Ontario’s Job Market In Recession, But May Have Bottomed Already

Being unemployed is rarely a pleasant experience, but it is particularly hard in recession years. Good news are in a depressingly short supply these days, and maintaining a positive attitude is difficult if you are among the thousands looking for work now. Even when you find and apply for jobs that fit your skills and background, your applications seem to vanish without generating a single response (let alone getting you job interviews).

Yet while the recovery ahead of us may be long and plagued with uncertainties, GTA’s January’s job market reports produced by the Vicinity Jobs Network indicate that the market may have just turned the corner.

To be sure, Ontario’s job market is still in a rough shape, with a disappointingly low number of new job openings. But comparison with previous years indicates that the initial shock may be behind us, and there are even very early signs that the situation may have stabilized.

Before drawing significant conclusions, it is important to understand exactly what has been happening on the employment market. The Vicinity Jobs Hiring Index reports are a good place to start, as they analyze job postings from all major online job boards and employers’ web sites, and provide a good indication of the employers’ mood. While they currently only look at York Region’s employment market, it is reasonable to assume that the same trends apply across the Greater Toronto region.

What happened on the job market?

At first glance, the picture the reports paint looks unsurprising (see the graph below): In comparison to previous years, GTA’s job market remained stable until about May 2008, then a decline began. In November (shortly after the stock market collapse), the number of new job postings suddenly plummeted to about 60% of November 2007’s numbers. December was even worse, with 55% of the job posting numbers from a year ago.


Graph york region job postings jan08 to jan09


But January’s data came in at a surprising 62% of the levels from January 2008 and even 2007 (the numbers from both years were very close). And, on a week-by-week basis, in the last week of this January, the number of new postings climbed back to 78% of the levels from the last week of January 2008. And while one month’s data does not provide enough information to draw significant conclusions, the numbers give us a reason for cautious optimism.

You think that there is no way the downturn will be that short? Well, it actually wasn’t.

In some industries, the slowdown started long time ago

A closer look at the data reveals that certain key job types and industries had been declining long before November 2008. The market for professional services jobs was among the first to see a weakening as early as the Fall of 2007, only weeks after the first cracks appeared in the financial markets. Manufacturing jobs remained relatively stable until the spring of 2008, but started declining then.

What kept the overall job figures looking OK was a remarkable resilience in the retail and services sectors: Jobs in these industries did not see a significant decline until November 2008. (I guess someone had forgotten to tell consumers that the economy was in a bad shape, so until November, they kept spending – and retailers kept hiring – while most businesses were cutting cost.)

So while, on the surface, the overall situation only turned ugly late in 2008, the downturn in the professional services and manufacturing sectors had started a lot earlier. The strength of retail and services sectors was masking a severe hiring downturn on the market for higher-value-added jobs.

Don’t hold your breadth quite yet

There are reasons to be cautious too, however. A closer look at the January data indicates that even if a recovery did start, its impact is again not distributed evenly between industries (see the diagrams below). This January, postings for jobs in the retail trade industry accounted for 23% of the total, compared to 21% a year ago, while the professional services industry accounted for only 9% of all job postings this January, compared to 14% a year ago and as much as 19% in January of 2007.

Graph postings by industry january 08 and 09

The strength of the retail sector jobs looks somewhat surprising, given recent news of bankruptcies and layoffs in the industry. However, it may indicate that Canadian retailers are in a better shape than originally thought. If Canadians are starting to spend more, then a recovery (or at least stabilization) of the economy – and the job market – may be boosted by consumer spending (and not by business investment). It remains to be seen whether this will last though: Consumers may well change their attitudes if the weakness of the World economy results in more job cuts in Canada.

Last but not least, Ontario and the GTA continue to face long-term structural economic challenges, resulting to a great extent from the strong reliance of the local economy on ailing auto and car parts manufacturers. These problems were around long before the current crisis started, and were only made worse by the current recession.

What does all this mean to you if you are unemployed?

If you are looking for work outside of the retail and services industry, the hiring situation in your field had gone bad long before last November: The news did not hit Main Street until the financial markets’ collapse in November 2008, but the crisis had already started. The job market had been deteriorating in most industries for a while already – in some cases, for over a year. In that sense, the recent events didn’t change the trend – they only highlighted it.

The situation may not be improving yet, but it seems that it has at last stopped deteriorating. We need to collect data for another couple of months to confirm whether the trend has (or hasn’t) actually turned.

Even if it has, however, finding a job is likely to remain a difficult task for a while, because the massive downsizing that many employers undertook recently (and some continue to undertake) means that there are more job seekers competing for each job opening. Besides, the number of new postings is still far from where it was a year ago. But there seem to be some (however bleak) light coming from the end of the tunnel. (Look for an update on the situation in this blog in March)

Leave a Reply