OTTAWA – Canada’s job performance last month was the worst since the global recession as 54,500 workers joined the ranks of the unemployed, all full-time and all in the important private sector.
Economists were left scrambling to lower their assessments of the North American economy following the unexpected reversal of February’s job gains, combined with a Canadian trade report for February that was almost as bad, and soft job creation south of the border.
The loonie had tumbled more than a cent in early trading, but ended the session down 0.39 of a cent at 98.39 cents US.
“It doesn’t get much uglier than this,” Bank of Montreal chief economist Douglas Porter said in a commentary.
Even taking into account that Canada’s jobs report is essentially a survey and subject to a margin for error, the combination of all three economic releases Friday gives credence to the view that the soft patch seen in the second half of 2012 has continued into 2013.
“Combined with the trade numbers and the sluggish U.S. numbers … It does suggest the North American economy hit some heavy weather in March,” Porter said.
“Is it going to weaken further? I don’t believe it will. I believe this is a soft patch but we will get out of it later this year.”
Still, Porter estimated the Canadian economy would struggle to grow at a one per cent pace in the first half of 2013, after barely advancing at a 0.7 per cent rate in the last six months of 2012.
“It’s a long road to recovery and the government’s austerity measures are not going to get us there,” agreed NDP finance critic Peggy Nash, who criticized the government for delaying new infrastructure spending when jobs are needed now.
Finance Minister Jim Flaherty, in an email released by his office, called the March result “disappointing,” but noted the monthly report was merely a “snapshot in time” and not indicative of the overall record.
“If you look at job creation since the depth of the global recession July 2009 employment in Canada has increased by nearly 900,000 and is now more than 465,000 above its pre-recession peak,” he said, adding that the economy as a whole is also above pre-recession levels.
March’s jobs loss was the biggest one-month decline since February 2009 and, with a small retreat in the number of people looking for work, helped lift Canada’s unemployment rate 0.2 to 7.2 per cent.
Meanwhile, February recorded the eleventh straight trade deficit for Canada, as exports fell by 0.6 per cent and the deficit widened to $1 billion.
The troika of bad news was completed by a U.S. Labour Department report issued at the same time that found American employers added only 88,000 jobs in March — a nine-month low. The U.S. unemployment rate dropped to 7.6 per cent from 7.7 per cent in February, but only because more people stopped looking for work.
But the big shock Friday was the Canadian employment report — which was worse than any economist had predicted. Not only were its bottom-line numbers dismal, the underlying data was, if anything, weaker.
The 54,500 overall jobs retreat included a 38,700 pick-up in self-employment, considered a low-paying segment of the labour market. Among employer-paid workers, the loss was actually 93,100, with 85,400 of those coming in the private sector.
As well, hours worked fell 0.4 per cent and wages were only 2.1 per cent higher than they were at this time last year.
“The underlying numbers are ugly (but) the employment decline would have been even worse but for a large jump in self-reported self-employment,” noted labour economist Erin Weir of the United Steelworkers.
Economists had expected Statistics Canada’s March report to even out the above-trend gains of February, but few saw such a massive bleeding, leaving the country with about 26,000 fewer jobs than at the beginning of the year.
For David Madani of Capital Economics, who for some time has been bearish about the Canadian economy, the jobs numbers were in keeping with his low-growth economy scenario. He said Canadians should have been skeptical of last year’s 20,000-plus monthly employment increases.
“(That) seemed far too strong for an economy that grew by less than one per cent over the entire second half last year,” he said. “Overall, we think there is some slight downside risk to our estimate that GDP increased by a modest 1.2 per cent annualized (in the first quarter).”
The Bank of Canada is still on record as predicting economic growth of two per cent this year, but economists have long abandoned that view and advised Flaherty to count on 1.6 per cent for budgetary reasons. The central bank’s next quarterly outlook comes on April 17.
By industry, the biggest losers in March were manufacturing, which shed 24,200 workers; accommodation and food services, which declined by 24,900; and public administration, down 24,300. Construction was also down by almost 10,000.
The gainers were few and far between. The most notable was a 12,100 increase in finance, insurance and real estate, and a 10,300 gain in the professional, scientific and technical services category.
Regionally, employment fell in six of the 10 provinces, with Ontario and Quebec leading that way, each shedding about 17,000 workers. Even Alberta, one of the country’s stronger performers, lost 11,300 jobs and in British Columbia, employment fell by 14,800. Nova Scotia registered the only notable increase relative to its population with a pick-up of 2,900 jobs.