Canada’s Employment Market Remained Largely Unchanged in September Despite Stronger Hiring Demand

According to Statistics Canada there was little change in employment in September. Full time gains were offset by part-time losses. The rate of unemployment went down 0.1 point to 8.0 percent – but for the wrong reason: Some job seekers, mostly youth, seem to have given up looking for work and dropped out of the labour force altogether. This is disappointing, as economists had expected 10,000 new jobs to be created. This did not quite happen as expected.

Still, the picture is not as grim as many news media reports have suggested. The part-time job decline of 44,000 in September was mostly offset by an increase of 37,000 full-time jobs. While the job market situation remains difficult, the replacement of part-time with full-time jobs is welcome news. Historic data shows that part-time jobs are often created in the early stages of economic recovery following recessions, but these get replaced gradually by full-time position as the economy strengthens. The past recession has been no different in this respect: Part-time employment over the past year had risen by 4.6% (+146,000), faster than the full time growth of 1.5% (+203,000).

Another somewhat encouraging detail is that public or private sector employment numbers did not decline significantly. In fact, it is the number of self-employed that went down. Self-employment often picks up in hard economic times as many people find it impossible to find suitable employment. So the fact that self-employment is declining is not necessarily a bad sign.

We also need to put September’s number into perspective:   Since September 2009, employment has risen by 349,000 jobs (+ 2.1 %). While far from being proof of a strong recovery, the numbers indicate that the gains are at least not evaporating.

Here are some of the other more interesting findings of Statistics Canada survey results:

Among the 15 to 24 year old group employment declined in September. For those aged 25 to 54, increases among men were offset by declines in women. Both men and women aged 55 and over posted employment increases.

There were employment declines in Ontario, Saskatchewan, New Brunswick and Prince Edward Island in September. There were increases in Quebec, Newfoundland, Labrador and Nova Scotia. Average hourly wages increased 2.3% in September.

Ontario lost 23,000 jobs in September. The rate of unemployment remained unchanged at 8.8%. Despite this decline, employment in Ontario grew by 127,000 (+1.9%) from a year ago.

In Quebec employment went up by 15,000 which brought the unemployment rate down 0.5 percentage points to 7.7%. Since last year the number of workers has gone up by 122,000, or 3.2%.   Newfoundland and Labrador had gains of 4,900. Over the last 12 months they have had the fastest rate of growth at 5.3% (+11,000).

Employment in sectors of professional, scientific and technical services dropped by 32,000 (-2.4%). Although during the past 12 months, employment in this industry has risen by 86,000 or 7.2% one of the highest rates of growth by industry.

Transportation and warehousing jobs rose by 15,000 in September bringing total gains of 30,000 (+3.8%) over the past year. The construction industry saw little change in September although they have been on an upward trend for over a year with gains of 68,000 or 5.8% over the past 12 months. Growth in this industry has been among the fastest in the past 12 months.

Hiring Demand Strengthened in September

A key reason to be somewhat optimistic, however, are hiring demand reports that we produce for the communities that we serve. In some of the regions in Ontario, we saw the highest hiring demand levels since 2008. So for job seekers with the right set of skills, there seem to be more job opportunities now than there ever were in the past 2 years.

With that said, however, a high level of hiring demand coupled with a lack of employment growth gives us some reasons to worry. Main stream economic theory (specifically, a concept known as the Beveridge curve) suggests that high hiring demand levels should lead to reduction of unemployment. However, this time around, in Canada – and many other industrialized nations – healthy hiring demand increases since the recession have not translated into significant employment growth yet.

A recent article in the popular economic magazine The Economist examined this phenomenon in the United States. It looked at a variety of reports and sources and concluded that high unemployment coupled with high hiring demand is a symptom of structural problems. Simply put, employers are having difficulties filling job openings because few of the unemployed have the qualifications required – while there are few jobs available requiring the qualifications that those looking for work have. The same may be happening in Canada. If it is, then we may be in for a prolonged period of high unemployment even if/as the economy recovers. Significant investment in re-training workers may be required to overcome this. The full Economist article can be found here: http://www.economist.com/node/17173957

The full Statistics Canada survey results can be found here: http://www.statcan.gc.ca/daily-quotidien/101008/dq101008a-eng.htm