Canada's Job Destruction Takes a Break in April

• Canadian economy created 36,000 jobs in April
• Unemployment rate unchanged at 8.0%
• Stronger than expected data was largely driven by self-employment

Despite the fact that the Canadian economy likely produced the worst quarterly contraction on record in the first quarter of 2009, it managed to add 35,900 jobs in April. This is quite remarkable (and highly unexpected) given the challenges the economy still faces. However, this jump follows five months of horrible job hemoridging, and in total the economy has lost 321,000 jobs since October. The unemployment rate remained at a seven year high of 8.0% in April, up 2.2 percentage points from its low in the beginning of 2008.

While the headline number is encouraging, the details of the report are a little less so. The rise in employment was fully owing to a 37,000 jump in self employed workers. It's probably safe to say that a large portion of this was likely those who were laid off and forced into self employment, a trend that was also noticeable during the 1990's recession. The rise in employment was also focused in the 55 and up age group (+24,200), as more retirees are re-entering the job market, likely the result of deteriorating wealth related to the stock market correction. The industries of strength were business building and support services (+14,600), information, culture and recreation (+17,100), and other services (14,000).

More good news is that the massive job losses in the goods producing sector stopped in April, and manufacturing managed to add 6,700 jobs. However, this must be tempered by the fact that manufactures have still cut employment by 13% since 2006. The construction industry lost 7,500 jobs, but the rate of job destruction has slowed from double digit values in the last two months. Meanwhile, trade services (wholesale and retail) continued to shed jobs at an accelerated rate, and has accounted for 40% of the total jobs lost during this recession, an indication of still weak domestic demand.

While it is great news that job destruction halted in April, we shouldn't put too much stock in one month of data. During the 90's recession it was not uncommon to have one or two months of large jumps in employment amidst several months of large scale job losses. Moving forward, the Canadian economy still has a lot of challenges ahead of it. Primarily, the global economy remains rather weak, putting continued pressure on the Canadian manufacturing sector. While there have been some signs of life in the manufacturing sector, it has been largely driven by automotive production, and we all know how that story ends. With the possibility of bankruptcy looming over GM, and Chrysler already filing for chapter 11, there are some 20,000 jobs still at risk in the auto industry alone. We expect the Canadian economy to continue to shed jobs over the rest of 2009, but not to the same degree as we saw over the last five months.

TD Bank Financial Group

The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.