The jobless rate will be higher in Canada than the United States in 2014, according to a Bloomberg News survey, ending a five-year advantage touted by policymakers as evidence of the country’s stronger economy.
Unemployment in Canada will average 7 percent next year, according to the median estimate in a survey of 15 economists. A separate survey about the U.S. economy forecasts a 6.9 percent jobless rate.
Canada’s employment growth this year is on track to be the slowest since 2001, outside of the last recession, as manufacturers and governments fire workers to cut costs. The United States is now tapping pent-up demand after a much deeper slump while Canadian consumers curb record debts and struggling exporters delay investments.
“Canada was able to outperform the U.S. during the recession and the recovery, but now it’s payback time,” said Benjamin Tal, deputy chief economist at Canadian Imperial Bank of Commerce in Toronto, by telephone.
Unemployment has been lower in Canada since October 2008 on a monthly basis, according to figures from Statistics Canada and the U.S. Labor Department. While the advantage was as large as 2.2 percentage points in November 2010, it has narrowed to 0.2 points in August with Canada’s rate at 7.1 percent and the United States at 7.3 percent.
Before 2008, the last time Canada had lower unemployment in any month was August 1981, when Pierre Trudeau was prime minister and Ronald Reagan was president.
“It is an important symbolic event if Canada’s unemployment rate exceeds the U.S. rate,” said Erin Weir, an economist at the United Steelworkers union in Toronto. “There has been this idea that Canada is dramatically outperforming the U.S., and we may well be seeing the end of that.
Prime Minister Stephen Harper has touted the country’s labor market, saying the country has recovered jobs lost in the global recession faster than any other Group of Seven country.
But the world’s 11th-largest economy still needs to add more than 22,000 jobs a month for the rest of 2013 to avoid suffering the weakest annual gain since 2001, except for the recession years of 2008-2009, according to Bloomberg calculations using Statistics Canada data.
Still, Weir said Canada will benefit from a recovery in the United States, which buys three-quarters of Canada’s exports. “Canadians should be quite happy to see the American job market recover,” he said.