Last week the U.S. Department of Labor announced an increase of 271,000 jobs in October to go along with a 44,000 increase here in Canada.
Break out the champagne? Not so fast, says Canadian staffing expert Steve Jones.
The information isn’t nearly as important as many believe. But if you truly want to know where the economy is headed, there’s a much better indicator advisors can use.
“The labour market surveys that come out the first week of each month are surveys. They’re not data,” Jones told WP. “They’re the most overly relied upon junk data that you could imagine. Markets move substantially on this information -- and really they shouldn’t.”
The Canadian Staffing Index is what matters – and here’s why.
The recruitment and staffing industry has a six- to eight-week lead time on the job numbers; that’s because temporary help and executive search firms get their mandates a month or more prior to the work actually being performed.
“In September it [Canadian Staffing Index] was up 5% from August and that pretty much will tell you you’re going to see a big bump in October in jobs,” said Jones. “I would say 10 months out of 12 you’ll get a pretty good indicator of what’s going on.”
The key months for the index are September, October and November. The three times in the past 20 years that this trio saw declines, the very next year Canada went into a recession.
“The recruitment industry in Canada in September and October saw significant and persistent improvements in the number of people working in temporary assignments and the number of search mandates the placement agencies received,” said Jones. “That accurately predicted the number that came out after the fact of 44,000 jobs.”
So, if you want to use jobs as a bellwether for economic growth, the Canadian Staffing Index just might be the more important number to hang your hat on.