As Hilary Rejto said in her blog – Canadian employment rate increased by 52000 job place, that increase was unexpected and positively surprised many economists. However, there is also a down side, which brings more of a negative effect then benefits for economy. I would like to elaborate more, explaining why is it bad for economy.

This increase looks beneficial for the Canadian economy in the short-run, because creating job places is beneficial for economy, social factors etc. On the other has, in my opinion, it has different impact in the long-run. That is so called inverse relationship between level of unemployment and inflation. In our case, it means that as number of job places increased in Canada (unemployment decreased), inflation rate also increased. In other words, general price level will also increase on certain types goods. It follows from basic macroeconomics (Phillips curve principle) . Creating job place, and paying people salaries are huge costs (especially for extra 52000). Following it will increase costs of production (variable costs) for all firms, businesses or any governmental organizations. The only way to escape these costs is to increase prices on their good, which will generate more revenue.

Conclusively, there is no reason to be happy (in long-run) about 52000 extra increase in job places.  However, some economists hoping that people are naive make a nice promotion for themselves, which leads to misunderstandings and wrong objectives for country’s economy.

Picture source: http://adsoftheworld.com/files/images/greenpeaceUnemployment.jpg .