Job Data Tanks in July
Watching the job market is a lot like watching the mortgage market. It’s got its own ebbs and flows, and the emerging data is that of the type that’s always changing. This year March saw a steep decline in jobs, only to be picked up by April’s number of 95,000 jobs that were created. Now we’re back at the bottom again, with the Canadian labour market losing 39,400 jobs in July.
Employment gains were seen last month in the private sector, but it was an exceedingly high number of jobs in the public sector that offset any of those increases. Statistics Canada is reporting that a whopping 74,000 jobs were lost in this latter sector, with health care and social assistance service jobs seeing the biggest hits. Most of those were in Quebec, which saw a setback of 30,400 jobs in total – the biggest drop among all of the provinces according to this new data.
The numbers mean that our unemployment rate went from 7 per cent at the beginning of the year, to the 7.2 per cent where it now sits. But not everyone is convinced that the data is showing what’s really happening around the country.
“I’ve no doubt there is some restraint going on, but it’s incredibly hard to believe that it all happened effectively in one month,” says Doug Porter, chief economist with the Bank of Montreal. But even he can’t help but notice the softening.
“I think the overall story is job growth is moderate at best,” he says. “Another way of coming to the same conclusions is at the start of the year the unemployment rate bottomed at seven per cent and we’re now at 7.2 per cent, so it does look like there’s a bit of a deterioration since the start of the year.”
CIBC’s chief economist, Avery Shenfeld, agrees saying that the massive drop in public service employees “could simply be statistical noise,” or could be a result of over-counting in prior data collections.
There was one category that was hard hit by the numbers though, and have been all summer – youth employment saw a loss of 45,600 workers. That makes this the worst summer on record for those looking for summer work before they head back to school next month.
“The Bank of Canada should view it as a temporary shock that will be unwound after the Labour Day holiday,” says David Madani, chief economist with Capital Economics in Toronto. “Nevertheless, the modest gains in prime-aged employment over the past six months support our view that the economy has been underperforming its potential growth rate of two per cent.”