Jobless rate edges up to 7.5%

After two consecutive months of declines, the Canadian economy created jobs again, though the unemployment rate still inched up to 7.5 per cent from 7.4 as more people looked for work and outpaced the gains.

While the net increase of 17,500 jobs nearly met the expectations of most economists, details in the latest figures released Friday morning by Statistics Canada left some analysts pessimistic.

“It remains evident that Canada has lost jobs momentum,” Bank of Nova Scotia economist Derek Holt wrote in a note.

The gains came from a 43,000 increase in part-time jobs while the country lost 26,000 full-time jobs. “Thus hours worked took a hit and that's a negative for GDP,” Mr. Holt wrote.

He also added that 3,800 newer jobs in the private sector were offset by a drop of 17,300 positions in governments. “The public sector took it on the chin.”

CIBC chief economist Avery Shenfeld also found the numbers “not particularly encouraging” because the gains were driven either by less lucrative part-time work or self-employed work, where there was a 31,000-strong increase.

The Canadian job market remains soft and does not compare favourably with the U.S., he wrote in a note.

“We may have less reason to feel smug about Canadian outperformance, at least in terms of the near-term growth trend.”

The manufacturing sector was a bright spot, with a gain of 30,000 jobs.

“We’re yet to recover the lost jobs of the October-November period, but we’ll gladly take the December job gains,” wrote Krishen Rangasamy, senior economist at the National Bank in Montreal.

“We remain cautious about the 2012 outlook for employment creation in a slow Canadian growth environment.”

Mr. Rangasamy warned however that the manufacturing gains in December won’t continue because exports are affected by a strong Canadian dollar.

And he predicted that construction, where 12,000 jobs disappeared, could see a further contraction because of the fading impact of government stimulus program and expanded housing.

“All told, expect Canadian employment growth this year to be well below the 2011 performance,” Mr. Rangasamy concluded.

In an anomaly, every province saw a slight increase in employment except Quebec, where big losses in the construction and health care and social assistance sectors contributed to a decline of 25,700 jobs.

Ontario had a net gain of 15,700 jobs, all part-time, while 80 per cent of British Columbia’s 10,700 job-increase was also part-time work.

After a strong start of the year, Canada has now gone six months without any significant job gains. Statistics Canada said of the 199,000 jobs created in 2011, almost all came in the first six months.

Economists speculate that the uncertainty in the global economy, particularly concerns that Europe may not be able to contain its sovereign debt crisis, is keeping employers on the sidelines.

As well, Canada now faces some structural weaknesses, such as high household debt and a slowing housing market.

Original Article
Source: Globe