Canada sees surprising job gains in August

[ErickMontreal]

Canada sees surprising job gains in August

 

Financial Post

September 4, 2009

 

Canada posted a surprising gain in employment in August as the economy showed signs that it was pulling out of a recession.

 

Canada posted a surprising gain in employment in August as the economy showed signs that it was pulling out of a recession.

Photograph by: File, AFP/Getty Images

 

OTTAWA — Canada posted a surprising gain in employment in August as the economy showed signs that it was beginning to pull out of a recession.

 

Statistics Canada said Friday that 27,100 positions were added during the month, compared with 44,500 losses in July. The unemployment rate edged up to 8.7 per cent in August from 8.6 per cent the previous month.

 

The gains were led by part-time and private-sector employment, the federal agency said. There were 30,600 part-time jobs added in August, while 3,500 full-time positions were lost. Hardest hit was the manufacturing sector, which shed another 17,300 in August. The biggest gains were in the retail and wholesale trade, up 21,200, and finance and real estate, up 17,500.

 

Six provinces saw employment rise, with the biggest increases in Ontario, British Columbia and Quebec. Alberta lost the most jobs in August.

 

"Since employment peaked in October 2008, total employment has fallen by 387,000 (down 2.3 per cent)," the agency said. "The trend in employment, however, has changed recently. Over the last five months, employment has fallen by 31,000, a much smaller decline than the 357,000 observed during the five months following October 2008."

 

Most economists had expected the economy to lose jobs in August, with the consensus being about 15,000 fewer positions. They also expected the unemployment rate to rise to 8.8 per cent.

 

"This report may not quite carry the good housekeeping seal of approval for the recovery, but it certainly is another big step in the right direction," said Douglas Porter, deputy chief economist at BMO Capital Markets.

 

"While we can quibble about the details, the broader picture here is that the labour market is stabilizing, and apparently much faster than in the U.S." (The U.S. Labor Department said Friday that 216,000 jobs were lost in August, although that was less than analysts had expected.)

 

Charmaine Buskas, senior economics strategist at TD Securities, said "the fact that the (Canadian) unemployment rate continues to rise has a bit of a mixed messages, as the initial interpretation is negative, but suggests that workers are slowly becoming more encouraged by better prospects in the job market."

 

"Ultimately, this report, while positive, is not going to have much impact on the Bank of Canada. It has already committed to keep rates on hold, and one month of good employment numbers is unlikely to sway the decision."

 

Avery Shenfeld, chief economist at CIBC World Markets, said: "Half a loaf, or in this case, half a job, is better than none, so an increase in Canadian employment driven by part-time work is still an encouraging signpost of an economic recovery now underway."

 

The employment report follows some mixed signals of an economic recovery in Canada.

 

On Thursday, the Organization for Economic Co-operation and Development said Canada's economy will contract two per cent in the third quarter of 2009 before edging up 0.4 per cent in the final three months of the year.

 

That's in contrast to forecasts by the Bank of Canada, which expects the country's gross domestic product to grow 1.3 per cent in the third quarter of this year, followed by a three per cent gain in the final three months of 2009. The central bank also forecast the economy will contract 2.3 per cent overall this year and grow three per cent in 2010.

 

Last week, Statistics Canada reported GDP increased 0.1 per cent in June, even as the second quarter declined overall by 3.4 per cent.

 

The outlook by OECD, a Paris-based group of 30 industrialized nations, shows Canada's recovery lagging along with the U.K., which is expected to decline one per cent in the third quarter and be flat in the final quarter, and Italy, which is forecast to shrink 1.1 per cent and grow 0.4 per cent, respectively.

 

August unemployment rates by province:

 

Newfoundland and Labrador 15.6%

 

Prince Edward Island 13.7%

 

Nova Scotia 9.5%

 

New Brunswick 9.3%

 

Quebec 9.1%

 

Ontario 9.4%

 

Manitoba 5.7%

 

Saskatchewan 5.0%.

 

Alberta 7.4%

 

British Columbia 7.8%

 

Source: Statistics Canada

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