What our fellow workers south of the border had been experiencing for a while now, is happening in Canada as well. Last month, Canada’s job market lost 16,000 jobs. This is the third consecutive month this is happening, with factory workers shedding the most jobs, dropping to the lowest level in eight years.
Not surprisingly, Canada’s unemployment rate edged up to 6.5%, being at its highest since the beginning of January. The manufacturing industry has hit the lowest level since 1998.
While this is not, by any stretch of imagination, good news for the workers who lost their jobs, weak jobless report could result in something good–interest rate cuts. Last week, the Bank of Canada didn’t change its overnight lending rate, leaving it at 4.25%. However, going forward, economists are betting more and more that interest rates will be cut should the weakness in the labor market continue.
Otherwise, overall employment in Canada kept on adding new jobs. So far this year, 194,000 workers found mostly full-time positions, which matches the job growth in the U.S. Considering that we are a population of 30-odd million, this is significant.
Plus, Canadian economy appears to be very much pro-equality, since 2.1% more adult women found employment, in contrast to 0.6% more adult men.
The quality of jobs in Canada is also higher, 63,000 part-time jobs were cut, while 47,000 full-time jobs were added.
In addition, most of lost jobs came from the industries impacted by the strong Canadian dollar, which eroded profit margins as competition with cheaper overseas exporters intensified. Since January of this year, exchange rate-sensitive sectors lost 87,000 jobs.
Aside from these sectors, many other sectors took a hit, such as construction that lost 8,700 jobs, public administration lost 21,000, while some heads rolled in the financial and education sectors as well.
On a positive note, wages are still running ahead of inflation, whereby employees earned 3.7% more in comparison to last year. To put things into perspective, the consumer price index (CPI) gained so far 2.4% on an annual basis.
Yet, regardless how much ahead of inflation wages are, economists still expected the jobless rate to drop to 6.3%, instead of increase from 6.4% to 6.5%. Now, whether this discrepancy in expectations is only a consequence of sampling errors or whether it is a real discrepancy, remains subject of much debate.
For my two cents, I don’t like seeing Canadian economy losing jobs. On the other hand, I like the notion that inflation in Canada is still tame and that interest rates are either going nowhere or going down.