28,500 new jobs fail to impress markets
The Canadian PressFriday, June 06, 2014
OTTAWA - Canada's labour market staged a modest comeback last month, but the good news was tempered by the fact all 25,800 net new jobs were part-time and many likely temporary as the first wave of students entered the summer job market.
Despite the net increase in jobs, the official unemployment rate edged back to seven per cent after several months at 6.9, an unusual outcome caused by more Canadians entering the work force.
But the real news in the key monthly report from Statistics Canada is that full-time employment fell by 29,100, the second big drop in two months.
As well, since 48,600 young workers found employment, the assumption is that many were university students finding summer jobs — a welcome development on one level but no solace to the long-term unemployed in the country. In fact, employment among men aged 25 to 54 fell by 23,000.
The weakness was also reflected in hours worked, up 1.1 per cent but not enough to reverse April's 1.9 per cent fall-off — and the 1.4 per cent year-over-year gain in wages was the slowest in three years and below the inflation rate.
"It was tough to find much positive other than the nice headline," said Bank of Montreal economist Doug Porter.
"It's probably one of the starker cases of the headline telling one story and the details telling quite another," he said.
Markets weren't fooled. The dollar weakened modestly on the news, particularly as it compared to a relatively stronger 217,000 job creation month in the United States.
The Canadian numbers did little to alter the prevailing trend of an economy that, after churning out strong job gains in the first few years following the 2008-09 recession, has largely run out of steam in the one area most important to Canadians — the ability to create well-paying, permanent, full-time jobs.
The agency noted that over the last 12 months, only 86,000 net new jobs have been created — or a mere 0.5 per cent increase — with all the growth part-time.
In fact, over that period the number of Canadians who could be said to be employed full-time fell by almost 27,000, a startling figure given that the economy grew by about two per cent during those two months.
Earlier this week, the Bank of Canada also noted that the economy had underperformed in the first quarter of 2014 and that the risk in the outlook had skewed slightly to the downside.
Economists say the numbers are representative of an economy in transition. The days when housing and to a lesser extent retail spending could sustain growth have come to an end, yet the rotation to export-based manufacturing and business investment has yet to take hold.
That's why many are pointing to brighter prospects going forward, particularly if the U.S. economy continues to pick up steam. But don't expect fireworks, said Diana Petramala, an economist with TD Bank.
"U.S. economic growth is estimated to have picked up to above four per cent in the second quarter of this year, and Europe is emerging from recession. Alongside improving Canadian corporate profits, better global economic prospects should lead to moderate gains in Canadian employment, in the range of 10,000 to 15,000, through the rest of 2014," she said.
That is barely enough to keep up with population growth, however.
If there was a bright element to the report, it was that employers added 66,200 workers in May, as 40,400 left the self-employed class.
In terms of sectors, employment increased by 22,000 in education services and by about 20,000 in accommodation and food services. Agriculture jobs were also up 19,000.
Among sectors that lost jobs, the natural resources industry declined by about 23,000 and there were about 21,000 fewer workers in finance, insurance, real estate and leasing.
Manufacturing was also down by 12,200 and construction was largely flat.
Regionally, the agency said the biggest draw of jobs came in resource-rich Alberta, which picked up 16,400 workers. Most other provinces showed little change in relationship to their population, except for Newfoundland and Labrador, which lost 4,100 jobs, all full-time.