The Canadian economy is showing signs of sputtering in the face of stiffening headwinds from the U.S. slump and ongoing tight credit conditions.
Two key economic indicators released last week - unemployment and merchandise trade - painted a picture of a somewhat resilient economy that is mostly succeeding in avoiding the outright contraction occurring in the United States, but just barely.
Canada's employment numbers continued to come in on the plus side in April with the addition of 19,200 new jobs, and the trade surplus jumped to $5.5 billion in March, the highest in almost a year, as exports rose 1.6 per cent to $40.1 billion.
But the headline numbers, which along with oil rising above US$125 a barrel helped boost the Canadian dollar, looked better in the aggregate than the details.
"I think this shows the economic weakness coming through," said Bank of Nova Scotia economist Karen Cordes. "Thus far, we've seen a little more resilience than we'd expected, but now we're starting to see that lag that we'd anticipated."
On the jobs front, that weakness showed in the fact that the national unemployment rate actually rose for the second straight month to 6.1 per cent, up one-tenth of a point following a two-tenths-point rise in March, and that most of the new jobs were in the public sector or in the self-employment category.
Full-time private-sector payrolls declined by 8,300.
On the trade front, all the gains were due to the increased value of exports, mostly because of ever-higher oil and prices for many other commodities that Canada ships out of country.
Exports managed to rise, but volumes of exports actually slipped 2.4 per cent, noted BMO deputy chief economist Douglas Porter.
"Souring commodity prices, especially oil, are more than offsetting the underlying damage in Canadian trade flows from the strong loonie and weak U.S. demand," he said.
Cordes said the rise in self-employment jobs was a telling point.
"You never know with the self-employment sector whether there's a gain because people can't find jobs," she said.
As expected with slowing trade volumes, manufacturing remained very weak, losing 14,900 jobs. And average hourly wages faded to a 4.3 per cent year-over-year gain, down from 4.7 per cent in March and 4.9 per cent at the start of the year.
Nonetheless, Porter said, "the main point is that job growth continues to churn ahead even in the face of a U.S. 'recessionette.' " And in comparison with the United States, Canada's economy is a veritable job-making machine, according to the Statistics Canada data.
Over the past year, the proportion of working-age Canadians who have jobs increased by 0.5 percentage points to a record 64.5 per cent. This compared with a 0.3-point contraction in the U.S. to 62.7 per cent.
Overall, Canada's economy created 348,000 new jobs over the past 12 months, a 2.1-per-cent increase, with full-time work rising twice as fast as part-time, Statistics Canada said.
The employment picture was mirrored between the two trading partners, with the U.S. shedding jobs in construction and financial services, whereas Canada had gains in both sectors, particularly construction.
But the carnage in factories continued, with April's loss of 14,900 manufacturing jobs, bringing the 12-month total to 111,500.
Most of those job losses came in the manufacturing heartland of Ontario, which accounted for 50,000 of the contraction over the past year. British Columbia lost 29,000, Quebec 13,000 and even Alberta shed 11,000 manufacturing jobs.
