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Canada reported a monster employment print today.  Specifically, Statistics Canada reported that the employment in Canada was up 31,000 in September and that the unemployment rate decreased to 8.4%. This was the first monthly decline in unemployment in Canada since the labor market started to turn down in the fall of last year and is Canada’s largest gain since May 2006.

The unemployment rate in the United States, based  on data from the Bureau of Labor Statistics, was  9.8% for September.  The delta between Canada and the United States is therefore currently at 1.4%.  This is the largest delta since this data has been tracked, so largest delta ever.  As we wrote on 6/8/2009 in a note entitled, “The World Cup of Unemployment: Canada Versus United States”:

“Our Lead Desk Analyst, Andrew Barber, looked at unemployment rates going back in both Canada and the United States about thirty years to 1979.  Over that entire time period, the United States has, on average, been 2.51% more employed.  That is, the unemployment ratio has been lower by 2.51%.  The chart comparing these long term rates is attached below.

For the past nine months, unemployment in the United States has been higher than in Canada.  The only other period in which that was the case was from 1, which was a period in which Canada was between 0.1% and 0.4% more employed.  As of the most recent data points, Canada is currently 1.0% more employed, which is a full 3.51% above the thirty year average between the countries."

Ever, as they say, is a long time.  And when economic shifts happen for the first time ever, it is a worthy call out.  Canada’s fiscal health and its leverage to commodity industries have obviously been a major advantage for her unemployment statistics.

The implication of this better than expect employment report from Canada will likely be another decoupling from the United States when it comes to interest rates.  Much like their commonwealth brethren, the Aussies, it is likely that the Canucks taking a real hard look at raising rates based on this print.

Daryl G. Jones

Managing Director

Deltas in Employed Canucks - a5