OTTAWA – Canada served up two unsavoury batches of economic numbers Friday as the latest trade and jobs figures provided further evidence of the country’s struggles.
On employment, Statistics Canada’s labour force survey said the market lost 31,200 net jobs in July, an unexpectedly steep decline that included the biggest one-month drop in full-time work in nearly five years.
On trade, the fresh figures showed Canada’s deficit with the world — the balance between imports and exports — ballooned to a record level of $3.6 billion in June.
“The overall story here is the Canadian economy is barely growing,” BMO chief economist Doug Porter said Friday.
“And the drag on the economy is in the export sector, the one area of the economy where I think there were very high hopes. We’re basically still incredibly dependent on consumer spending and housing to keep pulling the economy along.”
Combined, Porter said the disappointing jobs and trade numbers increase the likelihood that the Bank of Canada will decrease its already-low benchmark interest rate before the end of the year to help boost the economy.
After Friday’s releases, Porter said he thinks the chances of a rate cut before January are 25 per cent, up from 10 per cent.
Looking at the labour data, Statistics Canada’s survey found the national unemployment rate for July crept up to 6.9 per cent from 6.8 per cent the previous month.
The country shed 71,400 net full-time jobs in July — a number partly offset by an increase of 40,200 in less desirable, part-time positions. Statistics Canada said full-time work hadn’t suffered a one-month blow that big since it lost 80,300 positions in October 2011.
Public sector work plummeted by 42,000 positions, compared to the labour force’s addition of 13,600 private sector jobs.
The survey also found that paid employee positions fell by 28,400 last month, while self-employed work — often considered more precarious — declined by 2,700.
But Porter said the performance of the overall labour force may not have been quite as negative as the headline number suggests.
Pointing to the July drop of 24,200 public administration jobs, he said the decline could have been directly tied to the roughly 25,000 temporary positions created in April and May for the census.
Porter also underlined another possible “quirk” in the employment data. He noted that Ontario showed a drop last month of 37,800 positions in educational services, which could be due to a seasonal adjustment involving teachers that he has seen reflected in the data in the past.
He expects those numbers to recover over the coming months.
With the July decline in educational services jobs, Ontario suffered the biggest loss of any province. Its labour market lost 36,100 net positions, 18,900 of which were full time.
In Alberta, where the economy has been hit hard by low oil prices and May wildfires that temporarily shuttered some crude production, the unemployment rate rose 0.7 percentage points to 8.6 per cent. The rate reached its highest mark since September 1994.
Overall, the Canadian labour market had 0.4 per cent more jobs than 12 months earlier. During that same period, however, full-time work dropped 0.2 per cent while part-time jobs climbed 3.1 per cent.
“Looking at it from a very big picture, the reality is that we’ve had very modest job growth over the last 12 months,” said Porter, who thought the trade numbers were evenmore “disturbing.”
Statistics Canada said exports fell 4.7 per cent in the second quarter to $124 billion, the steepest slide since the second quarter of 2009 during the Great Recession.
“The extent of the drop — that’s a bit surprising,” said Krishen Rangasamy, a National Bank senior economist.
As a result, Canada’s quarterly trade deficit expanded to a record $10.7 billion in the second quarter, up from $6.4 billion in the first quarter.
“Basically, what that means is that trade is going to subtract from growth in the second quarter and is basically reinforcing our view that Canadian GDP actually contracted about 1.5 per cent annualized in the second quarter,” he said.
Rangasamy, however, is predicting a “strong rebound” in exports in the second half of 2016, thanks to the still-weak Canadian dollar and the strengthening United States economy.
On Friday, the latest release of U.S. jobs data offered evidence of ongoing economic improvements south of the border.
The country added 255,000 jobs last month as the unemployment rate stayed at 4.9 per cent, the U.S. Labor Department said.
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Note to readers: This is a corrected story. A previous version said the one-month drop was the worst overall in five years.