Number of Employment Insurance Recipients in Canada Declining

Statistics Canada reported today that 672,200 people received regular Employment Insurance benefits in July, down 31,400 from June. They also stated that the decline offset the increases in spring and brought the number of beneficiaries to March levels.

It is worth noting that there are generally two reasons why the number of EI recipients could decline: benefits may run out for some long-term unemployed, while others may come off the list of EI recipients because they found employment or started their own businesses. Since hiring demand in Canada has remained relatively strong in recent months compared to last year, and employment has been increasing, it is fair to say that most of the decline was likely due to people finding work. So overall, this is good news.

With the exception of Newfoundland and Labrador where there was a small increase, there were declines in nine provinces (most notably in Quebec, Alberta, Ontario and New Brunswick).

Since June of 2009 the decline of those receiving EI benefits has totalled 157,100. This partially offset the 2008-2009 recession numbers where the total had reached 329,000.

In Ontario, the number of individuals claiming benefits fell by 4,600 in July, following a drop of 3,900 in June. The declines have more than offset the increases recorded in April and May. The number of regular beneficiaries in Ontario has fallen by 76,900 (-26.8%) since the peak of June 2009.

In year over year overview, the declines were most notable in some areas surrounding Toronto: Woodstock, Guelph, Windsor, and Kitchener–Cambridge–Waterloo. The number fell by 23,000 to 86,700 in Toronto. This is the largest of five consecutive year-over-year declines. Hamilton posted a large decline as well (of about 3,700).

In Vancouver the number of beneficiaries fell by 2,500 in July, to 35,300. This marks the second consecutive year-over-year decline for Vancouver since the start of the recession in the fall of 2008. In British Columbia as a whole, the number of EI beneficiaries declined 0.8% in July compared to June.

South of the border, however, the picture looks more bleak. The US Department of Labour reported that US jobless claims rose last week. (note that, since the US numbers are released faster than those in Canada, the US report refers to the 3rd week of September, whereas the latest Statistics Canada report only covers the year until July) The number of newly laid off workers in the US rose for the first time in five weeks as the job market remained sluggish. This is disappointing news: Economists had expected no change or a small drop for that period. The rise suggests that the economy is still sluggish and that employers overall are not in a position to hire.

Since Canada’s economy is tightly integrated with that of the United States, the disappointing employment numbers from the US are likely to slow down the recovery in Canada as well. This is also in line with the expectations of the Conference Board of Canada – a think tank – which released a report on September 22nd, stating that Canada’s metropolitan economies have been rebounding strongly out of the recession this year, but will likely slow in 2011 (http://www.conferenceboard.ca/press/newsrelease/10-09-22/Metropolitan_Economies_Rebound_Strongly_Out_Of_Recession_But_Growth_Expected_To_Slow_In_2011.aspx ).

The full Statistics Canada report can be found here:
http://www.statcan.gc.ca/daily-quotidien/100923/dq100923a-eng.htm