Eagle Vision Quarterly Newsletter

September 2010

Richard Simms
President, Black Eagle Executive Search

My wife and I recently returned from a 2-week vacation in Europe, and we were both surprised and enlightened being immersed in the European economy during that time. Economic news in Europe is not bright with the so-called “PIGS” nations – Portugal, Italy, Greece, and Spain struggling with massive government debt and the resultant reduction in government spending leading to both public protests and lower economic activity. Public protests in Greece over cuts in government spending, and in France with respect to raising the mandatory retirement age from 60 to 62 are indicative of the negative public mood.

 

On the plus side in Italy, we were pleased to find that most Italians we met were singing the praises of Canada as a global beacon of economic responsibility and security with a good economy, banking system, and government.

 

So what do the above comments have to do with our current employment situation in Canada? In the last month, and certainly in the last 2 weeks since returning from Italy, I have heard more pessimistic comments about the state of the Canadian economy and job prospects than was evident at the end of the second quarter of his year. In June 2010, most Canadian manufacturers and distributors in the home improvement industry were experiencing better years than 2009 and optimism reigned. Perhaps with the Canadian government stimulus packages ending, and the introduction of the HST in Ontario and BC on July 1, 2010, the third quarter of 2010 has not been as kind. And concern about the sputtering U.S. recovery and government debt problems in Europe including recent bank issues in Ireland have further soured the outlook.

 

Here is the current Canadian employment status as reported by Statistics Canada:  

 

The Canadian labour market added 35,800 jobs (all full-time) in August 2010 as a seasonal rebound in the education sector outweighed cuts in the private sector.  The unemployment rate edged up to 8.1% from 8.0% as more people entered the labour force.

 

Beyond the seasonal factor in education, professional & technical jobs rose 28,300 and construction jobs were up 12,000 from July.  However, a majority of sectors lost jobs last month, led by manufacturing which eliminated 25,600 positions.

 

With the August numbers, all of the 417,000 jobs shed during the recession have been recovered.  It took only four quarters to accomplish this feat, compared with average economic recoveries between six and nine quarters. Still, close to 1.5 million Canadians remain unemployed which is 2% higher than what it was when the recession started.

 

In regards to the overall economy, Statistics Canada has advised that Canada's real GDP grew by 0.5% in the second quarter after increasing 1.4% in the first quarter.  On an annualized basis, GDP expanded at a 2% pace in the second quarter, compared with a 5.8% increase in the first quarter. The Bank of Canada last month had estimated that GDP growth would slow to a 3% annualized rate. 

 

Thus the overall employment outlook right now can be characterized by one word – uncertainty. It will be interesting to see how the Canadian economy and employment status unfolds in the 4th quarter of 2010 and 1st quarter of 2011.

 

 

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