Is Bay street the new face of Unemployment?
Financial, real estate jobs hit hard in January as growth ‘dismal’
Meet the new jobless — your broker, your real estate agent, your insurer. This group lost ground again as the Canadian economy created just 2,300 jobs in January, Statistics Canada says.
The “dismal” job growth figure fell well below economists’ consensus forecast of 25,000 jobs last month, based partly on expectations that unseasonably warm weather would spur hiring in some industries. Unemployment also rose, to 7.6 per cent, in January, as more Canadians began looking for work, Statistics Canada also said Friday.
The latest numbers extend a trend of weak job creation that began last summer and could now continue into the first half of this year, economists said.
“The overall jobs report was a bit discouraging,” said David Madani, an economist with Capital Economics, in Toronto.
With continuing uncertainty about the economic outlook in Europe and the U.S., and weakening domestic demand for things like housing, Canada could be facing several more months of disappointing numbers, economists said. “We’ve had several months now of disappointments, which start to accumulate overall,” Madani said. “It makes us a little more nervous about where the economy might be headed. Given what’s happening in the rest of the world and the weakness we’re seeing locally in housing and construction, we’re not confident economic growth is going to rebound this year. In fact we expect slower growth.” After a strong start in 2011, employment in Canada has largely stalled since last summer, with only 20,000 or so jobs being added in the last six months. Over the past year, the economy has produced 129,000 new jobs, for a 0.7 per cent gain in employment, one of the weakest records in a nonrecessionary period in many years. Jobs in financial, real estate and insurance services took another hit in January, declining for the fifth consecutive month. They fell 23,000 in January and are down 50,000, or 4.6 per cent, from a year ago. “Something quite significant is going on there. That has a lot of important implications for Toronto in particular, since the financial industry is so important to the city,” said Doug Porter, deputy chief economist of BMO Capital Markets. “There has been talk of some (financial) institutions cutting back. It may be quietly underway.” With profit margins under pressure, Canada’s big banks have talked openly in recent weeks about looking for ways to cut costs though no specific job reductions have been announced. The job market is also likely reacting to cooling of Canada’s red hot real estate market, economists said. Construction jobs also fell as housing starts weakened last month. January was the third month in the past four that saw the unemployment rate increase since last September’s 7.2 post-recession low. Toronto, which had a jobless rate of 8 per cent in September, has seen its unemployment rate gradually climb, reaching 8.6 per cent last month. Among the bright spots in Friday’s labour force survey: The number of employees in Canada rose by 39,200, offset by a similar decline in self-employment, which generally pays less than regular employment. The overall gains were shared equally between the private and public sector. By sector, employment rose in the education, information, culture and recreation and in other service industries in January. Meanwhile, 45,000 jobs were lost in professional, scientific and technical services.