A Bank of America Merrill Lynch report published today highlights a widening gap between the labour market of the US and neighbouring Canada.
Analysts note that the most recent monthly non-farm payroll data from each country looks strikingly different. Canada saw payrolls fall by 28,900 in a single month, much lower than even the most pessimistic analyst had forecast. Over in the US, 288,000 jobs were added in the same period.
Adjusting for the size of the US' labour market, that Canadian downturn equates with a 236,000 fall in jobs numbers in US terms, a figure the US has not seen since December 2009. BoAML analysts say that annual employment gains both countries "have closely tracked each other historically," but in recent years the two have started to part ways.
Much of the weak Canadian performance can be attributed to poor manufacturing competitiveness, which has seen the loss of auto sector jobs to Mexico, so that "despite the strong pickup in total US vehicle sales since the crisis, Canadian exports of motor vehicles and parts have failed to keep pace."
The manufacturing sector is the only one in Canada to have seen a net decline in jobs since before the financial crisis, with 240,000 fewer jobs than at the end of 2007. The product of this low employment growth will result in further divergence between the US and Canadian economies as a whole, says BoAML.
It's possible that we're reading too much into the non-farm numbers. Over at The Upshot, Neil Irwin and Kevin Quealy suggest that the amount of statistical noise, a result of sampling error, makes it hard to see any proper trend in the monthly release. But the series BoAML looks at goes back to the 1980s.
In a preview of this week's US initial jobless claims data, due on Friday, HSBC analysts note that "layoffs are trending at a low level" as last week's claims reading dropped to 297,000, a new low for the current economic expansion. HSBC sees claims at 313,300 this week, below their 323,000 four week average.