Unexpected Decline in Employment Raises Doubts on Domestic Outlook
The Canadian job market has taken an unexpected turn, with employment dropping by 71,200 jobs in November. This significant decline is the largest since 2009 and raises concerns about the resilience of the domestic economy.
Weakness in Job Market Contrasts with Bank of Canada’s View
According to the latest data from Statistics Canada, the job market has cooled down significantly in recent months. In contrast, the Bank of Canada had recently expressed optimism about the labour market’s ability to fuel consumption and remain resilient amid trade tensions.
However, with this latest report, there is a growing concern that the labour market may continue to cool down or even reverse course. This could have significant implications for the Canadian economy and interest rates.
November Job Losses: A Broad-Based Decline
The decline in employment was not limited to any one sector. Both the goods-producing and service-producing sectors experienced job losses, with public administration being a notable exception.
Public Administration Sees Significant Gains
In November, there were significant gains in public administration, which had seen a pickup in hiring last month due to election-related activities. However, these gains were not enough to offset the overall decline in employment.
Wages and Hours Worked: A Mixed Picture
While wages for permanent employees continued to rise at an annual rate of 4.4%, hours worked slowed down to 0.2% from a year earlier. This is a mixed picture, with some sectors experiencing significant declines in hours worked while others saw gains.
Private Sector Employment Drives Job Losses
The majority of the job losses were concentrated in the private sector, with little change in self-employment and public-sector employment.
Impact on Core-Aged Men and Women 55+
Interestingly, November saw fewer workers among core-aged men and women aged 55 and over. This could have significant implications for the labour market’s ability to sustain itself in the long term.
Canadian Currency Depreciates
The Canadian currency depreciated by 0.6% to C$1.3249 against its US counterpart at 8:40 a.m. Toronto time.
Julia Pollak Weighs In
According to Julia Pollak, labor economist at ZipRecruiter, "Canada’s jobs report is disappointing, showing job losses for the second month in a row… But observers should remember that the numbers are highly volatile and that this is still the strongest year for job growth in Canada in 17 years."
Key Insights
- The November employment decline was broad-based among both goods-producing and service-producing sectors.
- Public administration saw significant gains, while private sector employment drove job losses.
- Wages for permanent employees continued to rise at an annual rate of 4.4%, but hours worked slowed down to 0.2% from a year earlier.
- The Canadian currency depreciated by 0.6% to C$1.3249 against its US counterpart.
What’s Next?
The labour market’s performance will be closely watched in the coming months as policymakers and analysts try to gauge whether this is a short-term blip or a longer-term trend. With trade tensions still simmering, the Canadian economy faces significant headwinds that could impact employment numbers further.
In conclusion, while the November job losses are concerning, they should not overshadow the broader trends in the labour market. With careful analysis and consideration of multiple factors, policymakers can make informed decisions about the future of the Canadian economy.