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"Slow but steady" continues to be the message as the Canadian economy recovers. There are plenty of good indicators demonstrating that things are heading in the right direction, but the stability of World economies has already proven to be fragile so we remain cautiously optimistic!
When I wrote this update three months ago the TSX was at 11,600 (a 12 month high at the time) but last month it dropped back a little and this month it is back up at 12,100. The economy is like that ... Canada gained 20,000 jobs in February and has gained 159,000 jobs since July 2009, but having said that 417,000 jobs were lost between October 2008 and July 2009. This means that we are recovering but we have significant gains still to make! This month our industry published its first staffing index that showed the staffing industry is still down 30% from its high in October 2008, but is up 14% from its low in May 2009!
Here at Eagle we are continuing to see an uptick in resource requests, both contract and permanent, both on the technology side and in Finance & Accounting. Clients across most industry sectors are hiring again, but cautiously and being careful not to overextend themselves beyond their current lean staffing levels.
The GTA (Greater Toronto Area) is very active with hiring demand continuing to increase, and for the first time we are seeing signs that good candidates are getting multiple offers. While rates remain fairly steady, some clients are being disappointed when their candidate takes another offer because they were slow in making their hiring decision. The banks are very busy, the telcos are very busy, the Ontario provincial government is also very busy and we are also seeing some of the System integrators increasing their demand.
Western Canada has picked up significantly with Calgary clearly the hottest market, but there are definite signs of life in Edmonton and Vancouver too. The provincial governments in the West are still tentative with budget cuts and deficit fighting measures in play, but the oil and gas sector and the system integrators are getting quite busy.
When I talk about Eastern Canada, for Eagle that really means Ottawa and Montreal. Montreal seems to have become quite busy in February and like Toronto it is the financial sector and the telcos that seem to be driving demand. Ottawa has been quiet but signs are that Federal Government budgets are not going to be slashed this year, which creates an expectation that business will be picking up as we speak.
The following are some facts/indicators we are watching as of time of writing:
> The price of oil is a little over $82 a barrel which is up $10 in the last month ... suggesting perhaps the oil sector might be ready to spend again!
> Natural Gas prices are trending down again as the weather improves, but Encana did announce it will be doubling production ... mixed signals?
> The TSX seems to be doing well, currently around 12,100 ... up from 11,200 a month ago, a very positive sign.
> The Canadian dollar is very strong, currently about 99cc US. Not always a good thing for Canadian business, but a positive economic indicator.
> Prime remains at 2.25%, making borrowing inexpensive. This is good for when companies feel optimistic enough to invest ... of course Carney has only promised to hold those rates until July!
> Canada added 20,000 jobs in February, having added 60,000 full time jobs and lost about 40,000 part time jobs.
> Alberta's provincial government continues to grapple with its unusual situation of a $7B deficit, and the requisite cuts that go with that.
> We are seeing a pickup in activity in most sectors ... banks, energy companies, and telcos in particular. There is also some pickup in Municipal, Provincial and Federal Government activity.
> The Canadian government is not expected to drastically reduce its spending this year, which is good news for anyone dependent upon the Feds for business.
> Canada's new Staffing Index was released showing that temporary staffing levels are still down 30% from the peak of October 2008
No really big changes from previous months, just a slow steady increase in activity and no signs of a double dip recession ... fingers crossed!
The Canadian economy is more and more a knowledge worker economy, hence the demand will increase for skilled workers. People who cannot bring value in the knowledge economy will struggle. For the next few months I also think many companies will maintain their very lean structure which means that co-op or summer jobs may be scarce this year and new grads will likely struggle to find employment initially.
The good/bad news is that as long as this recovery continues the Canadian economy will create a huge demand for talent and we will return to talent shortages and eventually labor shortages. Then we face a new set of issues ... but I'll take those rather than recession any day!