Terry's Weekly Update – August 27, 2010

Opening Thought

"Flowers Are Happy Things"  — P.G. Wodehouse

Canadian Wages On The Rise But U.S. Could Be a Problem

Canadians have been bringing home more money each week than they did during the economic downturn, when jobs and workers’ hours were slashed, but economists warn a return to recession in the U.S. could derail rising incomes. “My concern is that if we get a double dip recession in the U.S., we’re certainly going to feel that in Canada, so I think we’re in for an extended period where unemployment remains -- at best -- at or near 8%,” says Andrew Jackson, chief economist at the Canadian Labour Congress. “And you will not see significant wage growth with unemployment at that level.”

Statistics Canada reported Thursday that the average weekly earnings of non-farm payroll employees rose by 4% in June from a year earlier to $853.50. That’s the largest year-over-year increase since February 2008 and the seventh straight month in which the year-over-year increase was at or above 2.3%.

Weekly earnings will grow by 3.4% this year and 4.2% in 2011, according to predictions in a report from the Desjardins Group released Thursday. That’s because the employment outlook is improving steadily as the domestic economy remains strong, says Benoit P. Durocher, senior economist at Desjardins. Desjardins expects employment growth of 1.8% this year before improving to 2.2% in 2011. As a result, the unemployment rate would drop from 8% to about 7.4%, it predicts. “We think there will be some pressure on the high side from inflation and this will favour some increase in the wages,” he said. “This should be a good sign for the internal economy combined also with job creation expected for next year.”

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