10 Sep Canadian labour market adds 35,800 full time jobs in August
Paul Vieira, Financial Post · Friday, Sept. 10, 2010
OTTAWA — The Canadian labour market rebounded in August as 35,800 jobs were added — all of them full-time, Statistics Canada reported Friday. Further, the August job report suggests the economy has recouped all the jobs lost in the 2008-09 recession at a faster pace than previous recoveries.
The unemployment rate, however, edged up to 8.1% as more people went looking for a job, which could be interpreted as a sign of confidence among Canadians about prospects.
Despite the job gain, the employment data also indicated some softening in the economy, with the private sector shedding nearly 40,000 jobs. Plus the data was skewed by distortions in the education sector, as jobs lost in that sector in July were restored last month. Once education is excluded, 32,600 people lost jobs in August, with positions lost in 10 of 16 industrial sectors.
Some analysts warn monthly job creation is about to face some big headwinds on top of a sputtering U.S. economy, as companies look to boost earnings through increased productivity and governments embark on deficit-reduction measures.
“Job creation is going to slow to a crawl,” said Derek Burleton, deputy chief economist at Toronto-Dominion Bank, adding he doesn’t expect the unemployment rate to drop “significantly” below the 8% level for the foreseeable future.
The 35,800 jobs added in the month of August beat economists’ expectations for a 30,000 gain, and is an improvement over the 9,300 lost jobs in July. As a result, monthly gains in employment averaged 13,000 in July and August, compared with an average monthly increase of 51,000 during the first six months of the year.
With the August report, all of the 417,000 jobs shed during the recession — which commenced in late 2008 and ended in the third quarter of 2009 — have been recovered. It took only four quarters to accomplish this feat, compared with average economic recoveries which suggest such a timeframe of between six and nine quarters.
“Put another way, there are now more Canadians employed than ever before,” said Douglas Porter, deputy chief economist at BMO Capital Markets.
In comparison, job creation in the U.S. recovery is badly lagging the historical average.
In August, full-time employment surged by 79,900 positions, the largest gain in 11 months, while part-time employment dropped by 44,100.
Beyond the technical glitch in education, professional & technical jobs rose 28,300 and construction was up 12,000. However, the majority of sectors saw job losses last month, led down by manufacturing, with 25,600 positions eliminated. Mr. Porter said the drop in factory jobs might reflect payback after a solid July, when auto production was unusually strong.
Mr. Burleton said he’s concerned about the pace of job creation in the coming months even though recent surveys point to near-term hiring. Economic output has grown in line with aggregate hours worked over the past year, implying virtually no growth in labour productivity.
“With visible deceleration in the pace of output growth since the spring and pre-tax corporate profits still recovering, we anticipate that businesses will seek to boost productivity partly through fewer additions to payrolls in the months ahead,” he said, noting corporate profits as a share of GDP stand at roughly 10%, just below the 12% norm.
Meanwhile, governments are likely to begin cutting their deficits, as agreed to by the Group of 20 countries, which likely means fewer hires in the public sector. The federal government has signalled that it intends to cease stimulus spending as of March 31 of next year and is leaning on the private-sector to pick up the pace of investment to offset the government withdrawal.
Pam Martin of Invis, Mortgage Broker – Kelowna,Vernon, Penticton, Okanagan, British Columbia, Canada