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July 2010 Canadian Economic Fundamentals

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Job seekers climb aboard as employment listings rise

OTTAWA — The number of job postings rose in May, the eighth increase in the last 10 months, and more people are taking that as a sign that it`s time to enter — or re-enter — the workforce, a report released Tuesday suggests.

The Conference Board of Canada`s Help-Wanted Index rose 5.7 percentage points to 96.1 in May after declining in April.

"This strong increase suggests that the recovery in the labour market is firmly entrenched," economist Julie Ades wrote in the report. "Indeed, the index has risen in all but two of the last 10 months, illustrating a steady upward trend."

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China property market starting to `collapse,` Rogoff warns

China`s property market is beginning a "collapse" that will hit the nation`s banking system, said Kenneth Rogoff, the Harvard University professor and former chief economist of the International Monetary Fund.

As China`s economy develops, "especially at the speed it`s growing, it`s going to have bumps," said Mr. Rogoff, speaking in an interview with Bloomberg Television in Hong Kong. He also said that while recoveries across the global economy are "very slow," the danger of a return to recession isn`t "elevated."

Mr. Rogoff`s concern echoes that of investors, who sent China`s benchmark stock index to its worst loss in more than a year last week. China`s data have been a focus because the nation has led the global recovery from the worst postwar recession.

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Canadian workers on the hunt, employers planning to hire

OTTAWA — The majority of hiring managers in Canada say they plan to add workers in the coming months, good news for the one-third of employees who say they are likely to leave their current jobs in the next year, according to CareerBuilder Canada`s mid-year job forecast released Wednesday.

The survey found 22 per cent of workers said they have a worse opinion of their employer in the wake of the recession, while just 14 per cent have a better opinion and 64 per cent stayed the same.

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Long-term unemployment in Canada has doubled: OECD
How long-term unemployment doubled

Long-term unemployment in Canada almost doubled during the financial crisis and recession, the OECD says, and it warns the government to closely monitor job-search efforts to avoid "dependency" on jobless benefits . In a report today on the employment in its member countries, the Organization for Economic Co-Operation and Development said the proportion of workers unemployed for at least 12 months stood at about 8 per cent last year, far below the OECD average of almost one in four. "However, as a percentage of the labour force, the number of long-term unemployed has almost doubled in the two years to the end of the 2009," it said.

Overall, the report said the jobless rate for the OECD stood at 8.6 per cent in May and, in a welcome sign, may have peaked. But 17 million jobs are needed to bring employment back to pre-crisis levels, it added.

It projected Canada`s jobless rate will now fall faster than it did in the recession of the early 1990s, sliding to 7 per cent by the end of next year. As for long-term jobless levels, it said that the temporary extension of Employment Insurance should have created a "much-needed buffer" and should be maintained until that specific category falls significantly. "But it is becoming even more important to make sure these extensions are accompanied by close monitoring of job-search efforts to avoid benefit dependency," the report warned.


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National Housing Price Index rises for 11th straight month

OTTAWA — Housing prices rose for the eleventh straight month in May, advancing 0.3 per cent compared to the month before and in line with analyst expectations, Statistics Canada reported Thursday.

The gains were led by Regina, where prices advanced 3.4 per cent, and Toronto and Oshawa, where prices rose 0.7 per cent.

Prices fell in Kitchener, down 0.8 per cent, Victoria, down 0.4 per cent, Windsor, down 0.2 per cent and London, off 0.1 per cent.

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New-house prices rise in May

The New Housing Price Index rose 0.3 per cent in May following identical increases in March and April.

Statistics Canada reports prices increased the most in Regina (up 3.4 per cent), followed by Toronto and Oshawa (0.7).

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Roadblock to recovery: Long-term joblessness remains an obstacle

The economy is growing again and some employers are hiring, but Bonnett`s Energy Services Trust is just one example of why long-term unemployment remains a blight.

For David Ross, the chief financial officer of the Alberta oil field services company, the demand simply isn`t there yet to prompt new hiring. Bonnett`s is still running at 50 per cent of prerecession employment levels, and that`s not likely to change soon.


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Canadian National may hire 10,000 over 5 years, CEO says

Canadian National Railway Co. plans to hire as many as 2,000 people annually over the next five years to replace retiring employees and reduce operating costs.

About 47 per cent of the workforce is planning to retire in that period, Chief Executive Officer Claude Mongeau said Tuesday in an interview in his Montreal office. Canadian National, the country`s largest railroad, had 21,501 employees as of Dec. 31.

The Canadian and U.S. economies will expand gradually in 2010, Mongeau said, and the railroad must ensure that hiring coincides with a revenue increase to preserve profitability. About 43 per cent of revenue last year came from Canadian and U.S. companies shipping goods within their home markets, while exporters from both countries accounted for the rest, Canadian National data show.

"It`s important for us to be there when the business comes," he said. "We don`t want to hire too early, but we certainly don`t want to hire too late."

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General strikes hit Greece and Portugal

ATHENS - Thousands joined general strikes in Greece and Portugal on Thursday bringing planes, trains and ferries to a halt in a new protest against austerity spending cuts.

Greece was worse hit, with thousands of tourists stranded by the halt in plane traffic and boats to the country`s many resort islands.

In Portugal the main impact was on trains around the second city of Porto but demonstrations were called in many cities.

The general strike in Greece was the sixth held this year and came only hours after parliament increased the retirement age to 65 as part of a pensions reform law aiming to save billions of euros.

More than 80 international and domestic flights were cancelled and 110 delayed when air traffic controllers joined the strike, aviation officials said.

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HOW TO STOP BEING AN ECONOMIC ... HYPOCHONDRIAC (AND ACCEPT SLOWER GROWTH)

OTTAWA - The global economy bounced out of this past recession quicker than anticipated and for some time households were becoming increasingly confident the economy was coming back.

With activity in the United States slowing, though, the mood has suddenly turned sour, leading to widespread speculation a double-dip recession may be in the offing.

But many analysts say double-dip fears are overwrought.

"This is a complete overreaction," Brian Wesbury, chief economist at First Trust Portfolios LP, said in a colourful commentary this week. "This is indicative of the severe case of economic hypochondria that seems to have gripped the nation and the world."

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Why Canada will rule the 21st century

The Canadian economy has proven that it can withstand a volatile market and still come out strong.


Like many of you I get a little extra patriotic around Canada Day. Don`t ask me why, but while enjoying the holiday I started thinking about something former Prime Minister Pierre Trudeau said years ago: The twentieth century belonged to the United States while the twenty-first century would belong to Canada. Now, into the second decade of this century, it appears that his forecast could be coming true.

Look at the evidence:
The recently concluded G20 summit gave Canada as the host a platform to be proud of. To begin with, Canada got most of what it had asked for going in — a fact Prime Minister Stephen Harper was quick to take credit for. This includes a pledge by member countries to halve their deficits by 2013 and stabilize debt burdens by 2016. Of course, Canada will be doing this well ahead of schedule — probably as early as next year.


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Housing market begins to cool

After a strong bounce-back, residential real estate is taking a breather. That may not be a bad thing.


Judging from the recently released May housing data, it looks like experts` predictions that the real estate market would slow during the second half of the year may be on target. Existing home sales, new listings and housing starts all slipped during May, and indications are that the trend will continue.

According to the Canadian Real Estate Association, or CREA, 37,576 homes traded hands on a seasonally adjusted basis during May, compared to 38,654 homes during May of last year. The average price of homes sold during the period rose by 8.5 per cent, compared to those sold during the same month last year, to $346,881. However, that percentage increase was significantly smaller than the 13.6 per cent year-to-date average.

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Surge of jobs created as unemployment dips below 8 percent

OTTAWA — Canada added a whopping 93,000 jobs last month, blazing past the 15,000-20,000 economists had predicted, Statistics Canada reported Friday.

Canada`s unemployment rate dropped 0.2 percentage points to 7.9 per cent, the first time since January 2009 it`s been below eight per cent, the agency said.

"Employment has been on an upward trend since July 2009, increasing by 403,000 (+2.4 per cent)," Statistics Canada said. "These gains offset nearly all the employment losses observed during the labour market downturn which began in the fall of 2008. The June unemployment rate, however, remained well above the October 2008 rate of 6.2 per cent, due to a large increase in the number of people in the labour force over this period."

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Housing starts decrease in June

OTTAWA — Housing starts fell for the second month in a row in June to 189,300 units, down 3.1 per cent from May, Canada Mortgage and Housing Corp. reported Friday.

Analysts had been expecting a gain of about 0.5 per cent.

May`s starts, initially reported at 189,100 units, were revised to a seasonally adjusted 195,300.

"Housing starts decreased during June, largely due to the multiple starts segment in Ontario. The single starts segment was largely unchanged Canada-wide," said Bob Dugan, chief economist at CMHC`s market analysis centre. "After a robust start to 2010, we expect the pace of housing start activity to moderate and total 182,000 units by year-end."

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Worst of crisis is over: ECB chief economist

FRANKFURT - The European Central Bank`s chief economist said Friday that the worst of the eurozone`s economic crisis was over but warned other major economies their policies were unsustainable.

Juergen Stark told reporters on the sidelines of a bank conference that "it seems that the worst is over" given that ECB loan operations came off smoothly at the beginning of July and economic indicators show solid growth in much of the 16-nation bloc.

"The most recent economic data is confirming that the recovery will continue," Stark said.

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Unemployment rate falls to surprise 7.9%

OTTAWA — Canada`s unemployment rate reached its lowest mark in 18 months in June, falling 0.2 percentage points to 7.9 per cent, Statistics Canada reported on Friday.

Canada added 93,000 jobs last month, blazing past the the 15,000-20,000 that economists had been expecting.

It`s the first time since January 2009 the rate has been below eight per cent, the federal agency said, adding that the economy has now recovered almost all of the job losses since 2008.

"You can`t really argue anything in this report," said Benjamin Reitzes, an economist at BMO Capital Markets in Toronto. "Businesses are confident in our recovery and are hiring. That should get the ball rolling on growth from a private sector perspective."

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Stunning jobs numbers may lead to rate hike

OTTAWA -- Canada`s stunning jobs data for June -- with payroll gains of 93,200 that smoked expectations -- all but cements another rate hike later this month from the Bank of Canada, analysts say.

The employment data, released Friday, means the Canadian economy has created 403,000 jobs in roughly a year, largely recouping the job losses the country sustained during the recent recession, Statistics Canada said in its report Friday. Further, the data removes some of the market doubt created over the Bank of Canada`s next move due to worries about Europe`s debt woes and a string of weaker-than-anticipated data from the United States.

"It`s hard to imagine how the Bank of Canada has any choice but to hike on July 20 with solid numbers like this that quintupled consensus and quadrupled our call," said economists from Scotia Capital in a Friday morning note, shortly after the Statistics Canada release.

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Global GDP outlook is raised

The International Monetary Fund raised its global GDP growth outlook yesterday, bumping up Canadian GDP growth by half a percentage point to 3.6% in 2010 on the back of a robust economic recovery in the first half of this year. It also warned that worldwide financial turbulence has cast a "cloud" over its forecasts.

World GDP growth was raised 40 basis points to 4.6% in 2010, while the IMF`s forecast of 4.3% growth in 2011 remained unchanged. The IMF trimmed its expectations for Canadian GDP growth by 40 basis points to 2.8% in 2011.

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Private sector fuels surge in jobs

After weathering a brutal downturn that knocked hundreds of thousands of Canadians out of the work force, Central Canada`s job machine is back and revving into high gear.

The country`s remarkable rebound from recession gained momentum in June, as surging job growth in Ontario and Quebec underpinned an increase of 93,000 jobs and unemployment fell below 8 per cent for the first time since early 2009, Statistics Canada reported.


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No heat wave for housing starts in June

Canada Mortgage and Housing Corp. is reporting its seasonally adjusted annual rate of housing starts was 189,300 units in June, down 3.1 per cent from May.

The agency also revised up its figures for April and May – to a 3.7-per-cent gain in April (205,900 units) and a 5.1-per-cent decline in May (195,300 units).


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