Bright spots in July’s dim jobs report: TD
Still adding full-time jobs monthly despite economic concerns.
bank of Montreal
OTTAWA: Although job creation in Canada slid to a halt in July shedding 30,400 jobs and pushing the national unemployment rate up by one-tenth of a point to 7.3%, the news isn’t as bad as it seems, says a TD Economics analyst.
Economist Leslie Preston said in a bulletin that month-to-month employment numbers “are notoriously volatile,” so July’s job losses need to be viewed in the context of past six-month trend.
Canada has added an average of 20,000 new jobs per month over the past six months, but TD Economics is expecting a trending down to 15,000 jobs in the second half of the year, a pace, Pearson said, that is becoming more consistent with 2% real GDP growth.
Statistics Canada’s labour report for July showed a loss of more than 30,000 jobs, TD Economics notes a silver lining: most of those losses (52,000) were concentrated in part-time positions in contrast to a 21,000 increase in full-time jobs. That continues a trend that has seen Canada add full-time jobs but lose an average of 8,000 part-time jobs.
There were significant losses (30,000) in the wholesale and retail trade sector, and employment in the professional, scientific and technical services (22,000), while public administration declined by 17,000.
Manufacturing saw a loss of 18,000 jobs while construction was up by 11,000.
Offsetting the declines were gains in information, culture and recreation, up 24,000, and finance, insurance, real estate and leasing, which increased by 19,000.
Ontario bucked a trend of job losses last month as the only province to make significant gains with 10,600 new jobs.
Wage gains were also healthy. Average hourly wage rate for increased by 3.9% year-on-year. TD Economics noted wage growth has outpaced inflation for four months, “a welcome development after lagging through much of last year.”
Hours worked were up 0.2% in July, consistent with its average pace over the past six months.
Bank of Montreal economist Doug Porter predicted August’s performance may be as bad as July’s, noting that Statistics Canada had still to register education sector layoffs that normally occur during the summer months.
“This is not good. It basically reinforces the picture that Canadian employers are turning very cautious,” Porter said.
“I don’t want to read too much into any one month’s news, but … we have a clear slowdown in employment. Perhaps the most telling statistic is that is that the unemployment rate made absolutely no progress in the past year. Effectively, job growth is now trailing a little bit behind population growth.”
Pearson said the bright spots in the report – healthy full-time job growth and wage gains – underscore that as long as worsening financial conditions in Europe do not feed into credit conditions in Canada, the Canadian economy will continue to chug along at a modest 2% pace.
Files from Canadian Press