Canada - Manufacturing Sector Boosts Employment in May
Canada - Manufacturing Sector Boosts Employment in May 8,400 jobs created in May Manufacturing sector adds 34,000 jobs
After kicking the year off on a high note, the Canadian labour market is showing growing signs of slackening this spring. Job growth in May slowed to just 8,400 positions, which along with an equally lackluster increase in the labour force, left the unemployment rate unchanged at 6.1%. Following the first two months of the year, when a stellar 40,000+ jobs per month were created, the average monthly tally has since declined to roughly 14,000. Still, employment remains up 2% on a year-over-year basis, which is a decent clip by any measure.
Looking at the sectoral breakdown, job growth in the services-producing sector, which has been a key source of strength over the past year, fell in May for the first time since July 2007. Seven of the eleven major services categories dropped on the month, with professional, scientific and technical services leading the way. As such, it was the goods-producing industry in May that buoyed the employment numbers. And rather surprisingly, a large chunk of the jobs created during the month stemmed from the manufacturing sector (+34,000). Still, looking through the month-to-month wobbles in the data, the overall trend in factory employment remains clearly down. Even with May’s bounce, over 66,000 jobs have been lost over the past year, and 344,000 since the recent peak recorded in 2002.
On a regional basis, the out-performance in manufacturing helped to lift overall counts in central Canada. Indeed, 14,000 of the 18,000 jobs created in Quebec on the month were in manufacturing, with especially strong gains in aerospace. Similarly, underpinned by a 15,000 job increase in manufacturing, Ontario added 11,000 total jobs in May, leaving the year-over-year rate of growth above the national average, at 2.2%. Elsewhere, some of the provinces that have continued to enjoy solid job gains in recent months - notably B.C., Alberta and Saskatchewan - recorded moderate paybacks in May.
Looking ahead, while May’s employment numbers indicate that Canada is still in the process of creating jobs, the recent deceleration in the growth rate over the past three months is likely to continue. Real GDP growth virtually stagnated in the first quarter and little improvement is projected over the next few quarters. Soft production trends will increasingly filter through to job creation and lead to some gradual increases in the unemployment rate. While Canada is likely to eke out modest gains in public and private sector service jobs, factory employment is forecast to fall further. In addition, the red-hot housing market in Canada has shown signs of cooling recently, which does not bode well for the construction sector. Among the provinces, Ontario remains the most susceptible to weakness in the U.S. economy, as further evidenced by this week’s announcement of layoffs at General Motors. The western markets and Newfoundland & Labrador are likely to hold up better, supported by high commodity prices.
TD Bank Financial Group
The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed, nor in providing it does TD Bank Financial Group assume any responsibility or liability.
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