Things appear to be headed in the right direction. Often our industry (staffing) is the first to see a recovery, as companies bring in contingent labour rather than take a risk on hiring full time. The big indicator for us is that in January we had more orders than in any month last year, and currently most offices are extremely busy.
Two months ago, when I wrote this report, the TSX was at 11,600 (which was a 52 week high) and today it’s at 11,200, so we are up and down, but generally trending up (despite this blip down). It’s again a sign that there is no boom to this recovery, just a 2 steps forward, one step back kind of steady positive progress.
The current activity levels at Eagle are echoed when I talk to my colleagues across the industry, so after an extremely quiet December (lots of vacation time) we are seeing Canada start to “put the pedal to the metal”.
Canada gained 43,000 jobs in January, all in part time, pushing the unemployment rate down 0.1 percentage points to 8.3%. We have still lost 280,000 jobs since October 2008. This means that there are still very few “skills shortages” across the country, but that will come as the jobs come back.
The deficit is still a concern, at a projected $55.9 Billion, particularly because the government is proposing a 5 year plan to basically reduce it to “acceptable levels”. That typically means reduced spending and increased taxes, neither of which will be good for the average Canadian business! Couple that with Canada’s first trade deficit since 1975 and we still have some way to go in this recovery!
The GTA (Greater Toronto Area) continues to be one of our hottest markets, with the order flow as high this month as it has been in a long time. The increased activity now seems to be fairly widespread across most sectors, although we are certainly not seeing the kind of “craziness” we saw through the boom times. Provincial and municipal governments also seem to be moving on a number of fronts after a bit of a quiet time … so that is good too.
Western Canada is starting to pick up again now too, with Calgary in particular getting quite busy. Vancouver has the Olympics pending which will likely have a dampening affect on our business, as the focus shifts to the games themselves as opposed to the “business” of preparing for them. It is anticipated that the sheer numbers of people in and around Vancouver will cause disruption to work days, with as many people as possible working remotely and plenty taking time off to escape the madness. Edmonton is suffering still from the affects of a provincial deficit that has seen a focus on cuts, but there are still signs of life in a city that has been growing at a very fast pace for the last five years.
Eastern Canada is warming up, we are seeing more activity in the Montreal marketplace than we have seen in some time and the Feds are continuing to spend on adding resources to help them on their projects. The large government initiatives have still not moved along, but the feeling is that there is an appetite for change and so companies need to understand where they will fit into that new agenda. Could be fun!
The following are some facts/indicators we are watching as of time of writing:
> The price of oil is a little over $72 a barrel … not so low as to affect existing projects, but not high enough to create a “boom”.
> Natural Gas prices are little higher than this time last year, having overcome a seven year low back in September.
> The TSX seems to be doing well, currently around 11,200 … a positive sign.
> The Canadian dollar is strong, currently about 93.5c 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!
> Canada added 43,000 jobs in January, all part time … which I believe demonstrates the value the staffing industry brings to the Canadian economy.
> 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, oil companies, and telcos in particular. There is also some pickup in Municipal, Provincial and Federal Government activity.
> Canada announced its first trade deficit in 34 years … a deficit of $4.8 Billion in 2009, as opposed to a trade surplus of $47 Billion in 2008.
> The Canadian government is on hiatus (prorogued) … but given their impending spam legislation, maybe that’s a good thing. When are governments going to back off and let the economy recover before they implement more legislation that lacks “common sense”?
There has been, and will continue to be, the concern that this “recovery” is a bubble, and we could suffer a second recession … but fingers crossed we are tracking well. The recovery was forecast to be long and slow, and that is exactly what we are experiencing.
The staffing industry tends to see economic changes early and we are seeing a spike in demand, in some markets (GTA) that has been steadily growing for some months now.
I would have preferred not to suffer the recession of the past 12 to 18 months, but given reality I am very optimistic that things are getting better.