Unemployment In Ontario and British Columbia On The Rise Again

Statistics Canada published the results of its monthly labour market survey on Friday, June 4th. It indicates that even though Canada’s unemployment rate did not change in May, unemployment in Ontario and British Columbia grew.

The full report can be found here: http://www.statcan.gc.ca/daily-quotidien/100604/dq100604a-eng.htm

It’s not all bad news: Even though the unemployment rate remained unchanged, employment (which is the number of those working) actually increased in May. How can this happen? In Canada, unemployment is measured as the number of unemployed people who are available and willing to work as a percentage of Canada’s work force. The work force is the total of employed people plus those who are unemployed but looking for and able to work.   The size of Canada’s work force increased between April and May, as more people joined Canada’s labour force. In other words, more people started looking for work, presumably either because they felt that they actually have a chance of finding work (and before they didn’t), or because they became available to work after finishing school, returning from maternity leave, etc. So Canada’s economy did, in fact, create jobs.

But if you live in Ontario or British Columbia, you probably did not see much of an improvement. Unemployment rates in both provinces increased: In Ontario 0.1 percentage points to 8.9%, and in BC 0.2 percentage points to 7.5%. The graph below shows the unemployment rate trend in Ontario and BC over the past 6 months, and in spite of May’s numbers, it seems to point towards an improvement. However, even if last month’s numbers turn out to be just fluctuations, they hint to the fact that the recovery that we are seeing remains quite weak.

Unemployment Rate Dec 09 to May 10

In Ontario, employment increased at a healthy rate: some 18,000 new jobs were created. However, even more people joined the work force (28,000) , thus pushing up the unemployment rate. May marked the first month in which Ontario’s unemployment rate increased in the past 6 months. However, the increase was insignificant compared to the improvement from the past several months.

British Columbia’s economy, unlike Ontario’s, actually lost jobs in May. However, this came on the heels of a significant improvement in April.
Regional Hiring Demand research that we conduct in Ontario’s York Region also indicates that hiring demand is recovering since it bottomed out in February 2009 – but the trend is volatile, and growth is slow (see the graph below). It is quite likely that some employers are simply recalling workers that they had laid off, and are therefore not advertising all job openings that they are creating (such job openings would not be detected by our analysis). It is encouraging that much of the job market growth in the recent months has occurred in industries like manufacturing and professional services – which are quite sizable and have been providing more stable, higher quality jobs in the past. It is somewhat worrying that both April and May saw hiring demand decrease, but those decreases were not significant enough to conclude that the economy is falling back into a recession. And, since the numbers of our study apply to a relatively small geographic area (York Region), they are more volatile and could be influenced by some very regional factors.

York Hiring Demand Jan 09 to May 2010
Another employment outlook survey recently published by Manpower (a global employment agency) for 36 countries also indicates that managers in Canada scaled down their hiring plans in the second quarter of 2010 compared to the first quarter. The full study can be found here:

http://files.shareholder.com/downloads/MAN/935006800x0x359395/1e773314-ae68-4121-a1f9-a15041ac22b4/Global_USltr_Q2MEOS_2010.pdf

Finally, it is important to put last month’s numbers into perspective. April and May were turbulent months, characterized by worries among investors and employers that the world’s economy may fall back into a recession, due to Europe’s financial difficulties. These fears seem to have subsided somewhat in recent week. With some luck, it seems that Canada will remain relatively unaffected by Europe’s financial worries.

So it seems that the job market is still recovering. However, getting back to the hiring demand levels that we last experienced in 2007 (before the recession began) will take years.