Globe and Mail Update
Published Friday, Nov. 04, 2011 7:04AM EDT
The Canadian economy unexpectedly shed 54,000 jobs
last month, the most since 2009, a sign faltering business and consumer confidence is slowing the pace of hiring.
All the losses were in full-time positions, Statistics Canada said Friday. The number of full-time workers tumbled by 71,700 in October, with many in manufacturing and construction in central Canada. The country’s jobless rate rose two notches to 7.3 per cent.
The second drop in three months, after a year of fairly steady hiring, suggests global economic woes and market volatility are weighing on Canadian employers. Several economists, and the Bank of Canada, have cut their forecasts for economic growth in recent weeks.
“Suddenly the jobs market doesn’t look quite so rosy in Canada,” said Avery Shenfeld, chief economist at CIBC World Markets, in a morning note. “Canadian employment was weak across the board in October.”
Among sectors, natural resources was the only industry to post notable gains for the month, the agency said. The private sector shed 32,000 positions and the public sector eliminated 3,800 jobs.
The Canadian dollar shed more than a full cent after the report, sliding to 98.10 cents (U.S.) from Thursday’s close of 99.20 cents.
The most worrisome sign is that wage growth is slowing, to 1.3 per cent from a year ago, noted Bank of Nova Scotia economists Derek Holt and Karen Cordes Woods. “Swings of tens of thousands in the monthly job count matter far less than the fact that the millions of employed Canadians are just not making wage gains that are keeping up with the cost of filling their grocery carts, fueling their cars and what they’re spending on other staples,” they said.
That translates into wage reductions in real terms, which will weigh on Canadian consumers and dampens the outlook for consumer spending, they added.
Central Canada felt the brunt of the losses. Employment fell in Ontario, Quebec, British Columbia, Nova Scotia and Prince Edward Island, while it grew in Newfoundland and Labrador.
The losses comes after steady job growth through much of the past year. Total employment has risen 1.4 per cent, or by 237,000 jobs in that time. Full-time employment has grown 1.6 per cent in the past year, despite October’s loss. Part-time employment rose by 17,700 last month and is little changed over the past 12 months.
Jobs numbers are subject to monthly volatility, but losses of this magnitude are “extremely rare,” aside from recessionary periods, said Douglas Porter, deputy chief economist at BMO Nesbitt Burns. In fact, the last such hefty job drop outside of recession was in September 1996, he added.
“No question, this is an extremely loud warning shot for the economy.”
Last month’s job losses were the most since February, 2009. Economists had expected 15,000 new positions, with the jobless rate staying put at 7.1 per cent.
Job losses among youth caused their unemployment rate to rise a notch to 14.1 per cent. Youth aged 15 to 24 have the highest jobless rate of any age demographic.