Canada’s May Employment Numbers Less Mediocre Than They First Appear

For all the obstacles Canada’s economy has been facing over the past year or so, e.g. depressed prices for its major raw materials (especially oil) and a wildfire in Alberta that proved especially difficult to contain, its labor market has held up pretty well.

2016-06-16-Canada-Labour-GraphicMay’s net job creation figure of +14,000, as reported by Statistics Canada, sounds rather mediocre, but it resulted from an impressively large gain in better quality work that was offset to an unfortunate degree by a cutback in temporary hiring.

The number of usually more stable and better-paying full-time jobs in May was +61,000. On its own, such a large increase would have generated enthusiastic headlines. Unfortunately, though, there was a simultaneous shedding of -47,000 part-time positions.

The unemployment rate fell by 0.2 percentage points, to 6.9% in May from 7.1% the month before. The last time the jobless rate was less than 7.0% occurred 10 months ago in July 2015.

The lowest Canada’s seasonally adjusted jobless rate has fallen since the 2008-2009 Great Recession has been 6.6% recorded in two separate months, October 2014 and January 2015.

There’s a section in Statistics Canada’s latest “Labour Force Survey” report that features comparisons with U.S. results. First, however, the Canadian data is adjusted to match the same tighter reporting rules that are adopted by the Bureau of Labor Statistics.

Using identical methodology as in the U.S., Canada’s May jobless rate remained higher, at 5.9%, than America’s 4.7%.

The 65.7% participation rate in Canada fell slightly to 65.5% when the calculation was adjusted to U.S. concepts, but it stayed well above the 62.6% reported for south of the border.

A keen eye is cast every month on employment in two key sectors: manufacturing and construction. The former registered a month-to-month improvement of +12,000. The latter did even better, at +19,000.

The year-over-year number of manufacturing jobs was still negative, though, at -1.4%. The Canadian dollar valued at close to 80 cents U.S. is helping Canadian manufacturers make some additional export sales, but not enough to swell payrolls.

U.S. year-over-year manufacturing employment in May was also on the decline, but only marginally, -0.3%.

Canada’s 12-month change in construction employment was +3.0%, which was barely short of matching the +3.4% figure for the sector in the U.S.

Canada Mortgage and Housing Corporation (CMHC) has reported that monthly average housing starts so far this year, at 195,000 units annualized, have been +8.0% compared with the same January through May period of last year.

Such a solid level of new home groundbreakings helps to support a healthy number of onsite job crews.

Furthermore, heightened degrees of regional labor market vitality in Canada are corresponding with where housing starts are performing best.

British Columbia’s home starts are +45% year to date, while total employment in the province is +3.0% (+70,000 in nominal terms), which is much faster than the national jobs pace of increase, +0.6%, and the jobless rate in B.C. is 6.1% versus a Canada-wide figure of 6.9%.

Home starts in Vancouver are +52% year to date, driven by a hyperactive multi-unit (i.e., condo) segment, +61%.

Ontario’s home starts are +7% while its year-over-year jobs gain is +1.1% (+79,000 in nominal terms) and its unemployment rate is a respectable 6.6%.

Major city home starts in Ontario, however, are showing mixed results, with Ottawa up +32, but Toronto pulling back, -6%. Toronto multi-unit starts are -12%. (Toronto and Vancouver have long been known as Canada’s condo-construction hotbeds.)

Alberta new home starts are -43% year to date, being led downwards by both Edmonton (-49%) and Calgary (-40%).

At the same time, the province’s total employment has plunged by 54,000 jobs in nominal terms and -2.3% in percentage terms.

The province’s unemployment rate has soared by 1.9 percentage points compared with May of last year and now sits at 7.8%.

Recognizing that much attention will be paid to the harmful effects arising from the recent natural disaster in Alberta, Statistics Canada has added a special ‘Wildfire Impact” section to its most recent “Labour Force Survey” report.

Conscious of the extraordinarily difficult circumstances being experienced by the residents of Fort McMurray during May (i.e., 80,000 people had to flee the city as it was surrounded, and in some neighborhoods overwhelmed, by flames), the collection of labor force information in the region was suspended for the month.

Statistics Canada makes the point, however, that the Wood Buffalo census agglomeration region (which includes Fort McMurray) accounts for only 2% of the province’s total population.

The absence of data from Wood Buffalo has therefore had little impact on the provincial employment numbers and has played a minuscule role in the national statistics.

Also worth noting, ‘public administration’ carried out extra hiring of +31,000 in May, an unspecified portion of which was tied to the 2016 Census.

As a technical note, from May through August, Statistics Canada, as it has always done in the past, will be monitoring the work-related activities of individuals in the overall population aged 15 to 24 who have been attending school and are intending to return to academic studies in the fall.

This will provide Ottawa’s statistical agency, and employers, with valuable information on summer student employment levels.

Leave a Reply