Week In Review: May 10, 2013

– Household employment rose 12.5K in April, following a decline of 54.k in March. The rebound in total employment was in-line with our estimate of +10K. While some people may take comfort in the fact that full-time jobs were up on the month by a robust 36K, we think the underlying details were quite weak. Indeed, private sector jobs fell 20K in April after an outsized decline of 85K the month before. The 105K cumulative decline over the past two months is the worst performance since early 2009 when the economy was in recession. Year-to-date, fulltime employment is still down 5K while the Canadian economy has lost 13.2K so far this year. All of the jobs created in April were in the public sector (+34K). The private sector actually shed 20K jobs following a plunge of 85K the month before. At the industry level, we note a rebound of 21K factory jobs. Elsewhere, we note the softness in construction (flat) and the large drop in transportation & warehousing (-21K) and building and other support services (-16K). The jobless rate was unchanged at 7.2% on the month. This morning's report is consistent with our view that the domestic economy will be much softer in Canada in 2013.

In March, building permits increased 8.6% in dollar value, easily topping consensus, which had set the mark at 1.3%. The jump was driven primarily by the nonresidential sector (+19%), although the residential sector registered a small advance as well (+1.9%). The swell in the value of residential permits was due entirely to multiples (+13.4%), which more than offset a contraction in singles (-4.7%). In real terms (i.e., number of residential units), permits rose 4.3%, as higher multiples (up 11.8% after sinking 22.7% the month before) outweighed lower singles (down 4.3%). Despite the increase in March, real residential building permits declined at an annualized pace of 27.4% in 2013Q1, with both singles and multiples pulling back (-6.2% and -39.7%, respectively).

In April, housing starts fell 3.5% to a consensus-matching 175K from a downwardly revised seasonally adjusted annual rate of 181K the previous month. The decline was felt in both rural (-10.1%) and urban areas (-2.5%). The weakness in urban areas was attributable primarily to multiples (-3.5%), although singles flagged as well (-0.9%). Single starts were at a SAAR of 60.06K, their lowest point since July 2009. On a regional basis, lower urban starts in Ontario (-14.9%), British Columbia (-5.6%), and the Atlantic Provinces (-40.8%) outweighed higher starts in the Prairie Provinces (+9.3%) and Quebec (+14.8%).

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