Tuesday, December 6, 2016

Canadian job market is still hurting

The results of Statistics Canada’s Labour Force Survey, issued on December 2, has caused a bit of a stir upon its release. The resultant unemployment rate stemming from the survey continues to raise questions, rather than answer them.
According to the Survey, the unemployment rate dropped from 7.3% in early 2016 to 7.0% in October and further still to 6.8% in November. On the surface this looks great, but in reality there’s nothing to celebrate.  First of all, the growth in the number of new jobs created in the Canadian economy was 10,700 in November – mainly due to new part-time positions, which increased by 19,400.  Full-time positions actually fell by 8,700.

Also, the unemployment rate fall could also be due to fewer people looking for a job. In fact, the share of Canadians who are employed or are actively looking for work, the so-called Labour Force Participation Rate, dropped from 65 .8% in October to 65.6% in November, and has been falling fairly steadily since peaking in 2008.

At first glance, one would expect that the unemployment rate and the participation rate would move in opposite directions – that is unemployment would go down as the participation rate increases. But the opposite appears to be true, both rates have been declining since 2008. The participation rate has been dropping quite steadily for eight years and declined from its historic peak (since 1976) at 67.7% in April 2008 to 65.4 in July this year. This means that employment in Canada has not yet recovered from the financial crisis of 2008-09.  The situation may also be exacerbated by the decline in employment crisis in Canada’s energy sector.
Ukrainian Credit Union Limited

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