Current economic conditions

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Output levelled off in April, after three consecutive gains, hampered in part by labour disputes. Employment growth resumed in June, after a two-month pause, as gains in services outweighed more losses in manufacturing.

The economy continued to be influenced by gains in commodity prices and the exchange rate. Food and energy prices continued their upward trend, while metals remained near their historic highs. Partly as a result, the Canadian dollar posted its second fastest quarterly increase ever, just under 7%, hovering near a 20-year high in May and June.

These shifts in relative prices continued to resonate throughout the economy. The stock market remained near its all-time peak. Export earnings of most commodities continued to grow, led by metals. Mining output was checked by labour disputes, after strong growth in recent months (non-metallic minerals have expanded by nearly a third in the past year). The investment boom in resources helped buttress manufacturing output in recent months against weak export demand, especially for lumber and autos.

Higher food and energy prices pushed up consumer prices, led by a 26% hike in gasoline prices since January. The jump in gasoline prices did not deter its consumption, which jumped 4.2% in April, its largest monthly increase in over two years. After a slow start to the year, when a cold snap discouraged motorists from venturing out, gasoline demand in April was 3% ahead of last year's pace.

Quebec's 6.9% unemployment rate was the lowest on record back to 1976, down over a full point from 8.0% in June 2006. At 0.4 percentage points, the gap between Quebec's 6.9% rate and Ontario's 6.5% rate was the smallest ever recorded. Before 2007, the smallest gap was 1.1 points, observed late in 2002. With comparable labour force growth in both provinces, the convergence of the unemployment rates reflects the strong job gains of 2.4% in Quebec since June 2006 (all in full-time employment) and the growth slowdown to 0.9% in Ontario. Growth in Quebec was led by household spending, partly fuelled by one-time pay equity settlements of $1.3 billion dispersed in the spring. Both provinces have lost numerous jobs in manufacturing and forestry.

Definitions, data sources and methods: survey numbers, including related surveys, 1301, 1901, 2152, 2306, 2406 and 3701.

The online version of the July 2007 issue of Canadian Economic Observer, Vol. 20, no.7 (11-010-XWB, free) is now available from the Publications module of our website. The publication Canadian Economic Observer, Historical Statistical Supplement (11-210-XIB, free) is also available. The supplement contains annual historical data for all series reported monthly in Canadian Economic Observer.

The paper versions of Canadian Economic Observer, Vol. 20, no. 7 (11-010-XPB, $25/$243) and Canadian Economic Observer, Historical Statistical Supplement (11-210-XPB, $28) will be available soon.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Philip Cross (613-951-9162; ceo@statcan.gc.ca), Current Economic Analysis Group.