Statistics Canada’s report for March 2014 is out. It registered a slight improvement in the job market situation in March, but points out that employment growth in Canada has been subdued for the last 6 months. Overall, in the 3 months before March, Canada’s labour market performance has been somewhat disappointing, so the fact that the economy created 43,000 new jobs in March is good news. Are things starting to turn around?
In an earlier post at the beginning of this year (which could be found here), reflecting on the fairly discouraging December labour market report from Statistics Canada, I pointed to 3 factors that I expected will have a positive impact on Canada’s job market this year. Two of these factors are still mostly intact – the Canadian dollar’s value has not bounced back (and now seems unlikely to), and the US Economy continues to appear on a more solid footing that last year (although its performance has been a little underwhelming). The third factor – the improvement in Canada’s stock market – continued until about the middle of February but may have lost momentum since.
I also identified some risk factors. It is still early to say if and to what extent those are materializing, but overall, there are no signs that any of them poses a significant threat at this time: The Canadian real estate market continues on its earlier trajectory, and inflation (and interest rate hikes) are not more likely now than they were at the beginning of the year.
The past winter was one of the coldest on record in North America, and some commentators suggested that this may have suppressed economic growth in both Canada and the US. The stronger performance in March seems to support this view. If economic growth was indeed impacted by the cold weather, then we should see a re-bounce in January and February, as it would have merely delayed the expansion plans of most businesses.
There is some evidence that this may be actually happening. In most Canadian regions where Vicinity Jobs tracks hiring demand, employers advertised significantly more job openings in March than they had advertised in the previous winter months. In fact, in many regions, March was among the top 3 hiring demand performance months from the past 12. If the winter slowdown was largely due to cold weather, hiring demand should remain strong in April as well.
On the other hand, some findings of the Statistics Canada report suggest that there were factors other than weather driving the labour market changes. For example, more than half of all newly created jobs were in the Healthcare sector, with many other gains being in social assistance services jobs. Such jobs are not usually affected by weather. At the same time, employment dropped in the agriculture sector, which is sensitive to weather changes.
It is worth noting that job market performance in which March was different from the previous months in other aspects as well. Many of the jobs that were created were taken by people aged 15 to 24 – the youngest labour market participants, who also face the highest obstacles to finding work. Compared with 12 months earlier, both employment and the unemployment rate for youth were little changed. It is also interesting that 18,000 of the newly created 43,000 jobs were in British Columbia. Prior to this increase, British Columbia had seen little employment growth since late 2012.
In March, unemployment returned to 6.9% – its lowest level in over 5 years (but a level which we had already reached back in September and November of 2013, only to return to higher levels in the following months). There were 17.833 million Canadians working in March, which is the highest employment level our Economy has ever seen. This is good news. If hiring demand remains high and unemployment crosses below 6.9% this spring, this will signal that March`s strong performance more than a fluctuation.