led growth, alongside an unwind of overly dovish market Fed expectations will, in our view, help support the USD as U.S. data gather pace," said currency strategists Ian Gordon and John Shin, referring to the greenback by its symbol.

The Bottom Line: Don't count on a soaring loonie for long

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