In the Labour Force Survey for January 2018, Statistics Canada said the Canadian economy saw 88,000 jobs lost during the month, an abrupt halt to the “stellar performance” that saw 2017 produce the biggest increase in jobs since 2002.
The drop in employment raised the unemployment rate up by 0.1 percent to 5.9 percent, a marked difference from November and December, when a total of 145,000 jobs were added, according to CTV. The loss reflects a record loss of 137,000 part-time jobs and a gain of 49,000 full-time jobs.
Economists had been expecting a gain for the month of about 9,000 to 10,000 jobs, so the figures that came out were surprising. “Overall, a mysterious mix of good and bad, with the latter’s impact blunted by how strong job gains were in the lead-up to these figures,” CIBC chief economist Avery Shenfeld wrote in a commentary.
Shenfeld also commented that while the job losses took away from the job gains made last year, ” the details also looking wonky, with all of the job losses in part-time work.”
Looking at the bigger picture
Overall, the news isn’t all bad, especially if you look at the bigger picture. As Bloomberg News points out, Canada’s economy has seen an increase of 288,700 jobs over the past 12 months — 146,000 of which came in November and December — while full-time employment is up 558,900 over the past 18 months.
“This is still a solid job market, we will have to monitor how the market adjusts to the minimum wage,” Brittany Baumann, a macro strategist at TD Securities, said by phone from Toronto. She cited the full-time job gain, faster wages and a low unemployment rate as signs of a resilient labor market.
Provincial summary
The drop in the number of people employed also coincided with an increase in the minimum wage in Canada’s largest province, Ontario. Ontario lost 51,000 jobs in January, entirely due to losses in part-time work. Overall, compared with January 2017, employment in the province grew by 104,000. The unemployment rate remains at 5.5 percent.
“The concentration of the job loss in Ontario and the focus upon lost part-time jobs in that province will no doubt feed debate on whether large minimum wage hikes took a toll on employment, but proving causality may remain contentious,” Derek Holt, Scotiabank’s head of capital markets economics, said in a commentary.
While there were job losses in Quebec, New Brunswick, and Manitoba, Alberta saw very little in the way of job losses as part-time workers were replaced with full-time workers. Compared with 12 months earlier, employment in the province rose by 46,000, entirely due to increases in full-time work. The unemployment rate in Alberta also fell by 1.7 percent, to 7.0 percent.
The Canadian dollar traded lower, dipping by 0.07 of a cent at 79.23 cents U.S. Economists are hoping the news will reduce pressure on the Bank of Canada to raise interest rates.
BMO Financial Group chief economist Doug Porter said the January figure brings the job market “back down to Earth.” He said it reinforces the view that the Bank of Canada will proceed “ultra-cautiously” through the rest of 2018.
“Even prior to this week’s financial market gyrations and this weak jobs data, we were of the view that the [Bank of Canada] would wait until the second half of the year before hiking [interest rates] again — these developments only embolden that view,” Porter wrote in a commentary.
“At the very least, we can dismiss any chance the bank hikes in March, and April is now looking more like a long shot as well,” he said.
