Friday job numbers may tell tales GDP missed: Don Pittis

Opponents in the battle overwhether the Canadian economy iscollapsingor clawing its way back torecovery will get more ammunition on Friday. That's when we learn the latest figures onjob creation and unemployment.

The numbers showedthe economy added 12,000 jobs in August, beating economists expectations of a loss of about 5,000 jobs.

Statistics Canada's GDP data that we got earlier in the weekis useful, but in several ways, the labour force survey is even better.

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"I'd personally put more weight on labour market figures than the GDP," says Mike Veall, professor of economics at McMasterUniversity. Veall's specialty is econometrics, reading economics through math and statistics.

Two months late

One of the problems with gross domestic product is that it'snot a simple figure, he says. It is more of a statistical constructestimating the total activity of the entire Canadian economy.

One result of that lack of simplicityis a lengthydelay getting a reading of the data. Another ismonth-to-monthinaccuracy.

The long and technical process of gathering all the components that go into creating thoseGDP calculations takes time. That means we don't get a reading on each month's economic growth untilmonths after it happened.

Even then, new data can alter the calculations, resulting in revised figures. This week, for example, Statistics Canadatold us the economy had actually shrunk by 0.8 per cent in thefirst three months of the year after previously telling us it had shrunk only 0.6 per cent.

"The main advantage of jobs numbers is their currency," says Veall. "They're more up to date."

Quick and dirty

Compared to GDP, the method for collecting jobs data is quick and dirty, using telephone surveys. While Veall says that may introduce some inaccuracy, it means the information isfresh, with Friday's data collected in August.

Most GDP figuresare not broken down by region or province. Regional breakdowns comeout just once a year, in November, and themost recentregional figuresare from 2013. That's not an economic update, that's history

As well as being virtually instant, jobs data isbroken down every monthnot only by province but right down to thecity level, allowing us to observe a key measure that wasn't available in the Tuesday growth statistics. That's whether job losses in places like Alberta and Saskatchewan are being replaced by job gainsin the country's industrial heartland.

Regional rebound?

In other words, the regional breakdown in the labour statistics will offer more clues as to whether we areindeed seeing the long-awaitedindustrial rebound in the third quarter.

As Veall points out, we've already seen the July jobless numbers, and to his practiced eyethey don't show thedramatic rebound hinted at by positive growth in the June GDP figures.

In fact, he says, it is wrong to read too much into any of these monthly figures. Even in the quarterly data there's just too much statistical error to argue over the importance of small changes.

He says the only statistically safe takeawayis that we've had a full year of low economic growth.

And Veall doesn't see that changing suddenly. He agrees with the analysis that Canada's traditionalindustrial sectorhas been so battered that, this time, a fall in the loonie won't result in a strong rebound. At least not right away and not in Friday's jobs numbers.

"I could be 100 percent wrong, but I don't think we're going to see anything terribly positive in any region," says Veall. "And we're going to see continued negative developments in the provinces that are dependent on oil."

In the long term he puts his hopes, like Bank of Canada governor Stephen Poloz and many others, in a rebounding U.S. economy.

But that hope got a knock on the head yesterday. New figures show industrial activity south of the border was the slowest it's been in two years.

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