Canada's Housing Bubble

Nov 24 2009 thestar.com

The number of Canadians receiving Employment Insurance benefits increased by 54,300 in September after two months of declines, pushing the total to 818,000.

But the alarming rise is taking place over what might be a more meaningful decline, one analyst says.

The numbers spiked in the first five months of the recession, starting after October 2008, when Canada's employment was at its peak, but have since levelled off. And the data, released by Statistics Canada on Tuesday, also show that initial and renewal claims are down, which Sal Guatieri, senior economist at BMO Capital Markets, takes to be positive.

"Fewer people are filing for employment insurance, presumably because fewer people are getting laid off and more people are finding work," Guatieri said.

"I would put more emphasis on that measure..... It might have stalled for the last couple of months, but still a convincing downward trend since the spring, when it looked like labour markets in Canada were stabilizing."

The annual percentage change in urban areas was quite drastic: Toronto's amount of EI recipients, for example, from September 2008 to September 2009, was 86.9 per cent; Greater Sudbury's change was 150.6 per cent.

Edmonton (289.6) and Calgary (375.5) had the two highest year-over-year percentage increases of EI claimants.

The national number of EI beneficiaries rose by a full 7.1 per cent in September, with the largest increases in Ontario, Alberta, and British Columbia. These numbers could reflect Statistics Canada economic data from late October, which showed non-farm employment drop by 110,200 in August - right before September's spike in EI recipients.

"If the job market was in fact on a downswing during this period, as the Labour Force Survey for October also seems to suggest, then this reported increase in Employment Insurance recipients may simply reflect reduced employment," Erin Weir, an economist with the United Steeleworkers, said.

But the number of initial and renewal claims processed in September fell by 5 per cent - about 14,700 - down to 280,700, a trend spread among provinces, the federal agency said. Guatieri thinks this is the more meaningful statistic, even if it does mean that a jobs recovery has not yet taken hold.

"It's still not back to levels that would be consistent with strong job growth," Guatieri said.

"It's more consistent with flat employment..... We still have a ways to go. We need to see initial claims falling further and that will happen when we see a more convincing upward trend in employment in Canada."