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The Real Story Behind Canada's Employment Numbers

Posted: 10/12/11 10:04 AM ET

On Friday, Statistics Canada reported that the Canadian economy created an impressive 61,000 new jobs in September. The result was sufficiently positive to trim the unemployment rate to a three-year low of 7.1 per cent.

For many, the news was seen as a sign that after two months of little employment growth, the Canadian economy was back on track despite fears that the economy was tipping back towards recession. Dig a little deeper into the numbers, however, and the headline may not be as positive as it first appears.

In fact, it could be downright deceiving.

Of the 61,000 new jobs, more than half can be tied to the start of the new school year. A full 38,000 of the jobs created in September consisted of education support workers returning to their positions after a summer's absence.

Another 39,000 new jobs were labeled as "self-employed." This classification has long presented difficulty for economists as the self-employment segment is notoriously volatile from month-to-month. During economic downturns, self-employment numbers tend to rise as newly-displaced workers may resort to self-employment as a temporary measure to bridge the gap between job postings. Conversely, the self-employment category often declines when employment is rising as self-employed individuals return to the workforce and the additional benefits that come with full-time employment.

The other troubling aspect of the latest StatsCan labour report is the list of sectors that lost positions during the month. The financial services continued to shed workers with the evaporation of another 35,000 in September. These jobs tend to be well-paid and will likely prove difficult to replace. The manufacturing sector also added to its losses earlier this year as 24,000 important manufacturing placements disappeared.

While it is encouraging to see the Canadian economy is adding jobs, euphoria must be tempered with reality. And the reality is that -- for lack of a better term -- high quality jobs in Canada continue to vanish. This is not in any way meant as an indictment of self-employment or any other occupation, but too many of the positions being created right now are inferior to the ones being lost.