Economists weigh in on job losses
Sharp drop just a blip or ominous sign?
Canada’s jobs market suffered its single-worst month since 2009, shedding 71,200 jobs in November, according to Statistics Canada. The Financial Post dug into the numbers and asked some of the country’s top economists whether this is a blip, or a sign of something more ominous.
DEEPEST JOB LOSSES — 27,500 — CAME IN MANUFACTURING
❚ Stephen Brown, senior Canada economist at Capital Economics: “It’s pretty clear the slowdown in GDP growth, both at home and globally is weighing on the labour market and you can see that in the manufacturing figure. That’s quite a big decline in any given month. In that sector, employment has been weakening more recently as well. You’ve also seen that weakness in connected sectors like transport and logistics.
“We certainly wouldn’t forecast a rise in manufacturing employment, but even though manufacturing is weakening, we don’t expect to see big drops in that sector.”
❚ Josh Nye, senior economist at RBC: “That decline is pretty eye- catching. It’s one of the bigger stories. It’s one of the weaker industries if you’re tracking employment growth year- to- date, down an average 4,000 per month. Manufacturing has been weak globally this year. You’ve got rising trade tensions between the world’s two largest economies and slowing global growth that’s really been concentrated in the industrial sector.
“Broadly speaking this is a sector that hasn’t generated much in the way of job growth for a number of years now so it’s hard to see that narrative changing in 2020.”
PUBLIC ADMIN LOST 24,900 JOBS, BUT THEY’RE ELECTION- RELATED
❚ Brown: “Those appear to be the dropback in temporary hiring for the federal election in October and we can gauge that ( because) part- time employment fell quite a bit and a lot of those jobs would’ve been parttime.
“We had a blip in October that pushed it up and a blip in November that pushed it down again. The long- term trend is generally positive.”
❚ Nye: “You saw something similar in October and November 2015 even on a slightly larger scale where you get a big surge in hiring around the election and it just drops off the following month. In October, public administration was up 20,100 and I don’t know if that’s all election hiring. December was up 5,000 in 2015 and even before these swings, public admin had been a source of growth. It’s up five per cent year- to- date, even with the retracement.”
ACCOMMODATION AND FOOD/ RETAIL LOST A COMBINED 14,300 JOBS
Statistics Canada adjusts its numbers for seasonal factors, so accommodation and retail numbers won’t reflect the thousands of new employees that are hired on short contracts. If that hiring spree took place as expected ahead of the holidays, the numbers would simply be flat, Brown said.
❚ Brown on accommodation and food: “We suspect that’s related to the fact that the weather was so bad at the start of November so just less demand from those industries for employment. Obviously those industries tend to hire more short-term temporary work and you tend to see the effects a lot quicker in response to changes in the weather. I would say half of the drop in employment is due to temporary factors.”
❚ Nye on retail: “The decline in retail employment was quite small and I wouldn’t read too much into it. I could imagine a scenario where more holiday shopping is taking place online and normally you would’ve had bricks- and- mortar stores doing a bunch of hiring for the holiday season and you’re perhaps going to get less of that because people are shopping online more and you don’t need as many people in those stores working. The seasonal factor anticipates a ton of holiday hiring and you don’t actually get that so it looks like employment is declining.”
QUEBEC’S ECONOMY WAS HOT, BUT IT STILL LED THE WAY WITH 45,100 JOB LOSSES
❚ Brown: “It fits in with the global story apart from the fact of all the manufacturing sectors, the one that has been really strong this year has been aerospace and that’s almost entirely in Quebec. If we’re seeing manufacturing weakness, we should’ve expected to see that in Ontario and the other provinces, not Quebec.”
❚ Nye: “It’s both Quebec and Ontario that are seeing that weakness in manufacturing over the last two months. Quebec’s employment growth has been quite strong and we saw a bit of retracement of that today. The drop in November is quite sizable when you look at the history so it could just be a blip. I don’t know that we’re ready to call it that this is the end for Quebec’s outperformance to the Canadian economy as a whole.”
B. C. AND ALBERTA EACH LOST 18,200 — BUT IN DIFFERENT WAYS
While B. C. lost most of its jobs ( 5,800) in accommodation and food, Alberta gained the most jobs (3,600) in this sector. Alberta lost 1,500 jobs in finance, insurance, real estate, rental and leasing and B.C. gained 6,200. Alberta also shed 4,500 jobs in other services, whereas B.C. added 100.
❚ Brown: “We would expect, generally, the picture in Alberta to be weaker, while the picture in B.C. should be strengthening quite a bit. The big fear for quite a while was the big problem in the housing market with prices falling was going to cause problems more broadly in the B. C. economy, whereas Alberta’s almost been in this five- year recessionary situation given the constant challenges in the energy sector.”
❚ Nye: “If you look at headline employment numbers in B.C., we’ve seen some softening in the last few months and I think a lot of that has been in the goods sector and forestry is a part of that. B.C.'S economy is doing quite well and we think it’s going to be one of the better performers in 2020. You’re seeing the housing sector start to pick up again, the resale market’s increasing as well. That correction in housing we saw in 2018 seems to have run its course.