First, the bad news:
Job market held back by struggling U.S.
JEREMY TOROBIN, Tavia Grant
Ottawa, Toronto— Globe and Mail Update
The slowdown in Canada’s recovery is spreading to the labour market as employers gird for a sluggish period.
After recouping all the jobs lost during the recession, the economy has shed positions in two of the past three months as the sputtering U.S. recovery saps Canada’s momentum. The International Monetary Fund has cut its 2010 forecast for Canada, citing “mainly external” risks, and Bank of Canada Governor Mark Carney is expected to pause his interest-rate hiking campaign later this month and scale back his projections for Canada and the United States.
“It’s quite clear the Canadian economy has lost a step or two, whether you look at output, spending or jobs,” said Douglas Porter, deputy chief economist of BMO Nesbitt Burns in Toronto. “The omens are there for much more modest job growth in the year ahead.”
Canada’s economy lost 6,600 jobs in September, Statistics Canada said Friday, adding to a report from the Bank of Canada showing fewer of the executives it surveys plan to boost staffing levels in the next year.
Though the unemployment rate slipped a notch – to 8 per cent – as fewer people looked for work, the hiring spree earlier this year as the economy rocketed out of the downturn is giving way to a tepid labour market.
Statistics Canada’s reading of the labour market, however, was actually stronger than the overall job losses suggest. Higher paying, more stable full-time jobs rose for a second consecutive month, the private sector added positions, while the number of hours worked is gradually increasing.
But job growth in Canada will likely remain sluggish as long as the U.S. economy is mired in a slow, grinding recovery where record-low interest rates have failed to produce the borrowing and spending needed to support hiring.
The world’s largest economy shed 95,000 jobs last month, the U.S. Labor Department said Friday, and the jobless rate has now topped 9.5 per cent for 14 straight months, the longest stretch since the 1930s.
“It’s fair to say that the easy gains in the job market are over,” Mr. Porter said, noting that two areas that have fuelled Canadian job growth – government and construction – are both fizzling out as the housing market stabilizes after the boom of last fall and the first few months of the year, and as stimulus spending winds down.
Over the past year, job growth in the public sector has swelled by 3.7 per cent, outpacing the private sector, with 2.4-per-cent growth.
With the slower job creation, Ottawa should extend its stimulus spending, rather than end it in March of next year as scheduled, and extend jobless benefits for unemployed workers, said Ken Georgetti, president of the Canadian Labour Congress.
Speaking in Edmonton, Prime Minister Stephen Harper said he had expected better jobs numbers for September, but that his government would stick to its plan to end the stimulus spending on schedule and switch to “much greater emphasis” on deficit reduction because Canada’s economy is still better off than it was at the outset of the slump.
“I don’t think there’s anything that would indicate we should change course,” Mr. Harper said. “We’ve said very clearly there’s going to be some bumps along the way.”
The jobs data all but guarantee that the Bank of Canada’s Mr. Carney will step to the sidelines on Oct. 19 and hold the benchmark interest rate at 1 per cent after three straight increases, economists said.
At the same time, the central bank’s Business Outlook Survey, also released Friday, included some encouraging news for policy makers.
Companies said they plan to ramp up investment in machinery and equipment, something Mr. Carney has urged them to do to help them compete with overseas rivals and prepare for a world in which the economy won’t be able to rely as much on an aging work force to produce growth.
The paradox is that, in theory, a shift from investing in people to investing in equipment could mean less need to hire workers at a time when unemployment is still high.
However, Stewart Hall, an economist with HSBC Securities in Toronto, said that doesn’t have to be the case.
“Some of these corporations, what they’re going to be doing is investing in their businesses to expand capacity, which invariably may mean you get further job growth,” Mr. Hall said. “Business investment is a very necessary part of the recovery equation. They’re not mutually exclusive.”
Now, the not-so-bad news:
Hiring in Canada to outpace globe
Optimism among Canadian business owners has been falling steadily since Oct. 2009, but hiring intentions in this country are still outpacing the rest of the world as the upturn takes hold, according to a new global study.
The bi-annual Regus Business Tracker surveyed more than 10,000 companies in 78 countries and found that 36% plan to boost their staff levels in the first half of 2011. Canadian businesses outperformed the global average with 41% preparing to add new staff.
“The intention to increase headcount is a clear indicator that businesses want to be prepared to grasp the opportunities that recovering markets may throw their way,” Wes Lenci, Regus’ regional vice-president for Canada, said in a release.
“For Canada in particular, where employment increased by 36,000 in August and 8.1% more people entered the labour force, unemployment nevertheless edged up 0.1 percentage points. This finding tentatively confirms that employment prospects in Canada are set to improve.”
Canada shed 6,600 jobs in September and the unemployment rate edged down to 8% as fewer people participated in the workforce, StatsCan reported.
Global unemployment has reached record numbers in the past three years, hitting 210 million, according to the International Monetary Fund and International Labour Organization.
“The findings of the Regus Business Tracker provide important evidence that the world unemployment situation may be set to ease in 2011,” the U.K.- based firm said.
Overall, more business owners told Regus they have a more positive outlook than they did six months ago. Canada, however, registered a more subdued reading of 99, down nine points from the last survey. Regus also found that 41% of global companies are looking to reduce their overhead costs in ways other than layoffs
“This reveals an attitude of cautious optimism,” Regus said.
“As companies look to find economies in their own operations, we are likely to see more and more organizations offering flexible working practices to their existing or prospective employees in a bid to achieve a better work-life balance and run a leaner organization.”
Copyright © 2010 The Whig Standard
