Canada and Ontario December 2015 Employment Numbers Analysis

Statscan released the December numbers on Friday and they were better than I was expecting (which wasn't much). Canada's seasonal adjusted jobs numbers increased by 22,800 in December. Unfortunately, full-time employment actually decreased by 6,400 jobs, while part-time jobs increased by 29,200 jobs. Year over year, jobs increased by 158,100. Full-time jobs increased by 151,000 versus 7,100 more part-time jobs.

However there does appear to be some caveats. In the Statscan writeup for the month, "In December, the number of self-employed increased by 40,000, while the number of private and public sector employees was little changed." So people could be declaring themselves self-employed out of necessity and there wasn't actually any private sector hiring. 

Ontario had a great December. Jobs increased by 34,900 in December. Full-time jobs increased by a massive 42,200, while part-time jobs decreased by 7,300. Year over year, jobs increased by 80,700.  Full-time jobs increased by 141,600 and part-time jobs actually decreased by 61,800.

A Closer Look At The December 2015 Ontario Employment Numbers

I already looked at the overall federal numbers in the previous post, but I thought I would look more closely at the Ontario numbers from Statscan.

Mirroring the federal numbers, Ontario actually dropped a small amount of jobs in December, 3,500. That comes after a bigger loss in November, so that's two months in a row of negative numbers. Considering the low dollar in that time period, that's not particularly encouraging.

Here's the employment numbers for the past few months (thousands):
August 6,932.4
September 6,957.1
October 6,994.1
November 6,960.2
December 6,956.7

There was a big gain in October, but since August the increase from 6,932.4 to 6,956.7 is only 24K more jobs, or an increase of only 0.35%. That compares to the population increase in that time that was also 0.35%. Pretty much Even Steven. Interestingly for the same period in Alberta, employment gained 1.47%. No massive effects from the drop in oil yet.

The fact that full time jobs increased in that period from 5,596.5 to 5,625.3 (thousands) over that period is a positive, while part-time jobs actually dropped very slightly from 1,335.9 to 1,331.4 (thousands).

It will be interesting to see January's numbers considering the drop in the dollar and the drop in gas prices, which is obviously good for Ontario's economy.

Ontario Loses 39,000 Jobs in December

A bit late on commenting on the latest Canadian employment numbers, but it needs to be analyzed. The headline was that Canada lost 46,000 jobs, but that really buries the lede that Ontario lost 39,000 jobs (with approximately 40% of the population) and the unemployment went from 7.2 to 7.9. Month to month numbers are going to be noisy but that is a pretty big jump for one jump.

There's been a raft of big plant closings in Ontario lately (for example Heinz in Leamington) and these jobs plus their knock on effects were bound to show up in the unemployment numbers eventually. A high dollar and high electricity prices have been causing manufacturing employment to leave Ontario so this shouldn't be that much of a surprise.

The dollar has been tanking recently (down to 92 cents) against its US counterpart and that definitely helps Ontario, both by making manufacturing wages cheaper relatively and also keeping Ontarians shopping at home and potentially increasing foreign tourism while depressing Ontarians spending their money abroad. The dollar decreasing also makes Ontario's high electricity prices more competitive with competing jurisdictions like New York state. Unfortunately prices are still scheduled to rise significantly over the next five years so even a 15% decrease in the value of the dollar won't help that much.

Losing employment is going to have to hurt Ontario tax revenues. Ontario income tax is heavily weighted to those who make enough to pay at the surtax levels so job losses at manufacturing plants which generally pay more than service sector jobs can have bigger effects. Jobless also spend less so HST revenues will be lower. Some of those employed will go on welfare which raises expenses for the province and municipalities. These job losses probably won't hurt government revenues for 2013 coming so late in the year, but they don't look good for next year.

I haven't checked the Hamilton individual numbers yet, but I'll make an individual post about them.

First Estimate of Ontario Electricity Global Adjustment: High

The first estimate for the global adjustment for Ontario electricity rates for December is out at the www.ieso.ca website. The value is 7.61 cents per KWh, down from the 8.47 cents per KWh in November, which set a record for the highest monthly global adjustment ever. The estimate is up massively compared to the final value of 4.06 cents per KWh in December of last year.

In general more demand lowers the global adjustment as the amount paid to high cost producer wind and solar producers is divided by more power consumed. December is usually a high demand month as more power is used for electric heating and also for lighting as December is the darkest month.

Less solar and wind production also leads to a lower global adjustment. Again, sunlight is at its lowest in December so solar producers won't have much electricity production. December is relatively windy so wind producers should have good production. Wind production can be high in the middle of the night when demand is relatively low compared to other parts of the day, and can cause problems if excess power has to be exported at low or negative costs to the US, however for December with the extra heating requirements at night that's less likely to be a problem. December thus far has also been relatively cold, so more electric heating has probably been used at night.