On November 5th, 2010, Statistics Canada published the October result of its monthly labour market survey. It seems to indicate that the job market recovery has almost stalled, at a time of the year that is normally be characterized by steady job creation. The Vicinity Jobs hiring demand numbers from October also show that hiring pulled down sharply from its peak a month ago. What is unusual this time around is that other economic indicators – such as stock price indices – point to an overall economic recovery.
According to Statistics Canada, employment remained virtually unchanged in October (as it had in September), as full-time gains offset part-time losses. While it is good news that part-time jobs are being replaced by full-time ones, the fact that full-time employment is growing so slowly is bothersome.
The unemployment rate did actually dip slightly to 7.9%, but without job creation this doesn’t qualify as good news: It simply points to a worsening mood among job seekers, because it means that less people are looking for work. Unemployment has remained stubbornly high in Canada (and even more so in the United States) over the past seven months, hovering around the 8% mark. And, as the graph from Statistics Canada below shows, the period of rather strong employment growth that we saw in the second half of last year and earlier this year seems to have ended in the summer. In the last four months, employment levels barely grew in Canada, with the economy creating just 5,700 new jobs per month on average – compared to the 51,000 new jobs that were being created monthly in the first half of this year.
It is also worth noting that the employment growth that was recorded was disproportionately high in one particular segment: Women aged 55+. At the same time, the jobs lost were primarily among younger workers. After the largest financial meltdowns in living memory, many people in the later stages of their careers no longer can afford to retire and continue working – or look for work. According to mainstream economic theory, a growing labour force is actually a good thing, because it supposedly strengthens the economy’s output potential and leads to economic growth – which in turn creates jobs. Unfortunately, we are not seeing many jobs being created this time around. Unless the job market starts improving, a larger work force simply means more unemployment.
In Ontario, the unemployment rate edged down 0.2 percentage points to 8.6%. This, however, was not due to people finding work, but was the result of fewer men aged 25 and over participating in the labour market. Statistics Canada also points out that, while Canada as a whole reached its pre-recession levels of employment, employment in Ontario is still below its pre-recession levels from October 2008. British Columbia, on the other hand, did reach its pre-recession employment levels but the types of jobs available changed: For example, construction jobs were quite strong in October 2008, but are still down 13.3% from their level at the time. Across Canada, employment has increased in the Healthcare industry, and in the Professional, Scientific, and Technical Services industries, and declined in other industries (most notably Manufacturing). So the structure of the job market has changed: While employment is at about its pre-recession level, the types of jobs available and the industries that are hiring are now different. This will likely not change, and could contribute to a prolonged period of high structural unemployment (as many unemployed may not have the skills required by the jobs that are being created).
Hiring demand analysis produced by Vicinity Jobs for the Greater Toronto Area also show an unstable market. Hiring demand did reach record high levels (since the recession started) in September, but dropped sharply in October to levels not seen since June. This gives us a reason to worry that the employment growth slow-down that started in the summer is here to stay. If less jobs are being advertised, we may not see a significant employment growth this month either. We should clarify, however, that the Vicinity Jobs research is regional and applies to parts of the Greater Toronto Area only, while Statistics Canada looks at employment numbers from all of Canada and Ontario.
It is interesting that, while the job market is showing signs of weakness, the stock markets have been posting solid gains. Unfortunately, this is partly in response to the so-called “Quantitative Easing” south of the boarder which involves significant long-term risks that may outweigh the short-term benefits (It involves the Federal Reserve simply printing money, which economic theory says will cause prices to go up down the road). Yet over the short term, if it becomes easier for companies to raise capital, this should – in theory – boost hiring by those same companies. The trouble is that financial markets nowadays are global, while job markets are local. Capital raised in Toronto and New York can be invested anywhere in the world, so it goes to wherever investors believe it will generate the best returns. Right now, this is rarely Canada. So higher levels of unemployment will likely stay with us for some time to come – even if the economy does not fall back into a recession and the stock market continues growing.
The ful Statistics Canada report can be downloaded at this link: