IN THE NEWS ~ Canadian job market flops
February 4th, 2012 - 1:00pm
Published | Publié: 2012-02-04
THE DAILY GLEANER (FREDERICTON)
Canadian job market flops
LOUISE EGAN Reuters
OTTAWA - Canada's jobs market got bogged down in a sluggish economy in January, while U.S. employment took flight from a prolonged slump, putting more pressure on the Bank of Canada and the government to keep the stimulus taps open.
The economy created a negligible 2,300 net new jobs in the month, Statistics Canada said on Friday, a far cry from the 23,100 market players had predicted.
The jobless rate ticked higher to 7.6 per cent from 7.5 per cent, the highest level since April 2011.
Layoffs in construction and professional services offset modest hiring in education, personal and household services, and manufacturing.
"Obviously after a weak fourth quarter we were expecting more of a bounce-back in the first quarter, but no signs of it in this report," said Paul Ferley, assistant chief economist at RBC.
Opposition political parties used the data to step up attacks on the Conservative government, which is preparing deep cuts to the public service that could leave thousands more jobless.
"This should be a strong wake up call to this government, which has been bragging about bringing about an austerity budget," said Peter Julian, legislator for the main opposition New Democrats. "This indicates that would be the worst possible approach this government can take."
Julian said the jobs data combined with an economic contraction in November and record high household debt levels were an incredibly dangerous mix for Canadians.
Liberal leader Bob Rae commented on his Twitter account immediately after the data: "Austerity won't solve that problem."
Public Works Minister Rona Ambrose said Canada's job growth record was the best in the Group of Seven industrialized economies, but the budget would focus on job creation.
"Too many Canadians are still looking for work," she said.
Canada had outperformed the United States in the last couple of years and recouped all the jobs lost during the recession a year ago.
That trend now appears to be reversing. The U.S. economy created jobs at the fastest pace in nine months in January but the unemployment rate remains above that of Canada at 8.3 per cent.
Hiring in Canada tapered off in the second half of 2011, although job gains in December raised hopes of a continued comeback in January.
In the year to December, Canada added 129,000 jobs, a gain of 0.7 per cent and the total number of hours worked increased by 1.4 per cent.
The Canadian dollar weakened after the employment report but later reversed those losses and touched a session high after the U.S. jobs data hit markets 90 minutes later.
The Bank of Canada is widely expected to keep easy money flowing for at least another year with an eye on possible fallout from the European debt crisis. Most economists have forecast the bank will keep rates on hold at one per cent until 2013.
"In terms of what it does for the Bank of Canada, it's probably fairly limited," said Camilla Sutton, chief currency strategist at Scotia Capital. "I think most expect the Bank of Canada to be on hold at least until mid-2013 so potentially it opens the door for them to sound a little more neutral. All in all, I think it just reflects that the Canadian economy isn't as strong as we had hoped."
Hiring in January was up in both the public and private sector. Full-time employment fell by 3,600 while part-time employment rose by 5,900.
The hourly wage of permanent employees, watched by the Bank of Canada for signs of inflationary pressures, rose 2.2 per cent in January, down from 2.4 per cent in December.
© 2012 The Daily Gleaner (Fredericton)