Employment Growth in Canada Stalled in July Just Ahead of the August Stock Market Selloff

by Brittney Windatt and Strac Ivanov

According to the Labour Force Survey from Statistics Canada, employment had little change following three consecutive months of small increases.   The unemployment rate actually fell 0.2 percent to 7.2 percent, but this was mainly due to fewer people participating in the labour market (some simply stopped looking) – and not thanks to job creation.   All this news comes in the middle of the largest stock market selloff since the one in 2008 that marked the start of the Great Recession. A selloff which, as of August 8th,   is still ongoing – and may still end up surpassing even the 2008 meltdown.

Some jobs were actually created in July: Employment actually increased by 1.5 percent compared to July 2010, with the growth in full time and among private sector employees.   More people are reported working in Alberta, Newfoundland and Labrador, while there was a decline in Ontario (granted, Ontario had seen stronger than average growth in the previous months).   In July, students aged 15 to 16 had more difficulty finding work than older students, whose unemployment rate dropped by half when compared to July 2009.

In July, employment increased in construction, transportation and warehousing, and retail and wholesale trade.   However, health care and social assistance, educational services, business, building and other support services, natural resources, and agriculture experienced a decrease in employment.   Employment in construction rose by 5.3 percent over the past 12 months, following three months of little change, yet remaining to be the industry with the largest growth from July 2010 to July 2011.   Employment in transportation and warehousing rose for the second consecutive month, experiencing a 7.2 percent increase compared to July 2010 resulting in the highest growth rate of all industries.   There were 28,000 more people working in retail and wholesale trade in July; however this increase, employment in this industry remained similar to its level in July 2010.   Employment in manufacturing increased 1.2 percent over the past 12 months, while health care and social assistance experienced an employment fall by 39,000 following a long-term upward trend.

According to the Labour Force Survey, the number of employees in the private sector increased for the fifth consecutive month by 95,000 resulting in a 2.2 percent increase of total gains from 12 months earlier.   In contrast, employment in the public sector fell by 72,000 in July.   Similarly, self-employment decreased by 0.7 percent.   In July, increases in full-time employment were mostly offset by declines in part=time work.   Over the last 12 months, full-time employment has grown by 351,000 while part time has declined by 99,000.

British Columbia saw a decrease in its unemployment of 3.1 percent from July 2010 to July 2011, while Ontario saw an even larger decrease in its unemployment of 10.8 percent from July 2010 to July 2011.   In Ontario employment increases 1.6 percent from July 2010 to July 2011 with full-time experiencing a 2.8 percent increase, while part-time employment saw a decrease of 3.3 percent.   In British Columbia, employment slightly increased 0.3 percent from July 2010 to July 2010, with full-time employment slightly increasing as well by 0.5 percent and part-time employment decreasing by 0.3 percent.

And then came the August stock market selloff. Stock market calamities of this magnitude almost always lead to unemployment growth, as employers cut jobs when they find it harder to finance their businesses and sell their products and services. That is, unless the drop is followed by a fast correction. Such correction looks unlikely now, given the debt problems in both Europe and the US. So, unfortunately, the job market prospects appear bleaker now than they have for a while.

The full Statistics Canada report can be found here:

http://www.statcan.gc.ca/daily-quotidien/110805/dq110805a-eng.htm