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Things I'm surprised at (or would have been surprised at if I had known this data one year ago);

1. That the recession wasn't worse (though I'm still not sure we're safe yet).

2. That it didn't hit construction worse than manufacturing.

3. That it hit Ontario as badly as it did. And I'm still uncertain why that is. Autos? Ontario is the most dependent on the US?

Why was this one (touch wood) not as bad as the 81 and 90 recessions? Because this time the Bank of Canada didn't have to worry about inflation.

The numbers seem promissing but I doubt its over yet. Another day, another boom, another change in labour.

Nick, of course the BoC didn't have to worry about inflation, world inflation happened. The largest central banks all dropped rates to under 1%. Although, if you believe that I'm maybe missing some history in Canada for the 81 and 90 recession, fill me in. If I'm not mistaken for the Americans, Volcker raised interest rates to around 20% in 81' and afterwards there was the crash due to falling commodity prices? Afterwards, Greenspan's answer was to drop rates like there was no tomorrow?

I'm not surprised that Ontario was hit for autos, one I believe that the devaluation of the greenback played a part in that, and second I would argue that it was coming due to the mismanagement of the auto companies. On a personal note, I'm pissed that the government bailed out GM and Chrystler, if they didn't, the market would of reorganized and given Ford the reward that it deserved. GM primarely was run by the union bosses, the execs didn't bother to do anything.

For construction I'm not surprised that it hit stronger, as construction is pretty much a regional phenomenon, and the auto sector is an international one, and keeping in mind that labour unions don't want to negociate lower wages, they rather have less people working.

Stephen, "employment losses by sector" graph and the "employment losses by province" graph, aren't they suppose to be "Employment by province" and by "...sector", due to being in the negative percentage range on the graphs?

In 81, and in 90, there had been higher inflation in the years before the recession than the Bank of Canada wanted in the years after the recession. Though the Bank had no explicit targets before the early 90's, it is as if the Bank had lowered the target rate of inflation. In this case, the target from now on is the same 2% that the bank had before the recession.

Another way to say it, expected inflation was permanently lowered during previous recessions, but not this time. That made the Bank's job easier. It was less afraid to loosen monetary policy by whatever it took.

I agree the recession is likely over.

However, one issue is that the GST likely lengthened and deepened the early 90s recession. With Ontario and BC introducing the HST there is some added risk there. Especially since services have been a bulwark so far.

Look a couple months over on the first employment chart. It looks like at this stage employment may have stabilized, but that was definately not the case, though you can see more underlying weakness in the hours worked trend.

I agree the BoC was the main driving factor behind lengthening the 90s recession, hopefully the Canadian dollar doesn't indirectly do what the ScareCrow did purposely in the early 90s.

So is there any story that we're-in-for-a-Japan-style-lost-decade pessimists can tell? The rate of labour force growth is much lower now than it was in the 80s. That should make the numbers look better. This time - unlike the 80s or 90s - we went into the economic downtown with governments running surpluses. What happens when the governments start trying to balance the books again precisely at the same time that the baby boomers start heading into retirement and expenditures on OAS, GIS and health care start to soar and an uptick in interest rates increases the cost of financing the debt? Economic growth's advantages for Canadians are somewhat muted if our assets are owned by others. The benefits of our resources are privatized but the costs of environmental clean-up after the tar sands - that's public.

The manufacturing job loss in Ontario is likely a combination of an economic perfect storm; the crash of the auto sector, the heavy reliance on collapsing US markets and the rising Canadian dollar. The really worrying issue in all this is the underlying lack of global competitiveness in Ontario manufacturing, bred in part by years of the exchange advantage provided by the low Canadian dollar. Today we find many Ontario manufacturing workers aging, with lower skills, using less efficient older machinery, scattered in too many small centres that lack the ability to generate cluster efficiencies and distances to, and between, their relatively remote locations. Given the projected rise of the Canadian dollar against its US counterpart to well past parity over the next two years, any real recovery in this sector is likely to be weak at best and perhaps not at all. There is no easy short-term solution. It is a long-standing structural problem requiring a long-term restructuring plan as a general change of attitudes about staying in school and the necessity/willingness to relocate to major centres. The other probably unpalatable alternative is for workers to accept something in the order of a 40 percent pay cut to compensate for the high Canadian dollar and their uncompetitive factories.

To the manufacturing job losses chart, one that you could add is percent of Ontario GDP from manufacturing. I saw one that showed GDP contribution is up (or steady), while jobs are down, suggesting a shift to different types of manufacturing, such as pharmaceuticals -- and also a growth in productivity. This may also be a shift from lower skills assembly line jobs to higher skill, scientific and technical work in the manufacturing sector of Ontario.

Excellent post and blog. I look here when I need perspective.

". Given the projected rise of the Canadian dollar against its US counterpart to well past parity over the next two years, any real recovery in this sector is likely to be weak at best and perhaps not at all."

I've been saying this for some time - Dutch Disease is/is going to become a serious problem for Ontario exporters.

The labour numbers seem odd to me. Here are some highlights:

Out of 79,000 new jobs, ...

51,000 of them were among women aged 25 to 54 and
17,000 were among men over 55

leaving just 11,000 for men under 55 and women over 55.

Out of the 79,000, 38,000 were created in education - in November?

Over half (40,000) were part time positions.

Just saying it might not be as rosy a picture as the headline number paints.


Interesting article in todays G&M on the carcinogenic pollution from tar sands operations. I suspect this will be their achilles heel and not GW. People aren't motivated by GW, but mention cancer and people will be demanding action (quite rightly). I suspect the tar sands operations will be under a lot of pressure to deal with the destruction they cause (you have to see it to really understand the scale of the tar sands operations - they're literally digging up north eastern AB). This may tamp down enthusiasm for tar sands and moderate the $CDN appreciation.

Also this summer and early fall, every employer that I talked to told me they were planning to start hiring in December/January.

Woops forgot to add, that this is for the US. Also german employment has picked up considerably as well.

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