Business·Analysis

6 things to watch for in Friday's job numbers in Canada and the U.S.: Don Pittis

Tomorrow's employment numbers in Canada and the U.S. will offer some insight into your economic future, Don Pittis writes.

Oil, cannabis, housing — employment data will offer hints of what's in store for 2019

Workers protest job cuts at General Motors. Those job losses won't show up in Statistics Canada data to be released Friday. (Carlos Osorio/Reuters)

The first big economic indicator of the year comes out in both Canada and the United States on Friday, when Statistics Canada and the U.S. Department of Labour release their job numbers. While tomorrow's numbers are for December, the final quarter of 2018 and summarize the entire year, they may offer hints of what to expect in 2019.

Here are some of the things to watch for.

1. Job market to stay tight?

Despite concerns about the economy, the U.S. continues to face a worker shortage. (Mike Blake/Reuters)

Despite talk of doom following a market slide at the end of 2018, there is plenty of evidence the job market will remain tight on both sides of the border. Increasing retirements as the population ages and a low participation rate mean employers remain hungry for workers, though demand differs regionally. For the first time in years, experts say, people have enough confidence to quit their job if they want to try something new.

That's considered good for the economy. In theory, a re-sorting of the labour force can make each worker more productive as they move into a job that better uses their skills.

A poll of economists predicts tomorrow's U.S. jobless figures will remain near their recent record low of 3.7 per cent. And in Canada, they're predicting a tick up, from 5.6 to 5.7 per cent. Numbers that come in above or below those predictions could spook or spark the wider economic outlook.

2. Housing and construction

Construction remains a big employer, but that could change depending on the fate of the housing market. (Frank Gunn/Canadian Press)

After a year of residential price and sales declines, watch tomorrow's numbers for any signs of a decline in construction jobs. A continued slide in the real estate sector in 2019 could hurt employment directly, including in real estate agencies. And a slowdown could have carryover effects into construction materials and sales of the kinds of goods people buy when they are setting up a new home, affecting jobs in those sectors.

If house prices fall and people begin to feel less comfortable, they might cut household spending, which could have a wider effect on new employment. However, long construction lead times mean it may be a while before job losses in construction hit. And extravagant price increases over the last decade should be enough to provide a safe margin for real estate investors considering new construction projects, especially if they have land and permissions in place. This is especially true in Canada's largest urban centres, where housing demand remains strong.

3. Pot jobs

Bill MacDonald instructs a new crop of cannabis workers at Ontario's Niagara College. (Carlos Osorio/Reuters)

On a positive note here in Canada, watch for any references in Statistics Canada's report to cannabis-related employment in the second half of 2018. The Organization for Economic Co-operation and Development has predicted that legal pot will contribute a significant additional 0.2 per cent to Canada's GDP growth rate this year. That fits with widespread reports of a shortage of product.

Meanwhile, both public and private sector retailers are looking to expand. Approvals for retail shops have been slow, and even where they exist, government shops have been operating on reduced hours due to a lack of inventory. While share prices for cannabis companies have been volatile, expect lots more job demand in 2019 across the supply chain, from highly skilled agronomists to informed retail staff.

4. Oil and gas bust

Albertans are plenty concerned about the strength of their oil sector. (Todd Korol/Reuters)

Despite deep worries in this country's oil and gas producing regions over the price of Canadian crude, job creation has been surprisingly resilient. In Alberta, for example, unemployment fell a whole percentage point in November.

Regional and sectoral breakdowns in the Labour Force Survey will offer indications of whether the industry's most recent battering will change that. Of course, jobless data does not tell the whole story since new jobs may not pay as well as those lost in the energy sector.

On a more optimistic note, while new development in the oilsands may be fading, other projects, including B.C.'s $40-billion Kitimat LNG terminal and a much discussed new refinery, could create jobs for many skilled specialists.

5. U.S. government shutdown

If the partial U.S. government shutdown continues, it could have an effect on private sector jobs as government workers spend less money. (Kevin Lamarque/Reuters)

While U.S. government workers affected by the partial shutdown are expected to keep their jobs, if the battle between an intransigent President Donald Trump and an equally intransigent Congress extends too far into the new year, expect trouble. The talks underway are trying to avoid a collapse in spending power among many government employees that could result in fewer jobs in the sectors that serve them.

Many government reports could be delayed by the partial shutdown, but the job numbers will reportedly be an exception because a failure to release the crucial economic data could further reduce market confidence.

In Canada, many retailers were worried the recent postal strike, which caused similar disruption to one government service, would also have a negative impact on online shopping. But bricks and mortar retailers reported stronger sales, and alternative shipping startups such as eShipper and Chit Chats got a boost.

6. Holiday retail employment

Temporary employment surges over the holidays. (Dan Kitwood/Getty Images)

Coming in as they did before the shutdown, early U.S. holiday retail sales were above average, though Statistics Canada won't have final December figures until February. However, employment during the holidays tends to rise as retailers and shippers bring in seasonal workers to help with holiday sales and post-Christmas bargains.

And while retailers have some latitude to cut staffing if sales prove weak, early predictions of a bumper season for Canadian retail sales will likely mean holiday employers grabbed the workers they could find in a tight labour market.

While holiday jobs are usually of short duration, they give employers a chance to try out new workers they might want to keep. And they provide experience to less-qualified workers when employers lower the bar during a time when trained workers are hard to find.

Follow Don on Twitter @don_pittis

About the Author

Don Pittis

Business columnist

Don Pittis was a forest firefighter, and a ranger in Canada's High Arctic islands. After moving into journalism, he was principal business reporter for Radio Television Hong Kong before the handover to China. He has produced and reported for the CBC in Saskatchewan and Toronto and the BBC in London. He is currently senior producer at CBC's business unit.

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