For the fourth straight month, job growth remained below average within the United States in June, according to the BLS’ latest “The Employment Situation” report, which was released to the public on July 6th. The report revealed that the national unemployment rate held steady at 8.2 percent for the second consecutive month, while only 80,000 new jobs were added to the national economy. With the release of June’s figures, 75,000 new jobs, on average, were created throughout the second quarter, the lowest three month average since fall 2010.
Although job growth was stagnant, did the United States’ neighbors to the north, Canada, and to the south, Mexico, report any positive economic news last month? Did Canadian unemployment and Mexican inflation continue to rise? Were there any signs of economic progress? And, is there any indication that unemployment and inflation will decline throughout the second half of 2012?
Canada:
According to Statistics Canada’s latest jobs report, employment growth remained volatile last month, as anticipated. Although the national unemployment rate dropped for the first month since March, from 7.3 percent in May to 7.2 percent in June, only 7,300 jobs were added to the national economy. To compare, an average of 70,250 jobs were created from March to April alone. However, since then, only 15,000 new jobs have been generated. In all, 17.5 million Canadians were employed in June; 14.2 million of those individuals held full-time positions. Even though 29,300 new full-time jobs were created last month, approximately 22,000 part-time jobs were lost, all but offsetting June’s total job creation. Of note, since June 2011, more than 75 percent of the nation’s net new jobs were created in January, March, and April 2012.
In the meantime, Canada’s most recent monetary policy statistics were unsurprising as well. For the 22nd consecutive month, the Bank of Canada’s benchmark overnight interest rate remained unchanged, at one percent. The Bank’s two other monetary rates – the bank rate and the deposit rate – were not raised or lowered last month either. In fact, the rates have held steady, at 1.25 and 0.75 percent, respectively, throughout 2012.
Mexico:
According to the National Institute of Statistics and Geography, Mexico’s annual inflation rate rose from 103.8 in May to 104.4 in June, the first month-to-month increase recorded since March. Total underlying inflation also upturned from June 2011 to June 2012, rising by 3.8 percent. Meanwhile, the annual underlying inflation for goods and services increased as well, by 4.6 and 3.1 percent, respectively. The expansions were anticipated as a result of recent national expenditures for July 1st’s general presidential election. With Institutional Revolutionary Party nominee Enrique Peña Nieto elected as the nation’s next president, election expenditures will begin to decrease, likely leading to a decline in August’s annual inflation figures.
As expected, the Banco de Mexico’s monetary policy was not adjusted last month, in spite of election expenditures and rising inflation. At 4.5 percent, the bank’s policy rate is presently two percent below the bank’s neutral nominal rate – and has remained unchanged for 36 successive months. Nevertheless, if inflation continues to increase on a steady basis, the bank’s board of governors may have no choice but to lower the rate prior to the end of 2012. The annual inflation rate is currently 4.3 percent, well above the Banco de Mexico’s target of three percent.
US:
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