Canadian Employment Declined In January

Total employment declined 21.9K in January following a surge of 87.5K over the two previous months. Full-time jobs were down 20.6K and part-time jobs also fell 1.4K. Employment in the goods-producing sector decreased by 17.1K this month (+13.7K in December). Within the goods-producing sector, construction (+17.2K) was the top performer while all other sectors were down with manufacturing (-21.6K) registering the sharpest decline. The services producing sector posted a slight pullback (-4.8K), after increasing 17.5K the month before. Among services producing sectors, educational services (- 30.9K), finance (-10.3K) and health care & social assistance (-8.0K) were the worst performers. However, there were gains in professional, scientific & technical services (+17.2K) and public administration (+15.4K) lagged. At the provincial level, Ontario (-30.9K) and British Columbia (-15.9K) were the worst performers while Alberta (+7.3K) and Quebec (+5.5K) posted the strongest gains. Despite this employment pullback, the national unemployment rate decreased one tick at 7.0%, thanks to the decline in the participation rate.






OPINION: January’s labour market performance was significantly below consensus expectations. It was about time that the LFS corrects to reflect the realities of stagnant economic growth. The January report was very weak, not just in the headline, but also in the details with a drop in the number of paid employees, full-time jobs and private sector jobs. Moreover, the wage bill was again stagnant in January – the 4 month change is the worst since the 2009 recession (middle chart). Labour market weakness should continue in the months ahead given the ongoing slowdown in the housing sector (17K increase in the construction sector in January despite a collapse in housing starts!) and the upcoming fiscal drag stemming from the adjustment in provincial public finances. Public sector jobs accounted for a big chunk of job created in 2012, January data indicates that this trend is starting to reverse (bottom chart).