Job Market Canada
September 11, 2011 by staff
The loss of 5,500 jobs last month resisted market expectations for a gain of 21,500 jobs and accounted for the second consecutive month of employment data less than encouraging. The increase in the unemployment rate was the first in seven months;anlysts expect to move higher in coming months on weaker growth.
Most of the jobs lost were in the private sector, part-time. Softness in the construction, transportation and natural resources sector weighed on the results of August.
The problems of the Canadian economy were sad productivity figures, also released on Friday, indicating that output per hour worked in the second quarter fell the most in five years.
“Jobs weak and low productivity are a combination depressing,” said Douglas Porter, deputy chief economist at BMO Capital Markets.
The data dealt another blow to Canada, who had been one of the unconditional economies among developed countries and industrialized countries. Recently, in February, Canadian policymakers had boasted of how the economy recovered the 428 000 jobs lost during the recession of 2008-09.
However, Canada’s gross domestic product shrank in the second quarter of weak exports, joining earthquake struck Japan as the only group of seven countries to reduce the period April to June.
August was marked by volatility in financial markets dramatically, mainly due to concern among traders about the ability of policymakers to address fiscal problems in the U.S. and Europe. Economists say the dent in confidence has yet to work their way through the economy.
The Bank of Canada left its key rate policy unchanged this week, indicating the need to raise rates had “diminished” as the U.S. slowdown today’s global economy and a drag on exports.
Prime Minister Stephen Harper said his government would be “flexible” in managing national economic policies amid a fragile economy. His Conservative Party recently won a mandate from the majority by promising to reduce spending and return to a balanced budget by mid-decade
The G-7 meeting in Marseille, Canadian Finance Minister Jim Flaherty said the country’s economy is “managing relatively well” despite the small loss of jobs in August. He emphasized the net gain in full-time jobs for the month.
Mr. Porter of BMO said that while the monthly employment decline in August was quite small, is another sign that the labor market momentum is fading in the global economy weakens. “I would not expect a quick return to hiring strong in the rest of the year. We will be lucky to see employment growth much at all,” he said.
Meanwhile, the Canadian labor productivity fell 0.9% in the second quarter, the biggest drop since the second quarter of 2006, as hours worked increased in spite of Alberta forest fires and tsunami in Japan caused a cut in production.
In general, Canadian data showed the public sector added a net 22,000 jobs, while the private sector, the key driver of the economy shed a network of 20,600 positions. The economy added a net of 25,700 full-time jobs, while a network of 31,200 part-time positions were eliminated.
Derek Burleton, deputy chief economist of TD Bank, said the weak productivity figures “are consistent with a cooling in hiring,” because companies will probably focus spending on machinery and equipment rather than labor because it seems to be gaining ground in terms of competitiveness.
Mr. Burleton sees unemployment rising to 7.6% at the end of the year. “This is not a jobs crisis in Canada and the United States, but any increase in the rate of unemployment is not a welcome development.”
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