North America’s Employment Situation Improves

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With the release of the BLS’ latest “The Employment Situation” report, which revealed that employment continued to rise within the United States in December, even in the midst of the nation’s recovery from Superstorm Sandy, economists were left to wonder – would such progress be noticed in other North American countries, particularly Canada and Mexico?

Did Canadian employment rise as well? Is there any noticeable trend in terms of hiring? Is Mexican inflation finally decelerating to more average levels? And, are there any signs the Banco de Mexico will continue to retain the nation’s central bank rate at 4.5 percent in 2013?

Last month, Statistics Canada released one of its most positive employment reports of 2012, as the country’s unemployment rate declined to 7.1 percent, a four-year low. The deterioration in joblessness was caused by a considerable rise in full-time employment and labor force participation. Nearly 41,200 Canadians were hired on a full-time basis, as overall employment rose to 17.7 million, an increase of 39,800 from November to December. The national labor force also expanded last month, rising to 19 million, the largest monthly total of 2012. In spite of such encouraging news, part-time employment and self-employment each contracted in December, declining by 1,400 and 22,800, respectively. Still, economists are encouraged by the nation’s latest employment statistics, as an average of 38,250 jobs have been created per month since September, leading some economists to believe employment will continue to rise this quarter.

Canada’s seasonally adjusted Ivey Purchasing Managers’ Index also increased last month, rising from 47.5 to 52.8, indicating that more firms reported higher purchases in December than in November. But, the index was still much lower than in recent months; back in July, the index rose to 62.8, a six-month high. And, each of the index’s four sub-indices, employment, inventories, suppliers, and prices, declined last month, falling to 49.2, 42.4, 47.8, and 61.3, respectively. Nevertheless, economists remain hopeful that the main index will continue to augment this quarter, despite last month’s depreciation of all four sub-indexes.

As a relief to nationwide purchasers, Mexico’s annual inflation rate declined from 4.2 percent in November to 3.6 percent in December, the lowest rate of 2012, as the nation’s total Consumer Price Index (CPI) was measured at 107.2. Although the rate is still higher than usual, any decline is certainly welcomed. After all, as recently as September, the rate was measured as high as 4.8 percent. According to the Banco de Mexico, the country’s annual total underlying inflation and underlying inflation – services rates also declined last month, falling to five and 3.6 percent, respectively. However, the annual underlying inflation – goods rate lingered at 4.1 percent for the second straight month, while annual core inflation was measured at 2.9 percent.

In early November, during their final meeting of 2012, the Banco de Mexico’s board of governors voted to retain the central bank rate at 4.50 percent, as previously reported. The rate has not been raised or lowered since 2009, as it remains two percent below the bank’s neutral nominal rate, which is presently estimated to be 6.5 percent. With Mexico’s annual inflation rate falling below the four percent upper limit in December, many economists have projected the rate will remain unchanged in early 2013.

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