July saw the official Bank of Canada announcement that the recession was over … of course the pain has not stopped! The unemployment rate remained at 8.6% but Canada lost another 45,000 jobs in July. There are however many signs that we are on the cusp of recovery and here at Eagle we are quite optimistic.
Over the last couple of months (June and July) and heading into August we have seen a steady increase in orders from our clients. The GTA (Greater Toronto Area) has been the busiest market, but Alberta has also started to pick up the pace. Ottawa, Montreal and East has not been very busy, but there is a school of thought that the onset of the vacation period may also be a factor here. On the candidate flow side of things we have seen an increased number of resumes over this period too, with again the GTA being the hottest area in the country.
The following are some facts/indicators we are watching as of time of writing:
> The price of oil was in the $70 range which should result in the oil companies ramping up some projects. We are seeing early signs of this.
> The TSX is still in the 10,500 range and has been over 10,000 for a while … a positive sign.
> The Canadian dollar is strong, close to 90c US. This is a positive indicator but can also serve to lengthen a recession.
> Prime is at 2.25%, and expected to remain there, making borrowing inexpensive. This is good for when companies feel optimistic enough to invest!
> Mark Carney, Governor of the Bank of Canada announced the recession was over here in Canada.
> Unemployment is still bad … 8.6% nationally (1,583,000 unemployed). However Ontario actually gained some jobs and improved its unemployment rate, month over month, from 9.6% to 9.3%.
> The Alberta government has large deficits for the first time in many years … which might cause a slowdown in government spending.
> The BC Government introduced tax breaks for oil companies … which might poach some business from Alberta?
> Many sectors appear to be picking up activity … banks, oil companies, provincial governments and telcos all appear to be picking up steam.> There have been few signs that any “stimulus” package will bring relief in the IT services sector. Hardware companies are benefiting from tax breaks but no big new IT services spending yet!
While we would like to see a more uniform recovery, we are at least seeing increased business activity in some major markets … and we are confident that others will follow. In addition to the concrete increase in demand there is also a more positive sentiment among our clients, many of whom are talking about increased activity in the Fall. There will continue to be some areas more significantly impacted than others but overall we expect things to just keep getting better from here. Pundits have stated many times that the recovery is likely to be slow, and that is what we are seeing. It would not however surprise me to see skills shortages return early in 2010 … which will be strange because there will still also be high unemployment. The last update I did in June suggested it might be the Fall before we see measurable improvement, and I think we are tracking to that prediction.