May 23, 2013

March 4, 2013

Canadian Employment Fell by 22,000 in January; But Some Interesting Shifts

Alex Carrick

Chief Economist, CanaData

After five months – from August 2012 to December 2012 inclusive – during which total employment in Canada increased by an extraordinary 184,000 jobs, January 2013’s figure from Statistics Canada was a notable letdown, -22,000. The decline was almost all in full-time work.

Fewer people were looking for employment in the latest month, allowing the jobless rate to fall by 0.1 percentage points to 7.0%. By comparison, the unemployment rate in the U.S. currently sits at 7.9%. (The U.S. clearly out-performed us in jobs creation in the latest month, however, adding 157,000 net new positions.)

Canada’s manufacturing sector in January shed 21,000 positions. On-site construction employment picked up to almost the same degree, +18,000. Be aware, however, that the outlook for jobs in construction is being negatively impacted by what is happening in the new homes market.

On the same day as January’s Labour Market Report was released, Canada Mortgage and Housing Corporation (CMHC) published its housing starts figures for the first month of the year. At 160,577 units seasonally adjusted and annualized, residential groundbreakings in January 2013 were at their lowest level in three-and-a-half years, dating back to July 2009 (139,000 units). At that time, the recession was just ending.

Home starts in 2012 and parts of 2011 were on an extended strong run. Analysts have been expecting a correction. But if the monthly number stays significantly down through the rest of this year, employment in construction will take a significant hit beginning in four to six months.

That’s a worry for a later date. Returning to January’s labour market numbers, total employment in Canada was +1.6% year over year, slightly ahead of the +1.5% figure for the U.S.

In services employment, the relative positions were reversed with the U.S. at +2.0% and Canada at +1.8%.

In manufacturing, the two countries were neck-and-neck, with Canada at +1.0% year over year and the U.S. at +0.9%.

There was a slightly greater discrepancy in construction employment. Canada’s year-over-year employment increase of +2.6% compared favorably with the +1.8% percentage change south of the border.

Canadian full-time work in January was +2.0% while part-time work was flat, 0.0%. This is good news since the former is usually higher-paying and more stable, which facilitates a greater contribution to the overall economy.

In the individual month of January, the total number of jobs in the public sector declined by 27,000. It seems that government austerity, which has been evident around the world, is finally making its presence felt in Canada.

Educational services employment dropped by 31,000 in the most recent January, but was still +3.7% year over year.

The stand-out services sub-sector for year-over-year employment growth was “finance, insurance, real estate and leasing”, +7.4%.

Regionally, Ontario (-31,000) and B.C. (-16,000) recorded the most numerous jobs declines in the individual month of January. Moving in the other direction, Alberta (+10,000) picked up the largest number of new workers.

On a year-over-year basis, an interesting regional shift has occurred. The employment gain in Eastern Canada (+1.8%) has outpaced the West. Furthermore, almost all of the East’s strength has been based in Quebec (+3.3%). Ontario’s jobs growth (+1.2%) has been more restrained and the Atlantic Region has been slightly negative (-0.3%).

The province with the fastest year-over-year employment growth in January was Saskatchewan (+4.1%), followed by Newfoundland and Labrador (+3.6%).

As for unemployment rates, the four provinces in the West are still recording the lowest levels, with Saskatchewan (4.0%) in the lead, followed by Alberta (4.5%), Manitoba (5.0%) and B.C. (6.3%).

The lowest unemployment rate in the East is in Quebec (7.1%). Next is Ontario (7.7%).

Habitual last-place finisher for both the Atlantic Region and the country as a whole – Newfoundland and Labrador – has thrown off that unflattering label. With an unemployment rate of 11.5%, it is performing slightly better than Prince Edward Island (11.8%) and only a little worse than New Brunswick (11.3%).

At 9.7%, Nova Scotia has the honour of posting the lowest jobless rate among the provinces on the Atlantic Coast.

For more articles by Alex Carrick on the Canadian and U.S. economies, please see his market insights. Mr. Carrick also has an economics blog.

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