News & Updates

    The Morning Brief - 05.13.19

    Posted by Bruce Carson on May 13, 2019 10:51:20 AM


    Economy—Job Numbers for April and Related Economic Data—Canadian Chamber of Commerce’s “Platform for Prosperity”


    Job Numbers, April and Related Economic Data

    Statistics Canada in a release on Friday set out that the Canadian economy in April created a record number of jobs and the unemployment rate had fallen to 5.7%, a point at which some economists say indicates basically, full employment. Job numbers in the United States for the same period were also strong with 263,000 jobs created and an unemployment rate of 3.6%, again as close as the U.S. could come to full employment.

    The question as put by Perrin Beatty, head of the Canadian Chamber of Commerce on Friday’s Power and Politics program is whether the 106,500 jobs created is a ‘one off’ number or whether it is the beginning of a trend? Economists had predicted a gain of only 12,000 jobs. Obviously we won’t know the answer regarding a trend for at least a couple of months, but does this number mean that the downturn in the economy demonstrated in the GDP numbers for Q4, 2018 and beginning of 2019, is over or will it continue for the next few months.

    Theo Argitis of Bloomberg in his analysis of the number wrote that this job number is the “strongest signal that the country is coming out of its six month stint of weakness.” Steve Holt of Scotiabank believes these job numbers show “you’ve got sector breadth, you’ve got regional breadth and the four biggest provinces are up.”

    The numbers support the view of the Bank of Canada that the slowdown is temporary. Some of the elements that may have led to concern about a pending recession have begun to reverse such as falling oil prices, volatile financial markets, higher interest rates, cooling housing market and global trade tensions. While global trade tensions may not have decreased, interest rates have stopped rising and the housing market has begun to pick up.

    Alberta, Ontario and Quebec saw relatively large increases in employment and even youth unemployment is trending in the right direction. 

    Bank of Canada Governor Stephen Poloz told the House of Commons Finance Committee after the Bank dealt with interest rates on April 24 and released the Bank’s quarterly Monetary Policy Report that the economy will recover in the second half of this year but is “currently facing some headwinds.” With regard to interest rates Poloz said the Bank’s accommodative policy is still warranted. Also the Bank is monitoring household spending, oil markets and global trade policy.

    In addition to positive job numbers, Canada’s international trade deficit for March fell to $3.21 billion with higher energy exports helping in this but it still is the 12th largest on record. Exports were up 3.2% including in addition to energy, export of autos and light trucks. Nine of eleven sectors tracked were up.

    Imports increased by 2.5 % with the import of consumer goods leading the way and Canada’s trade surplus with the U.S. in March increased over February’s numbers.

    Also on the positive side are housing starts, as CMHC reported they were up in April by more than 20% over March. The seasonally adjusted annual rate of housing starts came in at 235,460 from 191,981. The predicted number was 196,400.

    The number that doesn’t fit with the others is GDP for February. In February the economy shrank by 0.1% as manufacturing, financial industries, mining and oil and gas fell. Construction and utilities were up. The February number reduced the January gains of 0.3%. Depending on the numbers for March, Q1 may show the economy coming to a halt. GDP for March and Q1 will come out on May 31.

    GDP trails the other numbers set out above but it is the number which would determine whether Canada is headed into a recession. Given Friday’s job numbers that doesn’t seem likely but there is still a perception, borne out by the Bank of Canada’s Business Outlook Survey that the economy is faltering mainly caused by lack of competitiveness and inability to access offshore energy markets.

    We only have a few months to wait until Canadians answer the question as to whether they believe they are better off today than four years ago.

    Canadian Chamber of Commerce’s “Platform for Prosperity”

    Today, the Canadian Chamber of Commerce will release its “Platform for Prosperity” which is structured around 7 points and contains 45 recommendations for political parties contesting the 2019 election to take into consideration. The National Post’s Kevin Carmichael wrote about these recommendations over the weekend.

    Carmichael notes that the Chamber is concerned about what is going on in Ottawa. The Chamber in its release demonstrates that its members care about taxes, regulations and freer trade. It is seeking support for smaller companies with regard to digitization, training and the cost of pharmacare if it is implemented.

    The Chamber’s list of recommendations contains establishing a Royal Commission on tax reform, a plan to balance the budget, eliminate two regulations for every new one adopted, help smaller companies gain knowledge about international markets, provide better access to high speed networks, cooperation on skills training, and ensure that any new pharmacare program does not result in costs being passed on to business.

    Carmichael notes that many items on this list are also in the government’s list but there are two notable absences; climate change and income equality. However, a political party looking to encourage businesses as job creators to expand, would do well to spend time with this report and with its authors from the Chamber.

    Other National Issues

    Request by Opposition Parties for Emergency Meeting of the House of Commons Defence Committee

    The Conservative Party and the NDP have combined to request an emergency meeting of the House of Commons Defence Committee to investigate the government’s conduct over the last three years as it dealt with Vice-Admiral Mark Norman and the charge of breach of trust, withdrawn last week.

    The statement by the prime minister that Mark Norman would be dealt with by the courts made even before charges were laid will be at the center of such an investigation as well as the RCMP’s failure to interview and secure statements and evidence from potentially crucial witnesses.

    The list of characters that the opposition parties wish to see called includes Trudeau, the Chief of Defence Staff, members of the PMO and PCO and others who were involved in this matter and that proceedings be televised. The emergency meeting will take place this week.

    Unfortunately this request to hold a series of meetings to investigate what has become known as the Mark Norman affair will probably be rejected by the Liberal majority on the committee. Opposition MPs have the SNC Lavalin precedent and the Justice Committee as they now deal with the Defence Committee. Prime Minister Trudeau has already said that this case followed the normal course through to conclusion and there was no interference by his office. And it would be unlikely the government members would want to provide Norman with a venue for him to tell his story.

    If the government committee members shut this down, the opposition is left with question period and even that venue will run out when the House rises in June for the summer and the fall election. There will not be an independent public inquiry into this matter.

    This gets back to the point made in Thursday’s Morning Brief that unless there are rule changes and probably a culture change, House committees in a majority government will for the most part follow direction from the party whips who get their direction from the executive.

    It may have been sufficient for the McGrath committee on Reform of the House of Commons in 1985 to recommend that opposition parties have the power to request that an emergency committee meeting be convened, but in 2019 should there be a mechanism that allows such an investigation to proceed? As noted here last week that would require that MPs view the role of committees and their place as committee members differently and separate from orders from the party whips.

    Parliamentary reform should be on the election platform agenda this fall.

    To Come

    --today, the Canadian Chamber of Commerce releases its “Platform for Prosperity”

    --this week, the House of Commons Defence Committee will convene an emergency meeting

    --May 15, CPI numbers for April to be released

    --May 16, monthly survey of Manufacturing for March to be released

    --May 16, provincial election in Newfoundland and Labrador

    --May 17, Parliament adjourns for a week, reconvening on May 27

    --May 22, retail trade numbers for March to be released--bc  

    Topics: Morning Brief

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