Canada's jobs comeback? Too good to be true

Mon May 28, 2012 1:43pm EDT
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By Louise Egan

OTTAWA (Reuters) - Canada created a stunning 140,000 jobs in just two months this year, the most in 30 years and a source of pride for a government bragging that the economy has got its moxie back.

But scratch the surface of the official data, and stir in a few secondary figures, and the picture looks far less upbeat.

Canada is definitely creating jobs, but the figures are volatile at the best of times. There's also been an increase in involuntary part-time work, a decline in employment quality and a fall in real wages.

Experts say the heavy hiring in the construction industry - the main factor underpinning jobs growth in March and April - is not sustainable, and layoffs there, along with thousands of public sector dismissals, will dampen employment and drive up the jobless rate.

"I view these last two months as anomalies," said David Gray, an economist at the University of Ottawa who specializes in labor market policy.

Gray predicts continued unevenness and conditions that create "winners and losers" in the labor market, widening the income distribution gap.

Canada recovered from recession-era job losses far faster than Europe or the United States, winning back the 400,000 jobs lost in the slowdown by January 2011 as the economy bounced back from a recession that was also milder than the U.S. one.

BUST TO BOOM   Continued...