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The Star: Cohn: Ontario's debt is soaring, and province is falling behind

jje1000

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More bad news for Ontario (and the rest of Canada outside the Prairies).

Wynne or no Wynne, Ontario has some serious structural issues that it needs to deal with- and it will need to navigate an economy that's increasingly divided between the resource and service sectors. Truly the dutch disease people have speculated about.

Unemployment rate climbs to 7.1% as Ontario hit hard
MICHAEL BABAD
The Globe and Mail
Published Friday, Jul. 11 2014, 8:38 AM EDT

Canada’s labour market is limping badly, with the jobless rate now at 7.1 per cent and the slowest annual employment growth in more than four years.

The economy shed 9,400 jobs in June and the unemployment rate inched up from 7 per cent in May, Statistics Canada said Friday in a largely disappointing report that flew in the face of projects from economists, who had expected to see job creation of some 20,000.

Still, buried beneath the headlines was some good news: Employers added 33,500 full-time jobs in June, though that was eclipsed by the loss of 43,000 part-time positions. And over the course of the year, all job gains have been in the private sector.

The country’s labour market has been limping for some time now, with job-creation over the past year of just 72,000, or 0.4 per cent.

“This was the lowest year-over-year growth rate since February 2010, when year-over-year employment growth resumed following the 2008-2009 labour market downturn,” the federal statistics agency said.

Canada’s labour market readings have raised eyebrows among economists because of their volatility, which is why observers favour a longer-term trend. And that trend is not encouraging.

“In light of this volatility, it’s best to look at the six-month moving average for a more-reliable picture of the Canadian labour market,” said senior economist Krishen Rangasamy of National Bank.

“On that measure, Canada is creating on average roughly 9,000/month, mostly self-employed and in government, i.e. not a stellar performance by any means,” he added.

Jobs were lost in agriculture and manufacturing, though construction gained by almost 32,000.

The employment-to-population ratio, or the number of people working as a percentage of the adult population, inched down to 61.4 per cent from 61.5 per cent, continuing a troubling trend. It now stands just a shade over the low point hit late in the recession, noted chief economist Douglas Porter of BMO Nesbitt Burns.

Ontario, which lost 34,000 jobs last month, was a sore spot in the report, adding to the pressure on the recently re-elected government of Liberal Premier Kathleen Wynne.

“Gains in the West were more than offset by the sharp decline in Ontario, the latter province’s employment now about the same as at the start of the year,” noted Mr. Rangasamy.

Manufacturing in Ontario, which lost another 13,600 jobs, is now at its lowest point on records dating back to 1976, Mr. Porter noted.

Alberta, the heart of the oil industry and Canada’s jobs engine, gained 9,400 jobs.

“Annual employment in the province is now 3.5 per cent year over year, or miles above the 0.4-per-cent year-over-year national rate,” Mr. Porter said of the western province.

“If Alberta is stripped out of the national total, there would have been no job growth in the past year.”

The report knocked down the Canadian dollar, given how it will affect the Bank of Canada’s outlook.

“Today’s disappointing results will give the Bank of Canada more reasons to stay on their dovish script when they make their announcement next Wednesday, with their preference for a neutral stance on rate hikes to be maintained, despite accelerating inflation readings,” said Nick Exarhos of CIBC World Markets.
http://www.theglobeandmail.com/report-on-business/unemployment-climbs-to-71-as-jobs-market-limps/article19562032/
 
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jje1000

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Two paths to make- support manufacturing and try to find a niche (i.e. Green energy, which didn't work), or transition out of it and replace it with other sections. Either way, the transition needs to be made smooth, which will be difficult to do.

Ontario budget comes amid limping economy, ‘ugly external backdrop’
MICHAEL BABAD
The Globe and Mail
Published Monday, Jul. 14 2014, 7:52 AM EDT

Down and out in Ontario
Some food for thought as we await the first budget since Ontario Premier Kathleen Wynne and her Liberals were re-elected with a majority government:

What to expect
We know generally what the document will contain given that the government of Canada’s most populous province said it plans to re-introduce the proposed budget that sparked the election: As The Globe and Mail’s Adrian Morrow reports today, Ontario Finance Minister Charles Sousa will table a $130.4-billion spending budget that includes new transit lines, a provincial pension plan and a $2.5-billion “jobs and prosperity fund.”

Jobs
Ontario’s labour market has stalled, with employment barely above the level of a year ago and a jobless rate that tops the national average at 7.5 per cent. The median wage has increased by just 1.1 per cent over the past year, and the employment-to-population rate, or the number of people working as a percentage of the adult population, is a shade below 61 per cent.

Those numbers aren’t something you want on your record as you unveil a fresh budget.

“After three months of solid job growth, Ontario gave most of it back in June,” said senior economist Robert Kavcic of BMO Nesbitt Burns.

“Employment growth is now running at 0.1 per cent year-over-year, the slowest clip since the recession.”

Mr. Kavcic was referring to Friday’s report from Statistics Canada, which, among other things, contained this stunning fact: Factory jobs in the province now stand at the lowest on records dating to 1976, with manufacturing now accounting for about 10 per cent of jobs in Ontario, compared to 17 per cent 10 years ago.

Ontario lost almost 34,000 jobs in June, some 13,600 of them from the province’s factories. That, said Mr. Kavcic’s colleague, BMO chief economist Douglas Porter, puts the level of manufacturing employment at below 750,000.

Economic growth
Ontario’s economy expanded by just 1.3 per cent last year, though forecasts are brighter going forward.

Royal Bank of Canada, for example, forecasts economic growth this year at 2.3 per cent, down from its earlier projection of 2.5 per cent, and growth of 2.8 per cent in 2015.

The latest forecast from CIBC World Markets, in turn, sees something less stellar, with economic growth this year of 1.9 per cent and next year of 2.3 per cent. CIBC sees the jobless rate holding at 7 per cent or more for at least the next two years.

“While there is plenty of room for improvement in policy decisions – both at the provincial and federal level – the bulk of Ontario’s economic woes can be put down to much more prosaic factors: The 50-per-cent appreciation in the Canadian dollar in little more than a decade; a still-struggling U.S. economy (Ontario’s biggest customer); And, relentless manufacturing competition from China and Mexico (yes, the U.S. is enjoying a manufacturing renaissance … mostly in Mexico,” Mr. Porter said in a recent report.

“For any manufacturing-dominated province, that’s an ugly external backdrop, which even the best economic policies would struggle to deal with.”

Finances
Ontario faces a projected 2014-15 deficit of $12.5-billion, or 1.7 per cent of gross domestic product, for the worst showing in the country. The ratio of net debt to GDP is at about 40 per cent, and projected to rise to 40.5 per cent before starting to ease in 2017-18.

Here’s what Moody’s Investor Service said at the beginning of July: “The expected path to balance and stabilization of the debt burden, in our opinion, faces greater challenges than before.”
http://www.theglobeandmail.com/report-on-business/top-business-stories/ontario-economy-struggles-amid-stronger-canadian-dollar-ugly-external-backdrop/article19584076/
 

yin_yang

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i think what the article and our way of life don't take into account are people like me, who do not work because of environmental reasons. i know that almost any job i do will put more pressure on the environment, which is already quite stressed. so i do not do much except breathe and hang out. people should keep that in mind. it's important to see that side.
 
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