Canada's unemployment rate jumped two notches to 8.6 per cent last month as employers unexpectedly shed jobs, suggesting the country is still struggling for a sustained recovery.
Employers cut 43,200 positions in October, reversing two months of gains, Statistics Canada said Friday. Economists had expected about 10,000 new jobs for the month.
The report marks a full year of employment data on the economic crisis, from October of last year when the labour market peaked, to October of this year. About 400,000 positions have evaporated in that time, though the agency noted the majority of that decline was in the first five months of the downturn.
Friday's report suggests many employers remain cautious about hiring.
“Considering the lacklustre performance in the economy during the third quarter, especially compared to the U.S., it's not a complete surprise to see firms maintaining a tight leash on staffing,” said Andrew Pyle, ScotiaMcLeod associate portfolio manager, in a note.
In a positive sign, full-time employment rose by 16,500 positions, the second straight month of growth. Part-time work dropped by 60,000 positions in October, with adult women and youth bearing the brunt of the drop.
Over the past year, however, full-time employment has fallen at a much faster rate than part time work, falling 2.7 per cent, compared with a 0.7-per-cent drop.
Employment has decreased in most industries in the past year. The biggest yearly drops have been in manufacturing, natural resources, construction and transportation. Some sectors have expanded though, notably in information, culture and recreation as well as in finance, insurance, real estate and leasing.
Among provinces, Alberta, Ontario and Newfoundland and Labrador have all experienced above-average employment drops over the past year.
The weaker-than-expected report put pressure on the Canadian dollar. The currency weakened to 93.53 cents (U.S.) from Thursday's close of 93.83 cents.
“The big decline in October highlights the sluggish nature of the recovery and reinforces our expectation that the Bank of Canada will hold true to its commitment to hold rates steady until at least June 2010,” said Bank of Montreal economist Benjamin Reitzes.
Finance Minister Jim Flaherty repeated his expectations Thursday that job numbers will remain weak for some time. “Over all I expect to see some weakness in the job area. We need to have a clear, entrenched economic recovery and then the job numbers will have to catch up to that as businesses start to reinvest,” newswires reported yesterday.
Much of last month's decline was in retail and wholesale trade along with natural resources. Transportation and warehousing saw gains.
While both the private and public sector shed jobs in October, self-employment continued to rise. Self-employment has jumped 3.9 per cent in the past year, a typical recessionary trend, while private employment is down 4.1 per cent. The public sector has fallen 1.6 per cent.
Adult women and youth accounted for virtually all of the decline in October. Over the past year, youth employment has tumbled 8.7 per cent. It has fallen 2.3 per cent among adult men, though employment levels have stabilized lately. Employment among adult women is unchanged from a year ago.
Wages are holding up. Average hourly wages for permanent workers were 2.9 per cent higher in October compared with last year's levels, well above the rate of inflation and a jump from the previous month's increase of 2.3 per cent.
That increase partly reflects the stronger performance of the labour market in August and September, “though we don't expect the pace to be sustained,” said Ian Pollick, economics strategist at TD Securities.
© The Globe and Mail
