Canadians Report Highest Level of Job Security Since 2008Theophilos Argitis
Canadians reported the strongest job security since before the last recession, adding to evidence economic momentum may be accelerating.
The share of respondents in weekly Nanos Research Group polling who said their jobs are at least somewhat secure rose to 72.2 percent in the week ended Nov. 14. Those who reported feeling insecure or somewhat insecure dropped to a record low 9.4 percent. The difference at 62.7 percent is the widest since Nanos began collecting data in 2008.
Heightened employment sentiment is among economic signals increasingly at odds with the Bank of Canada’s assessment of a labor market which is suffering from “material slack,” part of Governor Stephen Poloz’s justification for keeping borrowing costs near historically low levels. National unemployment fell to 6.5 percent in October, the lowest in six years, Statistics Canada said Nov. 7.
While weak wage growth “does suggest there is some slack” in the labor market, said Ian Pollick, senior fixed income strategist at RBC Capital Markets, “the degree to which Poloz is sounding somewhat alarmist is a little bit disingenuous.”
In a speech this month, Poloz cited high rates of discouraged workers and slow employment growth as evidence Canada’s labor market isn’t as strong as an unemployment rate at a six-year low might suggest.
His assumptions are being tested by recent jobs data. Canada added 117,200 jobs in October and September, the second biggest two-month gain in the past 12 years. Even unemployed youth, who Poloz singled out as evidence of a weak labor market, have seen the strongest employment gains in more than a decade.
The Bank of Canada’s dovish assessment comes even with gross domestic product on pace for the fastest year of growth since 2010 and inflation running at the central bank’s 2 percent target. The national statistics agency will report on Nov. 21 consumer prices increased at a 2.1 percent annual pace in October, according to the median forecast of 18 economists in a Bloomberg survey.
In addition to jobs security, the survey polls Canadians on their outlook for the economy, real estate prices and personal finances, part of weekly polling for the Bloomberg Nanos Canadian Confidence Index. The broad confidence index, a composite measure based on the survey questions, rose for the first time in seven weeks, gaining to 58 from 57.8 the previous week.
Stronger job sentiment was offset by a weakening outlook for real estate prices. The share of Canadians predicting rising real estate prices over the next six months fell to 37.2 percent, from 37.5 percent a week earlier. The share of those who expect falling prices rose to 11.2 percent from 10.8 percent. The spread between optimists and pessimists fell to 26 percentage points, the tightest since April.
The survey is based on phone interviews with 1,000 people, using a four-week rolling average of 250 respondents. The results are accurate to within 3.1 percentage points, 19 times out of 20.