OTTAWA – Fresh bundles of disappointing data rolled out Friday are backing up expectations the Canadian economy is poised to close out the year with a whimper.
On Friday, Statistics Canada’s latest monthly jobs survey found the economy shed 35,700 jobs in November, while the unemployment rate crept higher by one tenth of a percentage point to 7.1 per cent.
Meanwhile, another batch of the agency’s data showed Canadian exports sagged in October, helping its trade deficit swell to $2.76 billion.
These numbers added brush strokes to the fourth-quarter picture, which as the country learned earlier in the week, received a flimsy handoff from September.
The economy’s performance — as measured by real gross domestic product — contracted by 0.5 per cent at a non-annualized rate in September, the final month of the third quarter.
That monthly reading dampened the encouraging results for the third quarter as a whole. The period saw Canada’s real GDP rebound to grow by 2.3 per cent after it had hobbled through two straight quarters of contraction.
Canada continues to limp from the pain of persistently low commodity prices and the failure of other sectors, such as exports and manufacturing, to pick up the torch from the resources industry.
“I’m concerned,” Sherry Cooper, chief economist for Dominion Lending Centres, said Friday.
“Now we have even more recent data and those data have also shown some troubling softening in the Canadian economy.”
The latest numbers Friday follow recent warnings from experts, including the new Liberal government, that Canada’s fiscal footing is now projected to be billions of dollars worse than anticipated.
The situation could be particularly problematic for the Liberals, who were elected on a promise to cap annual budgetary deficits at $10 billion over the first two years of their mandate and balance the books by the fourth year. The party vowed to spend billions on infrastructure as a way to stimulate the economy and create jobs.
However, Friday’s headline job number for November was, perhaps, not as bad as it looked at first glance.
Statistics Canada said the worse-than-expected drop was due to a reversal to the significant October increase in temporary work that was likely generated by the federal election.
The number of public-administration jobs fell by 32,500 in November to offset an October jump of 32,000 positions in the same category.
Still, a consensus of economists had estimated the country would only lose 10,000 jobs last month and the unemployment rate would stay at seven per cent, according to Thomson Reuters.
The report showed the services sector dropped 82,000 positions last month, including the significant decline in public-administration work. The losses included 15,600 jobs in wholesale and retail trade, 11,900 in information, culture and recreation and 11,200 in finance, insurance, real estate and leasing.
“I would say disappointing in so much as that it wasn’t just the reversal of the election-related hiring,” RBC deputy chief economist Dawn Desjardins said.
She noted, however, that even with the slide, Canada has still gained more than 150,000 new service-sector jobs since last December.
“So, it isn’t a horrible story by any stretch, but I think we need to see some recovery there as we go through December really just to allay any concerns that something is amiss here,” said Desjardins.
The November data also found the overall number of part-time positions declined by 72,300 compared to the previous month, while full-time jobs climbed by 36,600.
Regionally, Alberta saw its jobless rate jump from 6.6 per cent to seven per cent — the province’s highest level since April 2010 — as 14,900 fewer people were working there. That drop in the number of jobs was the biggest decline from October to November of any province.
The resources-producing province, which saw the bulk of its November losses concentrated in its services sector, has struggled amid stubbornly low commodity prices.
All provinces saw drops in employment except for Saskatchewan and Newfoundland and Labrador, which registered small increases compared to October.
Overall, by industry, the number of people in Canada holding natural resources-related positions remained virtually flat, while the manufacturing sector added 17,400 jobs.
The country also saw declines in employee positions with drops of 21,200 jobs in the public sector and 40,800 in the private sector. However, 26,300 more people said they were self-employed.
The survey found the November youth unemployment rate hit its lowest level since 2008, as it dropped to 12.7 per cent, down from 13.3 per cent the previous month.
The decrease, however, came despite the fact the economy lost 23,600 net positions for young workers aged 15 to 24. The change was partly due to the fact fewer youths said they were participating in the labour market in November.
Like many experts, Desjardins predicts the Canadian economy and exports to bounce back with help from the strengthening U.S. economy.
But she was surprised Canada’s once-encouraging trade numbers of last summer had fizzled by autumn.
“It was like, ‘Wow, this is what we’ve been waiting for,'” she said of June’s stronger trade data.
“So, it is disappointing that we didn’t see that momentum continuing into October.”
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