Canada adds 12,000 jobs in August
Unemployment rate edges higher as data becomes election fodder
Canada’s economy defied expectations in August, adding 12,000 net new jobs even as the unemployment rate inched up to 7 per cent for the first time in a year, Statistics Canada said Friday.
The jobless rate rose as more people looked for work, but the job creation figure was seen as further proof Canada’s economy is turning a corner after falling into recession in the first half of the year.
However, economists cautioned the gains may not be sustainable, given continuing low oil prices, slowing growth in China and volatile stock markets.
“While no ball of fire, Canada’s employment backdrop simply refuses to follow the recession script,” Doug Porter, chief economist at BMO Capital Markets, wrote in a note to clients.
The rise in the unemployment rate “is an unfortunate blemish on this report, but the solid full-time job gains, the big rise in total hours worked and the decent wage growth are all pointing in the right direction.”
The data became fodder in the federal election campaign with the Liberals saying it was further proof Conservative Leader Stephen Harper had mismanaged the economy.
“Stephen Harper won’t admit the truth, but StatsCan confirmed this week that Canada is in recession and unemploy- ment is rising,” said Scott Brison, the Liberal candidate in the riding of KingsHants.
“The youth unemployment rate remains stubbornly high at almost twice the national average,” he added.
Conservative party candidate Tony Clement defended Harper’s track record, saying “this is more proof that we need to stick with Prime Minister Harper’s low-tax, balanced-budget plan.”
Prior to August’s report, the national unemployment rate had held steady at 6.8 per cent for six months. The jobless rate for youth in August was 13.1 per cent, little changed from a year ago.
The economy has created 193,000 net new jobs since last August, Statistics Canada said. This despite an oil price shock that has seen resourcebased companies cut spending and staff, particularly in Alberta.
Full-time jobs in August rose by 54,000 positions, offsetting a drop of 42,000 part-time jobs, Statistics Canada said.
Coming on top of July’s 6,600 gain, it was the first back-to-back increase since the fall of 2014, economists noted.
Service industries did much of the heavy lifting, adding 17,200 jobs in August while goods producers shed 4,000 jobs.
Most of the hiring was in public administration, up by 14,000 jobs, which could be partly related to the federal election campaign, economists speculated. Education added 11,100 positions, with most of the past year’s gains at post-secondary schools. Health care and social assistance added 8,000 new jobs in August. Construction shed 3,600 jobs while manufacturing lost 3,200.
“A decent hiring tally in August is in line with other stronger readings we have seen recently from Canada’s economy for the third quarter,” TD economist Leslie Preston wrote in a note to clients, noting exports, auto and home sales are all up in recent months, though gains in the public sector “are unlikely to be sustained.”
In a surprising twist, Alberta added 4,700 jobs, while Ontario lost 3,900 positions despite recent improvements in exports. Alberta’s jobless rate remained at 6 per cent, while Ontario’s jumped to 6.8 per cent from 6.4 per cent as more people looked for work.
“Notably, all three oil-producing provinces saw job growth last month, while the manufacturing and tourism-heavy regions saw job losses . . . that’s just weird,” wrote BMO’s Porter.
In Alberta, employers may be filling jobs that have been vacant due to labour shortages prior to the oil price collapse, Porter speculated.
Compared to a year ago, Porter not- ed the jobless rate in Alberta is now up 0.8 per cent, while Ontario’s rate has fallen by 0.5 per cent over the same time period.
At Queen’s Park, Economic Development Minister Brad Duguid said while overall unemployment was up slightly last month, full-time job numbers are up. “Our economy is moving in the right direction,” Duguid said Friday.
In the U.S., unemployment fell to 5.1 per cent, from 5.3 per cent, hitting a seven-year low, according to government data. However, the economy created just 173,000 jobs versus economists’ expectations for a 217,000 gain.
The results muddied the expected timing of a central bank rate hike in the U.S. and sent stock markets in New York and Toronto lower.
Canada’s central bank is expected to hold its benchmark rate at 0.5 per cent at its next rate-setting meeting on Sept. 9. With files from Star wire services