Canadian economy sheds 18,600 workers, manufacturing continues to struggle

Canada’s mostly rosy jobs picture of the last two years appears to be darkening as the economy shed workers for the second consecutive month in November and the unemployment rate moved up one notch to 7.4 percent.

Economists had expected a modest pickup of about 17,000 in employment for the month, in part because October’s outsized dip of 54,000 seemed out of proportion with an economy that was growing, if slowly. But instead, another net 18,600 workers fell out of the labour pool last month — all due to a big drop in part-time employment and concentrated in the services sector and in Quebec.

However, manufacturing continued to struggle, dropping another 7,300 jobs, bringing the number of factory workers in Canada to 1.7 million, the lowest level since 1976 when Statistics Canada began tracking the sector. Union economist Erin Weir said 627,000 jobs have been lost in the sector over the past nine years.

Statistics Canada noted that despite the most recent declines, there were 212,000 more Canadians working in November than there were at the same point a year ago, a pickup of about 1.2 percent of the labour force.

But all of those gains are yesterday’s news. November’s loss marks the fifth consecutive month since June in which the economy has failed to create jobs in the aggregate. In fact, employment is down about 10,000 over the period.

The employment record appears to dovetail with the collapse in business and consumer confidence that began in late July amidst a sustained equity market selloff on worrying trends in Europe’s sovereign debt crisis and political gridlock in Washington that led to a downgrade of the country’s credit rating.

The Bank of Canada and other forecasters have warned that Canada faces at best sluggish economic activity during this fourth quarter of 2011 and in the early months of 2012 — and even worse outcomes should Europe’s troubles trigger a global financial crisis.

“The data smack of increasingly cautious business sentiment as the year grinds to a close,’” said Derek Burleton, a senior economist with the TD Bank.

What’s worse, Burleton added, is that there doesn’t seem to be much on the horizon to look forward to. Government hiring, which stabilized the market during the recession and early stages of the recovery, is set to fall significantly as governments seek to bring down deficits; export-oriented jobs don’t look promising given the fearful global situation; and there isn’t much action in the service sector given low confidence measures.

“Add it all up, and the hiring struggles are likely to extend well into 2012,” he said, with the unemployment rate drifting north to the 7.5 to eight percent range in the next six months.

CIBC chief economist Avery Shenfeld said one surprise in the report is that retailers don’t even seem to be overly optimistic about the Christmas shopping season, noting the 34,000 job drop-off in retail and wholesale industries.

Shenfeld pointed out that the unemployment rate might have risen higher had not about 25,000 Canadians opted out of looking for work last month.

The release came as Finance Minister Jim Flaherty launched a series of pre-budget consultations in Charlottetown. A release from the minister’s office said the 2012 budget would “maintain (the) focus on jobs and economic growth,” but gave no specifics on what measures he may adopt to achieve the purpose.

Not all the details in November’s employment report were negative. Full-time employment actually rose by 34,600, more than offset by the 53,300 dip in part-time work.

As well, hours worked increased by 0.3 percent after two consecutive months of declines, and average hourly wages rose to 2.4 percent after being down to 1.1 in October.

Regionally, the losses were concentrated in Quebec, which saw its employment fall by 30,500 split between part-time and full-time.

The agency said the services sector had a bad month in November.

Aside from retail and wholesale, business, building and support services shed 29,000 jobs.

The goods producing sector fared somewhat better, as 20,000 workers were added in construction, 10,000 in natural resources and about 8,000 in utilities. In the last 12 months, natural resources has seen employment rise an impressive 8.3 percent, a reflection of the strong global demand for Canadian commodities such as oil, metals and potash.

Aside from Quebec, Saskatchewan also had a notable drop in employment relative to its size of 4,200. Nova Scotia picked up 4,400, however, and Ontario saw a gain of 16,600 — 31,800 in full-time workers — during the month. Other provinces did not register major changes in employment.