Good economic news keeps coming in

This week’s parade of good economic tidings continued Wednesday with news that job growth should continue in the coming months and the sick man of Canada’s economy — manufacturing — expanded twice as much as expected in October.

While every recovery has setbacks as well as gains, the preponderance of positive news is getting much stronger lately.

On Tuesday, we learned that consumer bankruptcies plunged in October, while home resales — a sign of confidence and also a spark for consumer spending on home furnishings and appliances — were up in November by a stunning 73 per cent from a year ago. Better yet, prices were higher, but stabilizing, helping to dampen fears of a housing bubble.

Now the most seriously battered major industry in Canada, manufacturing, shows signs of a more robust rebound than expected. Sales climbed by a strong two per cent in October, double the average forecast of analysts.

The big winner among provinces was Quebec, whose factory sector shot ahead by more than seven per cent with the help of rocket-propelled aerospace sales, but it’s unclear how durable that strength will be since this industry’s monthly performance is exceptionally volatile.

However, even if the recovery is bumpy in some industries, it is widespread and apparently durable. Manufacturing sales have now expanded in four of the past five months, with October’s gain spread across 15 of the 21 industries included in Statistics Canada’s tally of manufacturing.

The strength of our factory sector is all the more impressive when you consider that it’s unfolding against the backdrop of a rising Canadian dollar that gained 2.6 per cent against the greenback in October alone.

About half of all manufacturing sales are exports, mostly to the U.S. Export competitiveness is hampered when a rising loonie squeezes profit margins, but we’re seeing that this headwind can be more than outweighed when export customers in the U.S. recover their ability to spend.

That’s what is happening right now as the U.S. recovery begins to gain traction, forcing U.S. retailers and industrial customers to rebuild their depleted inventories, believes economist Marc Pinsonneault at the National Bank.

He notes that manufacturing sales have been trending up since May, a period from which the Canadian dollar has risen by 16 per cent.

The uptrend in sales will continue, he predicts, noting for example that the huge U.S. market for Canadian automotive producers should keep boosting its purchases since inventories of autos and parts south of the border remain skimpy.

As this happens, the job picture in manufacturing, which had been utterly bleak, should keep improving.

Although factories still employ 172,000 fewer than they did 12 months ago, the losses have stopped and been partly reversed in recent months. Since August, the manufacturing sector has actually created 30,000 new jobs, about one-third of all the new employment we’ve seen in recent months.

More broadly, employment in all sorts of industries will likely continue a recent uptrend that has brought Canadians a total of 94,000 new jobs since July.

The most recent sign of this comes from a survey of online help-wanted ads carried out by the Conference Board of Canada. Its help-wanted index, based on this survey, jumped by 4.1 percentage points in November, an unusually big rise and the index’s fourth monthly increase in a row.

A rise in the help-wanted index tends to be followed by three months of improved job growth, with the strongest average gain in the second month, said Pedro Antunes, the Conference Board’s director of forecasting.

Among Canada’s larger provinces, British Columbia recorded the biggest gain, 12.5 percentage points, followed by Quebec’s 8.7 points.

At the same time, a measure of job market tightness maintained by the Conference Board showed further improvement in conditions for job seekers, with 3.5 unemployed Canadians for each job posted online in November, down from 3.7 in October.

(prepared by Jay Byran/Vancouver Sun)