After months of national back-patting over our relatively strong economy, July’s tepid jobs report splashed cold water on the notion Canada is free and clear of the recession. Amid 9,000 lost jobs, Canada’s unemployment rate inched back up to eight per cent, the first increase in nine months. But a quick glance at the horrendous situation in the U.S., where another 131,000 jobs vanished last month, offers a further reminder of how much better off we are. In a historic shift from the past, when the U.S. regularly outperformed this country, the mighty American job machine has come to look like a two-stroke engine compared to Canada.
Consider the last decade of job growth. Between July 2001 and July 2010, the U.S. economy added only 1.5 million more jobs than Canada, a country with a population just one-tenth the size of the U.S. But that figure doesn’t come close to capturing the yawning gap between the two countries. That’s because the U.S. has relied heavily on government hiring. When it comes to the all-important private sector—where job creation is crucial for sustained growth—the U.S. has actually slipped into reverse. Over the last decade, U.S. private sector employment shrank by 3.2 million. In Canada, meanwhile, private businesses added 1.4 million jobs.
“We’re just light years ahead of the U.S. in private sector job growth,” says Doug Porter, deputy chief economist at BMO Capital Markets. You don’t even need to go back a decade to see that, he says. Over the last 12 months of the recovery, private sector employment in the U.S. has been flat, while in Canada it rose 3.2 per cent. In fact, according to Statistics Canada, virtually all the jobs lost during the downturn have been reclaimed.
There are still reasons to be cautious, warns Pascal Gauthier at TD Economics. The overall slowdown in GDP growth in Canada in the second half of the year will likely cool employment growth. And Canada still lags the U.S. when it comes to productivity.
But for the time being, the recovery is gaining traction far faster in Canada than almost anywhere else, which should give Canadian workers more reason to take comfort in the coming months.
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