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Pulling apart the jobs data

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Canada :

This one was a surprise.

Almost always when you have a big dip in jobs in one month (as you did in October) you tend to see a bounce back the next. Instead, we have two declines in a row. Trends are fine, there is a silver lining in that full-time jobs were up (and part-time down), we are still up 1.2 percent over the last year, and the unemployment rate is relatively low.

Even so, two months in a row of employment declines could well mean a negative quarter for GDP, which would be a shocker -- and might even be a game changer for the Bank of Canada. I don't expect them to move on rates next week, but a Canadian rate cut just might be a possibility in the first quarter (before this report I would have said no chance unless the global situation got much worse)

United States:

Not a good report.

There was very mediocre job growth and of the total 120,000 jobs gained, 50,000 was in retail. That makes sense given the Black Friday numbers, but you have to worry that all those workers will be let go by January.

The drop in the unemployment rate is an illusion. The unemployment rate comes from a survey (separate from non-farm payrolls) which is done of households. What it has shown is that there are less and less people looking for work in the U.S. In fact, as of July, it hit 63.9 percent of the working age population, which was the lowest in at least five years. This month it went from 64.2 percent in October to 64 percent in November…a bad signal. If things are improving, people should be coming back into the labour market, not exiting it.

To be fair, the household survey did show a small increase in employment but the participation rate trend is the one to watch. Fed Chairman Ben Bernanke cares about stuff like this. By the way, it's why he has gone along with all the stimulus of the past few years.

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