The Bank of Canada says the country’s job creation record since the recession is likely a little less impressive than the fall in the unemployment rate suggests.
The central bank says in a new research paper that the unemployment rate, although the most quoted measure of labour market health, has over-estimated the jobs recovery in Canada and particularly in the U.S.
In the paper, the bank creates a composite labour market indicator, LMI, that combines a broad range of measures to paint a more accurate picture of what has occurred since the 2008 – 2009 recession.
In the recovery period between 2010 and 2013, the bank says the unemployment rate fell 0.9 percentage points.
But the LMI, which includes less publicized indicators such as hours worked, wage growth, long-time unemployment and labour under-utilization, fell only 0.5 percentage points during the period, suggesting the improvement in the labour market has not been as impressive.
The discrepancy is even greater in the U.S., the bank says, where the unemployment rate fell even further than Canada’s, but whose labour market is by virtually every other criteria far weaker.
The bank concludes policy makers need to consider the broad range of employment indicators for a truer picture of labour market health.
In other research papers issued Tuesday, the bank notes the loonie has gained prominence as a global reserve currency since the recession, and now accounts for about 1.8% of the total with world reserve holdings valued at about US$200 billion.
The bank also examines the growth of so-called digital currencies, such as bitcoin and Amazon coins, concluding that while they have the potential to challenge more traditional currencies, none is widely used at the moment.