Job numbers to show cost of economic downturn

OTTAWA -- The coming week will feature data on last month's job situation in Canada, and it's not expected to be pretty.

Analysts are expecting a smaller number than the record 129,000 job losses Statistics Canada reported for January. But heavy losses are still expected as Canada endures a recession sparked by a full-blown economic crisis in its largest trading partner, the United States.

"Canada's employment elevator is heading down, so the only question is just how many floors it dropped in February after plunging so steeply the prior month," Avery Shenfeld, an economist with CIBC World Markets, wrote in a report released Friday.

Shenfeld's forecast is for a loss of 45,000 jobs, slightly more optimistic than the market consensus of 47,500. He estimates that will put Canada's unemployment rate at 7.5 per cent, which would be the highest since November 2003.

"January's slide was so off the charts that we expect a lighter, if still formidable, loss of 45,000 positions in February, taking the unemployment rate to 7.5 per cent," he said. "Manufacturing (losses) likely can't match January's pace, but construction could be worse, and financial services could be a new area of weakness."

Canada's job numbers are due this coming Friday, a week after figures from the U.S. showed 651,000 jobs lost there in February. That pushed its unemployment rate to a 25-year-high of 8.1 per cent.

On Tuesday, Canadians might get some hints of near-future job prospects as staffing agency Manpower Inc. releases its quarterly outlook based on employers' plans to add to or subtract from their headcounts this spring.

Coinciding with the labour-force survey on Friday, Statistics Canada will release merchandise-trade figures for January. In December, Canada ran its first trade deficit in more than 30 years - taking $458 million more in imports than what was exported - and that deficit is believed to have widened the following month.

Shenfeld is expecting a trade deficit of $1.08 billion for January, along the lines of what other analysts are saying. He's also expecting Canada Mortgage and Housing Corp. on Monday to report that housing starts were down about six per cent in February from the previous month to an annual rate of 145,000.

Millan Mulraine, economics strategist with TD Securities, has an identical forecast for housing starts.

"Both single-family and multi-family units should post declines," he wrote in a research note. "And with labour-market and domestic economic conditions continuing to weaken, we expect further moderation in residential-building activity."

Shenfeld said the Canadian economic data over the coming week will be "simply more evidence that the recession will be biting hard in Q1."

Such data will follow up on recent figures that showed Canada's GDP shrinking 3.4 per cent in 2008's fourth quarter.

On a brighter note, Shenfeld said he expects a relatively light week in the way of disastrous reports on the U.S. economy, which might give stock markets a "one-week respite from the torrent of bad data."

Some of the U.S. reports to be released in the coming week include February's retail sales numbers on Thursday, and that country's trade figures on Friday.

Shenfeld said U.S. retail numbers might provide a "pleasant surprise," since they won't include auto fleet sales, which contributed heavily to declines in the most recent data for auto sales. CIBC is expecting a 0.2 per cent decline in U.S. retail sales for February, somewhat more optimistic than the market consensus of a 0.5 per cent drop.