Canada Unemployment Reaches 8.0%

• StatCan: Employment declined by 61K in Mar, all in full-time work. This decrease pushed the unemployment rate up 0.3% to 8.0%, the highest rate in 7 years. Since peaking in Oct 2008, employment has fallen each month, with net losses totaling 357,000 (-2.1%). In % terms, this is the largest decline over a 5 month period since the 1982 recession. Since Oct, full-time employment has declined by 2.8% (-387,000) while part-time has edged up 0.9% (+30,000)
• Losses in Mar were widespread across a number of industries, most notably in manufacturing; finance, insurance, real estate and leasing; construction; and natural resources. These losses were only partially offset by gains in "other services"; and business, building and other support services
• Employment fell in several provinces in Mar, with the largest declines in BC (-23K), Alberta (-15K) and Ontario (-11K), the provinces with the fastest rate of employment decreases since Oct
• In March, the increase in average hourly wages climbed back to 4.3% y/y (StatCan)
• TD: Facing a long-run decline, manufacturing sector job losses have accelerated, losing 127,800 jobs since Mar 2008, and the sector accounted for over 55% of Canada’s y/y job losses. The manufacturing sector constituted 15% of Canadian employment in 2000 but now comprises only 11%
• With employment having contracted 272K in the first 3 months of 2009, this is only around the half-way mark for 2009 job losses. Expect losses, albeit at a slower pace, through the next three quarters, anticipate the unemployment rate to rise to 10% by year’s end. There is still much pain ahead and, along with the hard-hit export sector, job losses have now infected domestic sectors (TD)
• BMO: Canada has now lost 295K jobs from the peak level reached in Oct 2008, equaling 1.7% in 4 months, or roughly half the 3.2% job drop in the U.S. from its peak level (hit way back in Dec/07). Canada looks poised to continue catching up, as previously robust sectors are vulnerable to further serious job losses, most notably construction. The jobs data loudly confirm that Canada is in the heart of a recession which is quickly rivaling that of the early 1990s and early 1980s
• CIBC: Sectors traditionally labeled cyclical industries are showing why they deserve that moniker, with Mar job declines centered on manufacturing, construction and resources, and services jobs roughly steady, despite a nearly 2% drop for financial services. Employment in the goods sector is down a sharp 5.7% in the past 12 months. We’re at risk of becoming numb to what are horrific numbers on Canada’s economic performance. The 2.1% employment decline in the first 5 months of this recession is roughly three times the pace of job losses seen at the same point in the recessions of the early 1980s and early 1990s. Our call for an ugly 7.3% annualized drop in GDP in the first quarter will prove to be a bit too optimistic
  
• Canadian business labor productivity fell 0.5% in Q42008, with output falling faster than hours worked extending the period of weakness in the business sector that began in Q22007. The GDP of Canadian businesses shrank by 1.3% in Q42008, reflecting weak domestic demand and the continuing slump in exports, the largest decline since the Q11991 when business sector GDP declined 2.2%. hours worked fell 0.8% in Q42008 after remaining virtually unchanged in the previous two quarters.
• Business sector productivity is below historical averages. For the business sector as a whole it fell 1.1% in 2008 the first annual decline since 1996. In 2007, it grew 0.6%, having risen from 0.2% in 2004. Productivity averaged 1.6% in between 1981-2000, and averaged 1.0% in between 2000-2007 (SC)
• Between 2002 and 2007 employment rates increased the most in the highest-paying industries and occupations. Up until 2007, retail trade had been the largest creator of new jobs, however, it has been surpassed by construction, health care and social assistance (SC)
• C.D. Howe: Although the national unemployment rate is low, regional dispersion remains high. Regionally linked employment insurance benefits influence relocation decisions, contributing to unbalanced labor markets and slowing the pace of regional convergence in wages, prices, and productivity across Canada

Apr 9, 2009