US adds 227,000 jobs in February as Canada sheds 2,800
OTTAWA: Unemployed Canadians continued to struggle finding work last month as the slow-moving economy again laid an egg in February, unexpectedly shedding 2,800 jobs.
The national unemployment rate dropped to 7.4%, but that was because close to a net 38,000 frustrated job seekers simply gave up the search.
The news was particularly grim for young Canadians. Employment among the 15-24 age cohort fell another 26,800 in February and now is down almost 300,000 jobs since the beginning of the recession in 2008.
Prime Minister Stephen Harper called the Statistics Canada report “disappointing,” but stressed some positives, including a net positive for full-time employment, which continues a trend, and a brightening outlook in the US.
Still, he conceded work remains to be done and promised action in the upcoming March 29 budget.
“Obviously we will not keep our eye off the ball and there will be a lot of measures in the budget to create jobs and get us on a long-term sustainable track,” he told an event in Toronto.
Liberal critic Scott Brison berated the government’s record, particularly on youth employment, saying “an entire generation of Canadians is losing hope.”
February’s report continues a string of poor results dating to October and wiping out what had been a heady period of growth and falling unemployment rates.
“Essentially the labour market has been flat on its back for the last five months—it’s gone nowhere,” said Douglas Porter, deputy chief economist with the Bank of Montreal. Revised figures show the economy has in fact shed 37,000 jobs since October.
And Canadians shouldn’t expect much better news going forward for a while, he added.
“Basically, the easy job gains are gone,” he said. “The things that really drove jobs early in the cycle are simply not going to be there, whether it’s government hiring or retail related jobs driven by consumer spending.”
Despite Harper’s reference to “a lot of measures” coming in the budget, the statements from ministers suggest there will be little to generate short-term job growth. In fact, the expectation is that Finance Minister Jim Flaherty will bring in an austerity budget that reduces spending and cuts the public service.
The ball is being left to the private sector to carry, but TD Bank economist Diana Petramala said corporations appear to be spooked over European debt problems.
“The weakness … largely reflects a small crisis of confidence, with businesses remaining reluctant to add to payrolls as rising financial risks in Europe threatened future demand prospects,” she said.
That is in contrast to the US, which, after years of playing second fiddle to Canada in terms of job generation, now appears to be catching up.
The US added 227,000 jobs in February to complete three of the best months of hiring in four years. Monthly gains over that period averaged 245,000.
That is slightly above consensus, while in Canada the result badly missed the expectations of economists who called for an increase of 15,000 jobs.
While the losses were tiny given the close to 19-million-member Canadian labour force, the big story was the exodus of workers from the job market, particularly in Ontario, which saw a fall off of 40,500 people actively seeking employment.
Labour market contraction at a time of rising population is normally associated with discouraged workers giving up on finding employment.
After strong job growth following the 2008-09 recession, Canada has seen this critical aspect of the economy slow and then essentially stall.
Statistics Canada noted that employment had risen by 121,000 over the past 12 months, almost all in the first six months.
Economists estimate Canada needs to add between 15,000 and 20,000 jobs each month just to keep up with demand from increases in population.
Labour economist Erin Weir of the United Steelworkers noted that along with fewer jobs, the two per cent gain in average hourly wages means even those working are not keeping up with inflation.
He called on government’s to shift focus from austerity to job creation.
“The priority should be to create jobs through public investment,” he said. “The risk is that budget cutbacks will push Canada back into recession by eliminating public-sector jobs and reducing expenditures that help support private-sector jobs.”