Canada's Janurary Employment Numbers Are Out, No Recovery for Ontario from Big December Drop

Statscan has the employment numbers out for January, available here. After a big dive of over 40,000 in December, the country as a whole bounced back with 29,000 jobs.

One thing about the numbers that the media didn't pick up on was that Ontario didn't bounce back at all in January. Although the media in general doesn't seem to care a lot about the individual Ontario numbers. In December Ontario lost a massive 39,000 jobs (which would be the equivalent of losing over 900,000 jobs in a month in the entire US). With the ice storm affecting Southern Ontario in December, conceivably some jobs weren't filled and perhaps they would show up in the January numbers. But they didn't:

"Although employment was little changed in Ontario, the unemployment rate fell 0.4 percentage points to 7.5% as fewer people looked for work. On a year-over-year basis, employment in the province rose by 54,000 or 0.8%, the same growth rate as the national average."

That's not really reassuring although at least Ontario didn't lose jobs two months in a row. The number of jobs increasing by 0.8% over a year isn't that fantastic considering the province's population grows at 1% at year currently (from Wikipedia).

Again the February numbers should be interesting to try and discern a trend. For the provincial treasury, low job growth isn't going to help income tax revenue, so the budget should be interesting to say the least. 

Ontario's Demographics: In and Out Migration from Other Provinces

Surly Hamiltonian has long held that Ontario is a pyramid scheme built on more and more people coming and propping up real estate prices. OK, that's some hyperbole, but with Ontario's malaise in manufacturing and ever increasing housing prices despite flat incomes it sometimes feels that way.

With Ontario's low birth rate, population growth isn't going to come from that, but from immigration, both from other countries and other provinces. With Ontario having slow economic growth for the past ten years, those two sources are changing.

In this post I thought I would look at interprovincial migration. From the Ontario Finance's ministry's demographic quarterly website, here's the most recent migration to Ontario numbers:

Third Quarter 2012, 22,300
Fourth Quarter 2012, 11,000
First Quarter 2013, 13,500
Second Quarter 2013, 22,900

Here's the numbers for people leaving Ontario for other provinces:

Third Quarter 2012, 27,900
Fourth Quarter 2012, 15,100
First Quarter 2013, 20,400
Second Quarter 2013, 27,700

One thing that jumps out at me is that people don't seem to move much interprovincially in the fourth quarter compared to the other quarters. That's not really surprising. People don't move during Christmas time.

The main take away is that more people are leaving Ontario than arriving interprovincially. Here's departures minus arrivals:

Third Quarter 2012, 5,600
Fourth Quarter 2012, 4,100
First Quarter 2013, 6,900
Second Quarter 2013, 6,800

There was a time recently when Ontario drew in more people from other provinces than it lost. Those days are gone for now. Over the year,  that's only 23,400 out of a population of 13.51 million people in 2012 according to Wikipedia. However those people leaving definitely lower the rate of growth of the province compared to previous times when the interprovincical migration was in Ontario's favour. If international immigrants are choosing other provinces over Ontario, Ontario's population growth rate will take an additional hit.

I take away two things from this. Ontario's GDP growth has had population growth as a big factor the past ten years as the per capita GDP growth has been quite stagnant. My guess is that per capita growth will remain stagnant and thus with lower population growth overall GDP growth in Ontario is going to be poor (not that it has been any great shakes in the last ten years).

The second thing is that if the population is growing less, there's less of a demand for housing. I think with current house prices compared to incomes and people choosing to leave the province, Ontario's days of rapidly rising housing prices will be coming to an end. I'm sure they can continue on for some time, but with lower population pressure they won't be as high as they could have.

Actually, one final thing. With more people leaving the province, the long term population projections for Ontario and its cities and towns are probably off. Something to consider for infrastructure.

And wait one more thing, at the risk of imitating Steve Jobs. Since the latest number as of this posting is the second quarter of 2013, I'm curious at the numbers for the rest of the year. Since Ontario lost 39,000 jobs in December 2013, I have to believe that will be reflected in the final quarter numbers or perhaps in the first quarter of 2014. Certainly something to watch.

Canada's November GDP Growth 0.2%, What will December's Numbers be for Ontario?

Canada reported 0.2% GDP growth in November according to this Financial Post article. What I found most interesting from the article was this:

"The overall increase in gross domestic product was in line with forecasts, while still below the previous month’s pace of 0.3%.

“The three-month trend in growth is now running at a nifty 3.8% annualized clip,” said Douglas Porter, chief economist at BMO Capital Markets.

“However, we look for a setback in next month’s report, as the brutal December weather — notably the ice storm in Ontario — is expected to produce a GDP decline for that month.”"

If GDP growth for December is negative for the country because of the ice storm, how bad will it be for Ontario? We've already seen 39,000 jobs lost in Ontario in December, so we can assume it will be quite poor and hence the overall fourth quarter numbers will be poor. One bright spot could be that hiring was suppressed in Ontario in December and will bounce back strongly in January. Those numbers should be out soon.

Canada's overall GDP growth was 2.7% in the third quarter of 2013, compared to 2.3% for Ontario (from the Ontario Finance Ministry's website, released in January 2014):

"Ontario’s real Gross Domestic Product (GDP) increased 0.6% (2.3% annualized) in the third quarter of 2013."

Analysis of First Ontario Credit Union Buying Naming Rights for Copps Coliseum

Over on the Ticats focused Tigercatatonia blog, there's some analysis on First Ontario buying the naming rights for Copps Coliseum.

First Estimate of January Ontario Electricity Global Adjustment

From the IESO web site, the first estimate of the electricity global adjustment for January and it is rather low at 3.63 cents per kilowatt hour. This is lower than the final 5.00 last year, however the first estimate in 2013 for January was similar at 3.77.

Since the global adjustment is in some sense a relationship between the amount of total power used and the amount of expensive green energy (sun and solar) produced, January isn't often a high month for the global adjustment. It is dark and cold, so electricity is higher from light and space heaters and the like, with not a lot of solar produced and the wind produced is smaller compared to the total power consumed compared to some other months.

November 2013 was the highest month ever for the global adjustment at 8.47 cents per kilowatt hour. Last year the mean January temperature in Hamilton (which isn't a bad proxy for the populous Southern Ontario area) was -3 Celsius versus the usual -6C and since this January has been much colder than last year, I wouldn't be surprised for the final January global adjustment number to stay around the first estimate.

Toronto December 2013 Unemployment Numbers

I'm slowly progressing towards making a post about the Hamilton 2013 December jobs numbers, but I thought I would mention the poor Toronto numbers first. Some stats from this article from the Toronto Star:

"The jobless rate for the Toronto region — at 8.4 per cent in December — is the second highest among Canada’s major urban centres.

It is higher than the national average — 7.2 per cent — and it is even higher than that for cities like Windsor, which were harder hit by the 2008 recession, according to Statistics Canada data.

The city’s jobless rate is even higher when the numbers for the suburbs are stripped out of the StatsCan data for the Toronto area.

In a report delivered Tuesday to the city’s economic development committee, councillors heard the unemployment rate in Toronto proper had risen to 10.1 per cent."

Wow 10.1 percent in the City of Toronto is quite high, although I'm sure historically Toronto has had a relatively higher level compared to other areas of Ontario. One thing I would say about it, is that with rising housing and rental costs over the past decade in Toronto coupled with median income that has been pretty stagnant over the same time period, a lot of people in Toronto don't have a lot of money left over after housing costs to buy discretionary goods and services. That can't be very good for job creation.

Where will employment in Toronto go in 2014? The dollar dropping against the US dollar recently should help, bringing in tourism and lowering the number of the people that go to the US or other places for tourism or shopping. I'm not sure how much manufacturing is left in Toronto proper to benefit from a lower dollar.

What will be interesting will be to see how many Torontonians move out to other places including Alberta versus immigrants new to the country moving in and how that changes the composition of employment. 

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.