Economy Recovery --- Signs say it’s a real recovery

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Eye-watering job numbers join growing list of positive trends
This time it’s real. While it’s great that January was a banner month for employment, with a whopping 69,200 new jobs, or more than four times the average economist’s forecast, that’s not the most important thing.
Far more significant is that this looks like the real thing.
Other economic indicators are lining up to suggest that it isn’t one of those statistical flukes that sometimes throws our employment numbers off track for a month. Instead, it is increasingly likely that strongerthan-expected job growth will be sustained this year.
“I just think the general health of the economy is improving,” said Dawn Desjardins, assistant chief economist at the Royal Bank.
While the pace of employment growth won’t remain at January’s eye-watering speed, it will nevertheless continue at a much healthier rate than most analysts have been forecasting, she believes.
/ C* T" J2 N4 CThe current Royal Bank estimate of about 325,000 new jobs this year works out to just over 25,000 per month, and is already far above that of most other forecasters. Nevertheless, Desjardins said it could now be moved up a bit.
It’s true that the January numbers also showed Canada’s unemployment rate edging up, to 7.8 per cent from December’s 7.6, but this is actually a good sign at a time when employment is growing. It’s not a sign of jobs disappearing, but rather of more job-seekers being brought out of the woodwork by improving optimism.
$ ~# W& ^1 H2 \( b! N) j4 |“The job market showed the two hallmarks of a strengthening economy: more jobs being created, and the news of these opportunities bringing more participants into the labour market,” said Avery Shenfeld, chief economist at CIBC World Markets.
There’s nothing new about this; it happens in every recovery. During 2010, even the strong employment gain of 369,000 only cut unemployment by about 132,000. The remaining job growth was offset by 237,000 people who entered the job market.
. {# y2 {( c9 n: q, RFriday’s employment outlook would have looked wildly optimistic until just recently. After a soaring early part of last year, Canadian job growth fell flat on its face in the autumn, creating, on average, not a single job in the three months from September through November.
' p- w" J: o7 sDecember did show a revival, with a robust gain of 30,400 jobs, but this seemed exaggerated to many. Most economists assumed this reflected a statistical error that would be reversed in January.
But it seems that there was no error. In the final analysis, privatesector jobs were up, public-sector jobs were up and so were those among the self-employed.
The big question is what has triggered this remarkably swift turnaround. And the answer seems to be found largely south of the border.
& ~% f! Q! R, Y“I think what has changed is that U.S. consumers are spending again,” said Douglas Porter, deputy chief economist at BMO Capital Markets. “We are selling more to our biggest export customer.”
That’s kind of ironic, since the U.S. employment numbers, which also arrived Friday, were a big disappointment, at least on the surface. The U.S. is roughly 10 times the size of Canada, but its job growth in January was only about half the size of Canada’s.
The explanation: as in Canada, any single month’s job numbers can be thrown off track wildly by statistical factors, crazy weather or other one-time factors. Two big monkey wrenches clanged into the U.S. report: big snowstorms that kept many home from work and an annual revision of statistics that distorted comparisons with December.
0 l3 @) k/ ?& t; W8 D) t  p8 M“In short, none of these numbers are reliable,” concluded Ian Shepherdson, chief U.S. economist at High Frequency Economics.
But other numbers are reliable, such as the outsized gains in U.S. consumer spending in recent months. January auto sales in that country, for example, surged more than 17 per cent from their year-earlier levels, a huge boost for enjoyedmontonto-parts industries.
" f& ~1 q9 f) e2 D  t- F+ ?While Friday’s growth is heavily dependent on exports, Canadian consumers will likely add fuel to our economic expansion as the year goes on. More jobs equals more incomes and more spending.