The global economy is rapidly slowing. Today we can add two more countries to the list of countries in, or headed for recession. Let’s start with a look at Canada.

Inquiring minds may wish to consider Canada’s biggest job loss in 17 years.

Fifty-five thousand jobs were lost in Canada in July, the biggest number since February 1991, principally the result of a struggling private sector in Ontario and Quebec. However most of the losses, 48,000, were in part-time work and overall employment remained 227,000 higher than it was a year earlier, Statistics Canada said Friday.

The performance was far worse than expected. The median estimate by analysts surveyed by Reuters had been for a gain of 5,000 jobs in July following a loss of that magnitude in June.

Traders immediately sold the Canadian dollar after the figures were released. The loonie fell to around 93.92 U.S. cents, from 94.16 U.S. cents immediately prior to the release. Bonds moved up as markets calculated the Bank of Canada was
less likely to raise interest rates than before.

“Certainly this is going to refocus the Bank of Canada’s attention on the growth side of the economy,” Royal Bank of Canada assistant chief economist Paul Ferley said. “Up to now recent comments have been sort of highlighting the risk to inflation but with this kind of employment report it’s going to make clear that there is risk on the growth side as well.”

The manufacturing heartland of Ontario and Quebec bore the brunt of the losses. Overall, 32,000 Canadian manufacturing jobs were lost in July, and 88,000 in the past year. While there were gains elsewhere, Ontario alone lost 41,000 factory jobs in July. Quebec’s unemployment rate rose to 7.4 percent from 7.2 percent.

Refocused Attention On Growth

Canada is not the only country showing concerns about growth. ECB President Jean-Claude Trichet said economic growth will be “particularly weak” through the third quarter. For more on the ECB, please see Trichet Puts Spotlight on the Euro, Dollar.

Japan trade surplus down nearly 89 percent

On July 23, CNN was reporting Japan trade surplus down nearly 89 percent.

Japan’s trade surplus in June fell 88.9 percent from a year earlier marking the fourth straight month of decline, the government announced Thursday.

Japan’s politically sensitive trade surplus with the United States fell by 40.2 percent, down for the 10th straight month on slower exports of cars, auto parts and mineral fuels.

The nation’s trade surplus with Asia dipped 6.3 percent, falling for the first time in three months due to rising imports of oil, natural gas and coal, the ministry said. The trade surplus with China fell 65.5 percent.

Japan’s trade surplus in the first half of 2008, meanwhile, fell 42.1 percent from a year earlier to 2.959 trillion yen ($27.40 billion), the ministry said Thursday. Imports grew 10.5 percent, outpacing exports that increased 3.9 percent

Japan Recession Looms

Bloomberg is reporting Japan Economy Probably Shrank as Recession Looms.

Aug. 8 (Bloomberg) — Japan’s economy probably contracted last quarter, bringing the country to the brink of its first recession in six years, as exports fell and consumers spent less. Gross domestic product shrank an annualized 2.3 percent in the three months ended June 30, according to the median estimate of 25 economists surveyed by Bloomberg News.

Toyota Motor Corp. yesterday reported the biggest drop in earnings in five years as U.S. sales slumped.

“What you’re going to see is a long, slow, modestly painful recession,” said Robert Feldman, head of economic research at Morgan Stanley in Tokyo. “It’s going to fall heavily on both workers and stock holders who are suffering lower returns as profits come down.”

“Most of the measures suggest that things aren’t as good as they were 12 months ago, but it’s nothing like 2001, 1998, or 1993,” said Richard Jerram, chief Japan economist at Macquarie Securities Ltd. in Tokyo. “When you say recession, it triggers images of 1998 or 1993,” Jerram said. “You’re having a period of sub-par growth, but it’s not the sort of downturn we saw three times during the previous 15 years.”

Japan’s recession may or not be as bad as previous recessions, but the recession in the US, and UK is likely going to be as bad as any since the great depression.

Mike “Mish” Shedlock
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