Canadian Employment Ends 2008 on a Low Note
Canadian Employment Ends 2008 on a Low Note Canada sheds 34,400 jobs in December Unemployment rate jumps to 6.6%
After exhibiting remarkable resilience throughout most of the year, the Canadian labour market finished 2008 in the dumps. Following a 71,000 drop in November, 34,400 jobs were lost in December - due to a large drop in full-time work. As a result, the unemployment rate jumped to 6.6% (from 6.3% in November), a level not seen since January 2006. While the unemployment rate has risen 0.8 percentage points since the start of 2008, it still remains well below the 10-year average of 7.3%.
December’s losses were fairly widespread, but the construction sector led the way shedding 44,300 jobs. During the first three quarters of the year, construction was a key source of strength for employment growth - with a net addition of over 100,000 jobs - reflecting the resilience of the housing market. However, both the new and resale home markets have already shown signs of cooling. Indeed, housing starts fell to 177,000 in December, reducing residential construction activity. For 2008 as a whole, the construction sector added a net 55,000 jobs. The service-producing sector outperformed the goods-producing sector in 2008, led by increases in healthcare and social assistance (+68,600) and professional, technical and scientific services (+53,700). While the healthcare sector is more recession-proof, the professional services sector has lost some momentum, losing a net 13,000 jobs during the second half of the year.
Regionally, Alberta (-15,800) took the biggest hit in December, driving the unemployment rate for the province up 0.7 percentage points to 4.1%. Employment in B.C. (-7,500) slipped for the fourth straight month, lifting its unemployment rate to 5.3% (from 4.9% in November). While these provinces have been locomotives of growth over the past five years, the latest jobs reports indicate that cracks are forming in the wake of a slump in commodity prices and a softening in the housing markets.
While 98,300 net jobs were created in 2008 as a whole, the massive job losses seen during the last two months provide an extremely weak hand-off for 2009. Although Canada is not in the same predicament as the U.S., it too is entering a recession and hence will see the labour market weaken as the year progresses. The sectors that were buoying job growth last year - particularly the construction sector - are unlikely to sustain a healthy growth rate this year. The service-producing sector is also likely to take a hit this year - notably in wholesale and retail trade, transportation and warehousing, and accommodation and food services - as domestic demand softens. Overall, we project employment in Canada to slide by a further 250,000 jobs in 2009, driving the unemployment rate up to over 8% by the end of the year.
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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