A few Green Shoots?

By: Dr. Mike Campbell

It has been a while since anybody has used the simile of the green shoots of recovery, but encouraging employment data from Canada and Australia may just warrant trotting it out again and dusting it off. In a recession, re-employment always lags behind the recovery, so improving figures for unemployment statistics could be a sign that things are finally getting better.

Figures just released by Statistics Canada showed that 93 200 people found work in June – this was six times the level that had been anticipated. It was enough to drop the national level of unemployment by 0.2% to 7.9%. This means that 403 000 jobs have been created over the past year; a number that Statistic Canada says off-sets most of the job losses encountered during the worst of the global recession.

In Australia, June saw the creation of 45 900 new jobs which was enough to drop the level of unemployment to 5.1% which is the lowest level seen since early last year. Australia was the only major developed economy to avoid going into recession during the financial crisis and the first to raise bank interest rates. The Bank of Australia interest rate has been held at a mighty 4.5% for the past two months; this is far and away the highest level of interest on offer in any developed country. Analysts are expecting that the interest rate will rise further, making holding Australian Dollars a more attractive proposition and leading to a further strengthening of the currency.