Manufacturing AUTOMATION

Job growth stalls as economy fails to generate sustained employment growth

March 7, 2014
By Julian Beltrame The Canadian Press

Canada’s jobs market continues to sputter as the economy gave back some of January’s gains by shedding 7,000 workers overall in February, a disappointment to those hoping for a strong start to the year.

The loss was tiny in relative terms and insufficient to alter the seven per cent unemployment rate.

But after last week’s news of stronger fourth-quarter economic growth than forecasted, and a gain of 29,000 jobs in January, economists had expected February would also see a gain in the order of about 15,000 jobs.

The bottom line looked worse than the underlying details – which included a pickup in full-time employment and private sector hiring – but it was sufficiently soft, especially when put up against the 175,000 job gain in the U.S., for markets to sell down the Canadian dollar.


The loonie fell almost three-quarters of a cent to 90.26 cents US as the news was released Friday, giving back most of the gains of the past week.

The setback in February continued a pattern of up-and-down months in the Canadian labour market, which has been virtually stalled since last August.

While the last 12 months has seen a pick-up of 95,000 workers, Statistics Canada noted “there has been little overall employment growth in Canada since August 2013.”

“Looking through the typical see-saw pattern in Canadian employment, there is little doubt that underlying trends are cooling, with job totals up a modest 0.5 per cent from a year ago and the unemployment rate seemingly stuck at seven per cent,” said Doug Porter, chief economist with BMO Capital Markets.

“I wouldn’t expect a whole lot more in the year ahead as we see this so-called rotation away from housing and consumer spending to exports and business investment,” he added.

Also troubling, added Porter, is that almost all the job growth in the past year has occurred in Alberta, with other regions left picking up the scraps.

Porter says monthly regional breakdowns are notoriously unreliable because of the larger sampling error factor in the survey, but a year-long look usually tells a true tale.

What the long-view shows is that Alberta has picked up 82,000 jobs compared with a year ago, an increase of 3.8 per cent of the workforce, while Ontario and Saskatchewan gained 29,000 and 5,000 jobs, respectively. All other provinces have lost jobs, except for New Brunswick, which broke even.

The general malaise is reflected in the employment rate, which held steady at 61.6 per cent, still about two percentage points below the pre-recession highs. This means that almost five years removed from the recession, there are still hundreds of thousands fewer workers in Canada relative to the population than before the slump.

But economists also noted that the underlying details were much more positive. Full-time employment rose by 18,900 and private sector jobs increased by 35,200. Offsetting the gains were sharp drops in part-time jobs and a massive falloff of 51,000 government jobs.

Scotiabank economists Derek Holt and Dov Zigler said the one-month public service plunge was likely exaggerated, given that the sector only lost 41,000 for the full year.

Still, there is no doubt government spending restraint is holding back job creation in Canada, economists said, a major factor in the weak U.S. job market as well.

“These figures illustrate the folly of imposing public-service cuts on a stagnant job market. Unfortunately, the federal government and many provincial governments have prioritized fiscal austerity over economic growth,” said Erin Weir, an economist with the United Steelworkers.

There were 15,500 fewer people classified as employees, as well, but 8,600 more people became self-employed.

Regionally, Quebec and British Columbia both had off employment months of 25,500 and 10,400 respectively compared with January, while Alberta and Nova Scotia saw gains of 19,000 and 2,900.

By industry, there were 9,000 more workers in natural resources and 7,900 more in agriculture in February, but 25,000 fewer in finance, insurance, real estate and leasing. Manufacturing saw a small pick-up of about 5,000, while construction lost 3,600.

In a separate report, Statistics Canada said the country’s trade deficit had significantly narrowed to $177 million in January from $922 million the previous month, although most of the improvement had little to do with jobs generating exports. In fact, in volume terms, exports fell 5.3 per cent, while a sharp decline in imports and better prices helped the bottom line.

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