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Job creation stays flat as unemployment rate edges up in January


February 3, 2012
By Julian Beltrame The Canadian Press

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Canada’s economy squeezed out a paltry gain of 2,300 jobs last month as the country’s unemployment rate increased due to more people looking for work.

The unemployment rate climbed one notch to 7.6 percent in January, as the economy continued its struggle to produce jobs in numbers large enough to absorb the increase in Canadians looking for work.

Economists had expected a pop of 25,000 jobs for the month, in part because of the unseasonably warm temperatures could have encouraged more hiring in some industries. But the increase was much weaker than anticipated, compounded by the 23,700 additional Canadians that joined the labour force, accounting for the climb in the jobless rate.

January was the third month in the last four that saw the unemployment rate increase since last September’s 7.2 post-recession low.

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“This extends the ugly end to 2011,” said Douglas Porter, deputy chief economist with BMO Capital Markets. “Today’s report reinforces the point that Canada’s job creation engine is cooling markedly,” adding that there is no single factor for the softening trend that has seen employment fall on average during the last four months. The 7.6 percent unemployment rate is also the highest in nine months.

TD Bank economist Derek Burleton said the recent figures are consistent with an economy fighting to keep its head above water.

And he sees little relief in the upcoming months.

“For the year as a whole, we continue to expect average monthly job gains of about 10,000 per month, more heavily weighted to the second half of the year,” he advised clients in a note.

After a strong start in 2011, employment in Canada has largely stalled since last summer, with only 20,000 or so jobs being added in the last six months.

Over the past 12 months, the economy has produced 129,000 new jobs, or a 0.7 percent gain in employment, one of the weakest records in a non-recessionary period in many years.

The fall-off in job creation has coincided with generally weaker economic conditions and declining business confidence due to uncertainty in the global situation. Earlier in the week, the agency reported that the economy contracted slightly in November following a flat growth reading in October.

Most economists believe conditions in Canada, as well as job creation, will remain weak throughout 2012.

The strongest indicator in January’s report was that the number of employees in Canada rose by 39,200, offset by a similar decline in self-employment.

That is usually considered a good sign because in a weak economy, many who can’t find work will resort to generating their own jobs even if the pay is lower.

By sector, employment rose in the education, information, culture and recreation, and in other service industries in January.

Meanwhile, there were a big loss of 45,000 workers in the professional, scientific and technical services industries, and construction shed jobs despite the warm temperatures during the month. Manufacturing saw a small pick-up, but remains 44,000 down over the last 12 months.

Regionally, there were few major changes in any province except Quebec. After a sharp drop in employment the previous few months, Canada’s second most populous province saw 9,500 new jobs added, bringing the unemployment rate down three-tenths of a point to 8.4 percent.


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