What Softening Job Market Means to Canada

The paltry increase in employment in January ó 2,300 positions ó was seen by many economists as yet another indication of Canadaís slowing economy, especially when taken in conjunction with a 36,500-job decrease in the last quarter of 2011. The jobless rate increased a mere 0.1 percentage point to 7.6% in January.

"Canadaís labour market is exhibiting a clear trend of increasing slack,î writes economist Emanuella Enenajornin in a report for CIBC.

"These figures are consistent with an economy fighting to keep its head above water,î adds Derek Burleton, deputy chief economist at TD Bank Group.

A discouraging outlook but there is some good news buried in the Statistics Canada data released last week. The number of paid employees increased by 39,000 in January, with private and public sector workers sharing the gains equally. In fact, January marked the third straight month for increases in public and private sectors employment, with education positions leading the public sector. Notes Burleton in his report: "This was perhaps the most surprising detail in the report, in view of recent focus by governments on fiscal restraint.î

These gains, however, were offset by a 37,000 decline in the number of self-employed. That, reports Dawn Desjardins, assistant chief economist at Royal Bank of Canada, may go some way to explaining the 44,800 drop in professional services positions in January 23,200 fewer positions in the finance, insurance and real estate sector.

The latter may be the more worrisome trend. On a 12-month basis, StatsCan notes, employment in professional services remained 23,000 or 1.8% ahead. But, notes CIBCís Enenajornin, in the past six months 73,000 positions have been eliminated in the finance, insurance and real estate sector ó "the biggest loss in any single sector of employment.î

The industry sector that fared the best? Says StatsCan, "While employment in natural resources was little changed in January, it has posted the highest 12-month rate of growth of all industries, up 8.5% or 28,000 since January 2011.î

On a geographical basis, Canadaís two most populous provinces are still struggling. Quebecís employment edged up slightly in January but year-over-year, employment was down 1.1% or 45,000 jobs. Quebecís unemploymentís rate is 8.4% while Ontarioís is 8.1%. Despite little change in January, Ontario is 0.7% or 44,000 jobs ahead of January 2011.

Tessa Wilmott is the editor of Knowledge Bureau Report.