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Ontario Leads Canada’s Job Creation in June as Employment in British Columbia Remains Unchanged

Statistics Canada released its monthly labour market survey report    this morning (July 10th) for the month of June, and overall, it is fairly good news (the original report is found here: Canada’s economy created 93,000 jobs – significantly more than generally expected. The trend was lead by Ontario, whereas employment in British Columbia remained unchanged.

Also, with the jobs created in June, the number of employed people in Canada reached the peak level that the economy hit just before the recession began. This is all good news. However, unemployment is still much higher than it was before the recession, because Canada’s labour force has grown significantly since then. So Canada’s economy clearly has some catching up to do. As a result, the unemployment rate now stands at 7.9% – indicating a 0.2 percentage points drop since May – but is still well over the 6.2% reached in October 2008, just before the job market took a nose dive.

Unemployment in Ontario saw an impressive 0.6 percentage points drop since May, and is now down at 8.3%. Unemployment in BC actually edged up from 7.5% to 7.8%, largely driven by an increase in the labour force participation rate (the share of BC’s population who are willing and available to work). So BC’s economy has some catching up to do: Its employment levels remained unchanged, while they should be growing.

This is largely in line with the Vicinity Jobs statistics on Hiring Demand from June: June was our second best month for this year, after March. However, overall hiring demand remained flat in the second quarter of this year, as the job market performance we saw in April and May was fairly disappointing. So in the second quarter of this year as a whole. the job market failed to maintain the momentum that it had gained in Q1 of this year. Hopefully the growth experienced in June will be sustained over the next months, but this remains to be seen.

A reason for concern is that hiring demand in the goods industries (mainly manufacturing) seems to have reached a record low in June. It lost some of the ground that it had gained in the previous quarter. Our sample size is fairly small: We only monitor hiring demand by industry in Ontario’s York Region (GTA North), but the findings are consistent with those of Statistics Canada: Across Canada, the StatCan report indicates that employment in the manufacturing industry continues to decline (0.8% drop since May) and is 1.1% lower than it was in June 2009, in the midst of the recession.

So where did all this job market growth occur?

In the service producing  industries, says Statistics Canada. And the service industries that stand out are trade, professional, scientific, and technical services, and healthcare. This is again consistent with our own findings: Hiring demand in the services industries was quite strong. However, we found that it was dominated by the retail industry. The last time we recorded a share of hiring demand in the Retail industry comparable to this June’s levels was during the recession months of last year.

In terms of occupational categories, hiring demand was strongest in the Management jobs category. This is also very similar to what we saw during the recession months last year.

So what does all this mean?

The economy is recovering, and the job market’s performance is remarkable, especially given the remaining instability in the remaining countries of the developed world. The US labour market report for the same period (June) which was released just a month ago, painted a pretty gloomy picture, including a decline in employment, declining work week (average hours worked), etc. Overall, Europe is not doing better.

However, it is becoming more obvious that the economy did undergo a shift of the type that we at Vicinity Jobs have been forecasting for well over a year now. Manufacturing jobs – which are in decline – are being replaced by service jobs. If the service jobs that are being created remain focused in the retail industry, this is a concern, for two reasons: First, retail jobs have historically been paying significantly less and have been associated with less job security than manufacturing jobs. Second, retail is largely a consumer-driven industry: If consumers are not doing well (for example, because they work on lower-paying jobs than those they worked in), the retail industry will suffer as well. For a strong, sustainable recovery to take place, business spending and investment needs to start going up faster than it has been in the current recovery.