Canada’s labour market got off to a rocky start this year by shedding a surprisingly high 21,900 jobs in January — almost all full-time and mostly in the provinces of Ontario and British Columbia.
The result was weaker than economists had expected, even taking into account that the unemployment rate edged down one-tenth of a point to 7.0 per cent, the lowest it’s been since December 2008.
Prince Edward Island's unemployment rate bucked the national trend, climbing to 11.8 per cent in January, up from 11.0 in December.
The dollar dropped by almost half a cent to below parity at 99.74 cents US on news of the loss of jobs across Canada, as well as two other negative reports released Friday showing a drop in both exports and housing starts.
“Canada struck out this morning, with uniformly negative data,” said Jimmy Jean of Desjardins Capital Markets.
“To be sure, care should always be taken in interpreting a single month but the housing starts trend has long been in place.”
In a simultaneous release, Statistics Canada reported that exports fell 2.1 per cent in real terms in December, continuing a weakening trend in a key sector that represents about one third of the total economic output.
And January housing starts collapsed to 160,600 annualized, the lowest since 2009.
Economists said no one was fooled by the drop in the unemployment rate; it was due not to strength in the labour market, but to a technicality.
Almost 58,000 Canadians left the work force in January or ceased looking for employment, the largest exodus from the labour market since 1995.
Still, the result isn’t the shocker the drop suggests. Analysts were anticipating that a payback in the labour market would come, reasoning that the relatively healthy employment picture in Canada seemed out of step with an economy that had suffered through a rough patch in the last half of 2012.
Analysts said the previously reported two month’s 100,000 jobs pick-up — since revised downward to 88,000 — and the 12-month gain of 286,000 jobs didn’t seem sustainable under the circumstances.
“Canada struck out this morning, with uniformly negative data,” - Jimmy Jean of Desjardins Capital Markets.
“Taken by itself the (jobs drop) was bad, but it’s hardly a shock given the fact employment seemed to be defying gravity in the second half of last year,” said Doug Porter, chief economist with the Bank of Montreal.
“This to me is a reflection of relatively sluggish growth in the second half of last year.”
Noting that employment is a lagging indicator, which means the data reflects the economy of a few months back, Porter said Canada “will be very fortunate to see much growth at all in the next few months.”
Economic growth in the third quarter of 2012 fell to 0.6 per cent, the lowest since the global economic fallout felt from the natural disaster in Japan in the spring of 2011, and the Bank of Canada forecasts the fourth quarter won’t be much better, coming in at one per cent.
Regionally, Ontario and British Columbia were responsible for almost all the employment reversal last month with losses of 31,200 and 15,900 respectively. Alberta and Saskatchewan had a good month with gains of 9,700 and 7,300, while Quebec was largely unchanged.
Economists had expected a modest 5,000 gain in jobs nationally, but there was a signal in the Conference Board’s help-wanted survey earlier in the week that the results would be weaker. The think-tank’s sampling pointed to a loss of 16,600 jobs.
The big job losses last month came mostly in two areas. Education services, which shed about 31,200 works, and manufacturing, which lost about 22,000.
The agency said employment in manufacturing was now back to the level it stood a year ago.
There was good news in the construction trade, however, which saw its second consecutive monthly increase and added another 17,000 jobs in January. And employment in public administration rose 15,000, reversing the previous month’s decline.