Jobless rate up in June
What goes up has come down — again.
Canada’s economy shed 9,400 jobs in June and the unemployment rate climbed to 7.1per cent in June, the highest level in half a year, Statistics Canada said Friday.
Younger workers and Ontario took the biggest hit.
The disappointing data surprised economists, who had expected another 20,000 jobs gain following May’s strong 26,000 increase, and also last month’s strong showing in the U.S.
After a year in which the monthly jobs data has gyrated wildly, Canada’s economy has created just 72,000 net new jobs for a 0.4 per cent increase in employment, economists noted.
Ontario was particularly soft, shedding 34,000 jobs, mostly among youth.
Young workers and Ontario bear brunt as Canadian economy sheds 9,400 jobs, dashing economists’ high hopes sparked by May’s strong increase
The jobless rate rose two-tenths of a percentage point to 7.5 per cent, Statistics Canada said. “The Canadian job market remains mired deep in a mid-cycle funk, with precious little employment growth over the past year,” Doug Porter, chief economist at BMO Capital Markets, wrote in a report on the data. “While there is much sound and fury surrounding monthly Canadian job tallies, often signifying very little, the underlying trend is unquestionably squishy soft.” Economists had expected Ontario would benefit from activity related to the election. Instead, June reinforced the regional divide in employment, with resource-rich Alberta continuing to show strong job growth. The report comes just days before Ontario’s re-elected Liberal government under Premier Kathleen Wynne has promised to reintroduce its May budget, including major investments in transit and other public infrastructure, which are seen as job creators. Capital Economics’ economist David Madani called June’s backslide “a shocking decline” that suggests the economy is “really struggling.” Madani said it shows Canada is failing to gain from improving conditions in the U.S., “due to trade competitiveness problems, which must be of great concern to the Bank of Canada.” The central bank’s interest rate policy has helped keep Canada’s dollar low, relative to U.S. currency, a measure that should help boost exports. But the policy has so far been slow to produce the expected bump in activity. The Canadian dollar, which has been trading near a six-month high, fell nearly a third of a U.S. cent to 93.46 cents U.S. on Friday’s news.
Other economists remained optimistic.
“Despite today’s disappointing news, we still remain confident that Canada’s economy and job market will reap the benefits of the current pickup in economic conditions south of the border,” wrote Derek Burleton, deputy chief economist with TD Bank.
One bright spot in Statistics Canada’s data was most new hiring in June occurred in the more desirable full-time category, partially offsetting the decline in part-time work.
As well, average hourly wages were up by 1.9 per cent over a year ago, compared to just 1.4 per cent in May, the federal agency noted.
However, the prospects for the immediate future look discouraging. Earlier this week, the Bank of Canada’s survey of business confidence found that Canadian firms’ hiring intentions had eased somewhat from what they were three months ago.
Labour economist Erin Weir said the data underscores the need for more public investment in infrastructure and other job-creating activities, and less government austerity.
“The Harper government has long trumpeted having a stronger job market than the U.S.,” Weir wrote in a note. “In June, the unemployment rate rose in Canada but fell in the U.S. Statistics Canada reports that it is now the same on both sides of the border, even after adjusting for methodological differences between the two countries.”
Full-time employment rose by 33,500, partly offsetting the loss of 43,000 part-time jobs. Self-employment accounted for much of the gains, rising by 23,400.
The biggest setback was among younger workers, who lost 44,000 jobs, giving back almost all of May’s gains.