Manufacturing down 30,000 jobs
Weak loonie has yet to lift demand for Canadian goods
Canadian manufacturing lost 13,000 jobs in June, with the ailing sector losing some 30,000 jobs over the past year, according to Statistics Canada’s latest monthly jobs report.
Canada’s unemployment rate fell by 0.1 percentage points in June to 6.8 per cent — even though the economy lost 700 jobs. That’s because fewer Canadians were looking for work, according to Friday’s Labour Force Survey. Employment in the construction sector, an important seasonal driver this time of year, fell by some 29,000 jobs, following a gain in May.
“Unfortunately, the two biggest decliners in June also happen to be arguably the two most important cyclical sectors — construction and manufacturing,” noted BMO chief economist Douglas Porter. “Manufacturing remains a big disappointment, and the recent softness there lines up well with the sag in non-energy exports.”
Earlier this week, the latest trade data from May showed exports fell by 0.7 per cent and the economy posted a $3.3-billion trade deficit, the second largest on record. “Employment in the manufacturing industry has been on a downward trend since the beginning of 2016,” StatsCan noted.
That’s a problem because many economists, including those at the Bank of Canada, have been banking on a realignment of the economy, away from the battered oil sector toward strength in manufacturing exports. The global oil price plunge has taken the crude-tied Canadian dollar down with it, making Canadian-made exports cheaper on the world stage.
The loonie took a hit again Friday on the back of the weak jobs report. Increased demand for Canadian goods caused by the cheap dollar, economists believe, will eventually boost the long-suffering manufacturing sector and recoup factory jobs.
But so far there has been little evidence in trade and jobs data to suggest it is underway.
“Despite the tailwind that a more competitive currency should be offering, a soft domestic economy and a sluggish U.S. factory sector have been enough to prevent a meaningful acceleration in Canadian manufacturing,” CIBC economists wrote in a note.
“A turn higher isn’t likely to be imminent either, with the Bank of Canada’s business outlook survey suggesting that firms are in no rush to invest or hire.”
The central bank has said it has seen some evidence of a pivot occurring, but such a fundamental shift could take years.
One optimistic note for Canadian manufacturing came from the jobs report from the U.S., which saw the addition of nearly 300,000 jobs, signalling strength in the economy of Canada’s biggest trading partner.
At home, economists had expected a gain of about 5,000 jobs, following an increase of 13,800 jobs in May.
The underlying details in the report suggested weakening job quality. StatsCan reported a drop in 38,000 paid employment positions was made up by a similar increase in selfemployment and a loss of 40,000 full-time jobs was replaced with a gain in part-time positions.
The labour force participation rate dropped from 65.7 per cent to 65.5 per cent, the lowest level since the 1990s.
The accommodation and food services and information culture and recreation industries were bright spots, adding some 34,000 jobs to the economy in June.
Ontario lost 4,200 jobs, but the province’s unemployment rate dropped from 6.6 per cent to 6.4 per cent as fewer people looked for work. The province has added about 63,000 jobs in the past year.
At Queen’s Park, Finance Minister Charles Sousa said despite the slight decline in last month’s job numbers the province "is on the right track."
Sousa said Friday that the province should continue to lead the country in economic growth in the coming months. However, British Columbia was the only province to add jobs in June. That province has an unemployment rate of 5.9 per cent, the lowest in the country.
Alberta’s unemployment rate was 7.9 per cent. The Fort McMurray area, where many oil-related jobs are based, was excluded in the June survey, due to the impact of the wildfires that ravaged northern Alberta this spring.
In the three months from April to June, the economy added11,000 jobs, a gain of 0.1 per cent over the first quarter, the smallest quarterly change in employment in two years. With files from Robert Benzie