Canada loses 2,800 jobs in February

OTTAWA — Canada’s struggling labour market experienced another setback in February, shedding jobs unexpectedly just as the economy was beginning to show renewed signs of life and employment growth in the United States picked up.

A surprising 2,800 positions were lost in February, while the unemployment rate declined to 7.4% as fewer people were looking for work, Statistics Canada said Friday.

Economists had expected 15,000 new positions to be created during the month and a jobless rate steady at 7.6%. The February drop followed the creation of a meagre 2,300 new jobs the previous month.

The disappointing employment report in Canada was in stark contrast to data on Friday that showed the U.S. economy added a better-than-expected 227,000 jobs in February, with the unemployment rate remaining at a three-year low of 8.3%.

“Just as the U.S. labour market finally appears to be turning the corner, Canada’s job market finds itself in a funk,” said Douglas Porter, deputy chief economist at BMO Capital Markets, with Friday’s report “extending a five-month string of disappointing jobs data in the country.”

Statistics Canada said 13,400 jobs were lost in the public sector in February, while private-sector employment rolls fell by 1,700. There were 9,100 more full-time jobs during the month, but part-time employment was down by 12,000 positions.

“Employment for the month declined in retail and wholesale trade, transportation and warehousing, health care and social assistance, and public administration,” the federal agency said. “These declines were offset by increases in finance, insurance, real estate and leasing, educational services, and business, building and other support services.”

There was little change in the provincial labour markets in February, the agency said, except for a decline in jobs in New Brunswick.

Porter said that “while this report isn’t as ugly as the headline dip in employment, the main message is that the domestic economy is now clearly struggling to post meaningful growth.”

Speaking to reporters in Toronto on Friday, Prime Minister Stephen Harper said the unemployment report underlines the continuing fragility of the economic recovery, and said his government remains committed to job creation.

“While today’s jobs report is disappointing overall, nevertheless I would point out that there are some positive elements that I think should not be ignored — the most important being that we’re seeing a trend of the number of full-time jobs continuing to increase,” Harper said. “We’re also seeing in the United States finally some job creation, they’re finally beginning to catch up to Canada.”

The prime minister noted that the “first stage” of the jobs recovery in Canada was the creation of primarily part-time employment, but those are gradually converting to full-time positions, he said. “Now with the growth finally of jobs in the United States, I think this gives us some reason for optimism going forward. But obviously we will not keep our eye off the ball and there will be a lot of measures in the budget to create jobs and get us on a long-term sustainable track.”

The Canadian economy grew by an annualized 1.8% in the fourth quarter of 2011, following an upwardly revised 4.2% increase during the previous three months. For the year, gross domestic product was up 2.5% in 2011, compared to 3.2% the previous year.

On Thursday, the Bank of Canada kept its key interest rate on hold at a near-record low 1% — where it has been since September 2010 — but acknowledged some improvement in the outlook for the domestic economy, as well as in Europe.

“All told, (the employment report is) a disappointment, and one that will temper expectations after (Thursday’s) statement that the Bank of Canada is moving towards hiking rates sooner rather than later,” said Avery Shenfeld, chief economist at CIBC World Markets.

While improving economic signs in the United States, Canada’s largest trading partner, are encouraging, BMO’s Porter said: “At this point, a renewed upturn in jobs likely requires a more robust U.S. recovery to pull exports more fully along for the ride.”

“The soft report has taken a bit of the recent shine off the loonie, and will likely temporarily damp down talk of the (central) bank soon shifting to a tighter stance,” he said.

— With files from Kim Covert

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: