Once again, the Canadian economy showed signs of struggle as the December jobs report showed gains only in Ontario, while jobs were flat or down in every other province.
“We are likely to suffer continued weakness in the Canadian dollar and the underperformance of the Canadian stock market. Mortgage rates are rising and government actions to cool the housing market will also contribute to downward pressure on the economy,” said Dr. Sherry Cooper, chief economist for Dominion Lending Centres
. “However, the weak loonie will help to spur exports and to attract foreign capital. Tourism will no doubt rise.”
The New York Times
today deemed Toronto the top tourist destination for 2016; and while government fiscal stimulus will help and cannot come too soon, according to Dr. Cooper, Bank of Canada Governor Stephen Poloz is ready to use unconventional monetary policy tools if needed.
In marked contrast, payrolls in the U.S. rose more than projected as the unemployment rate remained at a low 5%. U.S. strength vindicated the Fed's recent rate increase.
Canada added 22,800 jobs in December, rebounding from a loss of 36,000 in November, but the unemployment rate remained at 7.1% — posting a rise of 0.4 percentage points over the course of 2015. While today's employment report surpassed expectations, most of the job gains were in part-time positions.
“December's gains capped a rocky year for job growth as the natural resource sector shed thousands of jobs,” said Dr. Cooper. “Employment increased among people aged 55 and older last month and was little changed for the other demographic groups.”
Despite the sluggish economy, the housing market has remained buoyant.
The torrid housing price increases in Toronto and Vancouver continue, with Eastern Canada holding its own while the oil-dependent province of Alberta suffers.
House prices have jumped 10% in Toronto and 18% in Vancouver while slumping 2% in Calgary, Alta., in contrast to a 7% national average gain, according to the Canadian Real Estate Association.
"You don’t want housing to be the bright spot particularly if you want manufacturing exports to lead growth,” Emanuella Enenajor, senior economist at Bank of America Merrill Lynch, told Bloomberg News
, “but given our low rate environment, housing has been one of the key bright spots of the economy.”