6 things to watch for in Friday's job numbers in Canada and the U.S.: Don Pittis

The first bigeconomic indicator of the year comes out in bothCanada and the United States on Friday,when Statistics Canada and the U.S. Department of Labourrelease their jobnumbers. While tomorrow's numbers are for December, the final quarter of 2018 and summarize the entire year,they may offer hints ofwhat to expectin 2019.

Here are some of the things to watch for.

1. Job market to staytight?

Despite talk of doom following a market slide at the end of 2018, there is plenty of evidencethe job market will remain tight on both sides of the border. Increasing retirements as the population ages and a low participation rate mean employers remain hungry for workers, though demand differs regionally. For the first time in years, experts say, people have enough confidenceto quit their job if they want to try something new.

That's considered good for the economy. In theory,a re-sorting of the labour force can make each worker more productive as they move into a job that better uses their skills.

A poll of economists predicts tomorrow's U.S. jobless figures will remain near their recent record low of3.7 per cent. And in Canada, they're predicting a tick up, from5.6 to 5.7 per cent. Numbers that come in above or below those predictions could spook or spark the wider economic outlook.

2. Housing and construction

After a year of residential price and sales declines, watch tomorrow's numbers for any signs of a decline in construction jobs. A continued slide in the real estate sector in 2019 could hurt employment directly, including in real estate agencies. And a slowdown couldhave carryover effects into construction materials and sales of the kinds of goods people buy when they are setting up a new home, affecting jobs in those sectors.

If house prices fall and people begin to feel less comfortable, they might cut household spending, which could have a wider effect on new employment. However, long construction lead times mean it may be a while before job losses in construction hit. And extravagant price increases over the last decade should be enough to provide a safe margin for real estate investors consideringnew construction projects, especially if they have land and permissions in place. This isespecially true in Canada's largest urban centres, where housing demand remains strong.

3. Pot jobs

On a positive note here in Canada, watch for any references in Statistics Canada's report to cannabis-related employment in the second half of 2018. The Organization for Economic Co-operation and Development has predicted that legal pot will contribute a significant additional 0.2 per cent to Canada's GDP growth rate this year. That fits with widespread reports of a shortage of product.

Meanwhile, both public and private sector retailers are looking to expand. Approvals for retail shops have been slow, and even where they exist, government shops have been operating on reduced hours due to a lack of inventory. While share prices for cannabis companies have been volatile, expect lots more job demandin 2019 across the supply chain, from highly skilled agronomists to informed retail staff.

4. Oil and gas bust

Despite deep worries in this country'soil and gas producing regions over the price of Canadian crude, job creation has been surprisingly resilient. In Alberta, for example, unemployment fell a whole percentage point in November.

Regional and sectoralbreakdowns in theLabour Force Surveywill offer indications of whether the industry's most recent battering will change that. Of course, jobless data does not tell the whole story since new jobs may not pay as well as those lost in the energy sector.

On a more optimistic note, while new development in the oilsands may be fading, other projects, including B.C.'s $40-billionKitimatLNG terminal and a much discussednew refinery, could createjobs for many skilled specialists.

5. U.S. government shutdown

While U.S. government workers affected by the partial shutdownare expected to keep their jobs, if the battle between an intransigent President Donald Trump and an equally intransigentCongress extendstoo far into the new year, expect trouble. The talks underwayare trying to avoid a collapse in spending power among many government employeesthat could result in fewer jobs in the sectors that serve them.

Many government reportscould be delayed by the partialshutdown, but thejobnumbers will reportedly be an exception because a failure to release the crucial economic data could further reduce market confidence.

In Canada, many retailers were worried the recent postal strike, whichcaused similar disruption to one government service, wouldalso have a negative impact ononline shopping. But bricks and mortar retailers reported stronger sales, and alternative shipping startups such as eShipper and Chit Chatsgot a boost.

6. Holiday retail employment

Coming in as they did before the shutdown, early U.S. holiday retail sales were above average, though Statistics Canada won't have final Decemberfigures until February. However, employment during the holidays tends to rise as retailers and shippers bring in seasonal workers to help with holidaysales and post-Christmas bargains.

And while retailers have some latitude to cut staffing if sales prove weak, early predictions of a bumper season forCanadian retail sales will likely mean holiday employers grabbed the workers they could findin a tight labour market.

While holiday jobs are usually of short duration, they give employers a chance to try out new workers they might want to keep. And they provideexperience to less-qualified workers when employers lower the bar during a time when trained workers are hard to find.

Follow Don on Twitter @don_pittis