CREATING JOBS
Central Canada is a winner
OT TAWA Could this be the tipping point for Canada’s economy, or at least the labour market? We’ll have to wait and see.
Certainly after a disastrous first quarter, the outlook suddenly seems a lot brighter. For that, we can thank an unexpected surge in hiring in May — the biggest gain in seven months, in fact, and more than six times larger than anyone had expected.
And the majority of those new jobs were created in a previously unlikely location — Ontario, which had seen its prominence diminish in recent years as the manufacturing-focused economy turned to energy-heavy provinces for growth.
It’s probably too early to say Ontario is back in the driver’s seat, but it indicates that the plunge in oil prices is helping to shift the focus from the West — not counting a still-thriving British Columbia — back to Central Canada.
“I think it’s pretty clear that the Canadian economy is going to rebalance over the next two to three years,” said Jeremy Lawson, chief economist at Edinburgh-based Standard Life Investments.
“You’ve been through a period where the high level of oil prices and the strong investment in that sector — particularly being reflected in the strong growth of Alberta — is unwinding,” he said. “So Ontario, where a lot of that import-competing manufacturing and non-oil related manufacturing is located, is certainly going to improve relative to Alberta.”
Statistics Canada added weight to that scenario on Friday, reporting that about 58,900 new jobs were created overall last month — most of those being full-time positions and mainly in the private sector.
As expected, the unemployment rate remained at 6.8 per cent for the fourth consecutive month, a sign more Canadians have been actively seeking work. The jumpin May employment since October 2014, when 62,200 more people found work. The previous big gain was 93,000 in April 2012, the federal data agency said.
Last month’s net new job total surpassed economists forecast for an increase of about 10,000 positions. Most of those new jobs created during May were in Ontario, with 43,900, followed by British Columbia, at 30,600. Nova Scotia gained 3,700 workers.
Not surprisingly, resources dependent Alberta saw the biggest decline in employment last month, shedding 6,400 positions in the wake of the oil-price collapse. New Brunswick lost 4,600 jobs, while Newfoundland and Labrador had 4,300 fewer workers, Quebec dropped by 2,100 and net hiring in Saskatchewan — another resources-rich province — was flat.
“The weakness in the Prairies and the strength in B.C. and Ontario made complete sense. That fits with the bigger picture ... It’s like reality caught up with the data,” said Douglas Porter, chief economist at BMO Capital Markets.
“The Ontario unemployment rate is now below the national average, and it’s the first time we’ve seen that since 2006. There’s actually only a very small gap between Alberta and Ontario now. It was just a little bit more than a year ago that it was the largest gap ever in Alberta’s favour ... and B.C. is closing in on Alberta very quickly.”
Full-time jobs accounted for 30,900 of the additional workers overall in May — outpacing parttime employment of 27,900. The private sector generated a net 56,800 jobs, while public-sector employment fell by 19,100. There were also 21,100 more self-employed Canadian last month.
The largest industry gain was in the services-producing sector, up by 48,600 positions, followed by manufacturing with 21,500 new jobs. Construction, on the other hand, lost 4,700 workers.
In the natural resources sector, oil and gas extraction accounted for most of the overall 2,400 drop in employment. The sector also includes forestry, fishing, mining and quarrying activity.
“This is good news, in the fact that there’s a shift occurring back to Ontario from our energyrich provinces, Alberta and Saskatchewan,” said Jeff Brownlee, vice-president, public affairs and partnerships at Canadian Manufacturers & Exporters.
“Demand is picking up for Canadian products. The U.S. is our largest market and will continue to be our largest market,” he said.