Canada’s economy created just 200 net new jobs in July, widely missing economists’ forecasts amid other signs Canada’s economic growth rate is improving.
Canada’s unemployment rate improved, falling a tenth of a point to 7 per cent last month, but that was mostly due to a decline in the size of labour pool as fewer people looked for work.
The data, released by Statistics Canada Friday, is based on a monthly household survey and is prone to volatile monthly swings.
Economists had expected a 20,000 job bounce back last month, more than reversing June’s disappointing loss of 9,400 jobs.
The Canadian dollar fell 0.41 of a U.S. cent to 91.15 (U.S.) cents on the data.
“Today’s report highlighted that the labour market was stagnant in July following a very disappointing half-year job gain of 52,800, the worst showing in the post-recession period,” Dawn Desjardins, assistant chief economist at RBC, wrote in a note to clients.
“Canada’s employment situation remains weak,” Benjamin Reitzes, senior economist with BMO Capital Markets, wrote in a note to clients. While other reports show the economy appears to be gaining steam, “we’ve yet to see any benefits on the employment side.”
“All in all, today’s employment release was very discouraging, as the economy continued to shed full-time jobs and unemployed Canadians in the thousands decided to stop looking for work,” wrote Randall Bartlett, senior economist at TD Bank.
“These dismal employment numbers should refocus public policy on creating jobs. Investment in needed public services and infrastructure should take precedence over austerity,” Erin Weir, economist with the United Steelworkers, commented in an email.
Over the past 12 months, Canada has gained 115,300 new jobs but all the growth has been in part-time work.
Between June and July, the number of part-time jobs rose by 60,000 while full-time jobs fell by 59,700.
Most of the monthly job losses were in construction, health care and social assistance. Employment in educational services and in information, culture and recreation rose in July.
Some economists suggested the 42,200 decline in construction jobs is another sign Canada can no longer rely on the condo boom to boost economic growth.
The majority of new jobs were concentrated among people between the ages of 15 and 24, Statistics Canada said, while there were losses among people aged 55 and older.
Some economists commented on the contrast with the U.S. economy, Canada’s’ largest tradition partner, where the job market is roaring ahead.
“The contrast between the performance of Canada’s labour market and America’s couldn’t be starker,” Paul Ashworth, chief North American economist at Capital Markets, wrote in a note to clients.
Over the past 12 months, the U.S. has added more than 2 million jobs, all of them full-time, Ashworth noted. And while Canada’s unemployment rate, measured in U.S. terms, is just 6 per cent compared to America’s 6.2 per cent rate, if current trends continue Canada risks falling behind the U.S., Ashworth warned.
Despite missing the mark, economists said they did not expect the numbers to change the Bank of Canada’s policy on its trendsetting interest rate, which has been at an ultra low 1 per cent since September, 2010.
“We do not think the weakness is material enough to prompt any change in the bank’s near-term policy stance,” RBC’s Desjardins wrote.
Other recent economic indicators, including the RBC Purchasing Manager’s Index, housing activity and export growth, the Bank of Canada’s Business Outlook Survey, suggest Canada is on track to show higher growth in the second quarter, she noted.
TD said it still expects employment to pick up in the second half of the year as exports improve. However, job gains will likely remain modest as exports are more capital intensive than other sectors of the economy.
Regionally, Newfoundland and Labrador and Manitoba were the only provinces to show job growth, while employment fell in New Brunswick.
The rest of the provinces remained mostly unchanged.
- With files from Toronto Star wires services