Until March, Statistics Canada’s reports were painting a pretty rosy picture of Canada’s job market. In my blog posts from the past few months, I wondered where the employment growth was coming from. Last month, I suggested that Canada’s employers may be simply delaying layoffs to see where the economy is going. We (Vicinity Jobs) recorded a weak hiring demand levels since last October, and I predicted that unemployment will start creeping up again in the very near future unless the economy turns around. In March, Canada’s economy lost 55,000 jobs, and unemployment increased 0.2 percentage points to 7.2%.
Indeed, the upbeat job market reports in the months before March were hard to explain, given the context of a weak economic performance at home, the impact of drastic austerity measures in the US, and the never-ending sovereign debt crisis in Europe. Unlike 2008, this time growth even slowed down in emerging markets to rates that we have not seen in a while. The Conference Board – an economic think-tank – expects that the world’s emerging economies will grow by only 5% in 2013, down from 5.5% in 2012 and 6.5% in the 6 years before that (See full article here). Growth rates in the emerging economies will continue to decline over the following years, according to the Conference Board, reaching an average annual growth rate of only 3.5% at the end of this decade. The developed economies will not pick the slack – their growth will remain sluggish.
So export sales prospects look bleak for Canadian exports and are unlikely to improve any time soon. Domestic demand is unlikely to pick up the slack too, with Canadian households’ debt stretched to unprecedented levels and a meager real GDP growth between January 2012 and 2013 of only 1% (according to Statistics Canada). In an article published this month, the reputable economic magazine The Economist warned that Canada’s economy is standing on a “thinning ice” and needs to attract more investments and be more innovative in fields other than natural resources.
This reality finally caught up with the job market last month. If employers were holding back layoff decisions, they no longer are. The number of jobs in Canada is now down to the levels from 5 months ago. Compared to March 2012, the Canadian economy has only created just over 200,000 jobs. This amounts to a 1.2% growth – hardly impressive, but logical in the context of a 1% GDP growth.
In Ontario, unemployment remained unchanged. The province did lose 17,400 jobs last month, but the province’s labour force shrank by 21,400 people. The labour market participation rate (the percentage of the province’s population who are working or willing to work) dropped to 66.4%. In fact, from March 2012 to March 2013, the number of jobs in Ontario has grown by 1.1%, where the province’s population has grown by 1.2%.
British Columbia lost 14,800 mostly full-time jobs in March. Unemployment is now up to 7%. Compared to March 2012, BC has created almost no new jobs: But its population has grown by 1%.
South of the border, the picture was not very encouraging either. In March, the US economy notched its worst performance in nearly a year.
There was a glimpse of good news last month: Hiring demand, which we track for parts of Ontario edged up to levels not seen for 6 months. This may keep a cap on unemployment growth in April. But the weak fundamentals of Canada’s — and the world’s — economy means that significant employment growth is highly unlikely in the near future.
Written by Strac Ivanov, M.B.A., President of Vicinity Jobs Inc