Rocky start to year for labour market
OTTAWA—Canada’s labour market got off to a rocky start this year by shedding a surprisingly high 21,900 jobs in January—almost all full-time and mostly in the provinces of Ontario and British Columbia.
The result was weaker than economists had expected—even taking into account that the unemployment rate edged down one-10th of a point to 7.0 percent, the lowest it’s been since December, 2008.
“Canada struck out this morning, with uniformly negative data,” said Jimmy Jean of Desjardins Capital Markets.
“To be sure, care should always be taken in interpreting a single month,” he stressed.
“But the housing starts trend has long been in place.”
In a simultaneous release, Statistics Canada reported exports fell 2.1 percent in real terms in December, continuing a weakening trend in a key sector that represents about one-third of the total economic output.
And January housing starts collapsed to 160,600 annualized—the lowest since 2009.
Economists said no one was fooled by the drop in the unemployment rate; it was due not to strength in the labour market but to a technicality.
Almost 58,000 Canadians left the workforce in January or ceased looking for employment—the largest exodus from the labour market since 1995.
Still, the result isn’t the shocker the drop suggests.
Analysts were anticipating that a payback in the labour market would come, reasoning that the relatively healthy employment picture in Canada seemed out of step with an economy that had suffered through a rough patch in the last half of 2012.
“Taken by itself, the [jobs drop] was bad. But it’s hardly a shock given the fact employment seemed to be defying gravity in the second half of last year,” said Doug Porter, chief economist with the Bank of Montreal.
Noting that employment is a lagging indicator, which means the data reflects the economy of a few months back, Porter said Canada “will be very fortunate to see much growth at all in the next few months.”