Canada sheds 55,000 jobs in July
August 08, 2008
Canada's labour market shed 55,000 in July to post the worst two-month decline in seventeen years, Statistics Canada reported on Friday.
Combined with June's job losses, the two-month period was the steepest fall since the 1991 recession.
“Try as we might to find them, there was no silver lining to this report as all the details were bad,” wrote Scotia economist Derek Holt in a morning research note.
The majority of losses – 48,000 – came from the part-time sector, the government agency said.
The results were far below economists' estimates, which called for a modest 5,000 uptick in employment. Unemployment was also expected to remain at June's 6.2%, but the unemployment rate actually shrunk 0.1 percentage points as more people decided to exit the labour market.
Twenty of 22 economist surveyed by Scotiabank expected job gains or “flatness” at worst, according to Scotia's Mr. Holt, who called the results “remarkably bad.”
The news likely means the Bank of Canada will keep its benchmark borrowing rate unchanged, said RBC assistant chief economist, Paul Ferley.
“Though the Bank of Canada has recently put greater emphasis on the risk of inflation pressures taking hold in the economy, today's report will re-establish the downside risks to growth as of equal concern,” he said in a morning research note. “These offsetting risks will likely result in the central bank holding interest rates steady near term.”
Private sector declines came from heavy losses in manufacturing, most acutely felt in central Canada. Commercial and educational services also suffered declines. “The only significant gains were in accommodation and food services,” the government agency said.
It seems part-time manufacturing jobs bore the brunt of the losses – keenly felt within Ontario and Quebec. In total, manufacturing employment shed 32,000 jobs in July.
Net employment in Quebec declined by 30,000 jobs in the month, pushing the unemployment rate up to 7.4%. Ontario shed 19,000 jobs – all in full-time.
July brought the largest-ever monthly drop in manufacturing jobs in Canada's most populous province, according to BMO economist Jennifer Lee.
“Ontario and Quebec took one for the team,” Ms. Lee said. “Canada's economy is clearly downshifting, in response to the downturn in the U.S. and to the run-up in the [Canadian dollar]. Of relief to policymakers, the slackening labour market is taking steam out of wages.”
Over the past 12 months, manufacturing employment across Canada was down 88,000, with nearly all the losses in Ontario, Statscan said.
Traders immediately sold the Canadian dollar after the figures were released, according to Reuters. The currency fell to around 93.92 U.S. cents, or to the U.S. dollar, from 94.16 U.S. cents, or C$1.0620 to the U.S. dollar, immediately prior to the release.
Employment across Canada through the first several months of the year defied weakening economic conditions, averaging gains of 10,000 a month. July's results indicate “that labour markets are starting to succumb to weakening GDP growth,” RBC's Mr. Ferley said.