Canada’s jobs growth blows past expectations

Gordon Isfeld | Financial Post Sep 7, 2012

OTTAWA · A surprising 34,300 Canadians found work in August, recouping the previous month’s losses, even as the economy remained in the grips of a weak recovery and declining productivity.

Last month’s rebound — although modest when compared to massive gains earlier in the year — was carried by part-time hiring.

The jobless rate held steady at 7.3%, however, as more Canadians joined the workforce in search of employment.

Most economists had expected an increase of just 10,000 jobs in August, after a drop of more than 30,000 positions in July.

In many ways, this was absolutely the ying to July’s yang,” said Douglas Porter, deputy chief economist at BMO Capital Markets.

Statistics Canada said Friday that part-time positions rose by 46,700 in August, while there were 12,500 fewer full-time jobs created.

Overall, the private sector produced the bulk of the job gains, nearly 30,000, with the public sector creating 17,400 positions.

Most of the gains were in the service sector, in which transportation and warehousing added 37,100 positions. The professional, business and building sector also saw large increases.

The construction sector took the biggest hit in August, losing 44,000 jobs, while manufacturing shed 2,700 positions.

The shift from construction into part-time service-sector employment likely undermines job quality,” said Erin Weir, research associate at the Canadian Centre for Policy Alternatives. “In 2011, the average hourly wage in construction was $28.35, more than in any service industry and double the average wage in low-paid service industries like accommodation, food services and retail.”

Employment was up last month in Quebec, British Columbia, Saskatchewan and Manitoba, while Ontario and P.E.I. posted declines.

“July saw a 30,000 decline, but full-time jobs were up and all the weakness was in Quebec that month,” BMO’s Mr. Porter said. “And low and behold, all those Quebec jobs came roaring back, but they were all in part-time.”

In a separate report Friday, Statistics Canada said labour productivity fell 0.4% in the second quarter from a flat reading in the previous three months.

It was the first quarterly decline in a year, and larger than the 0.2% forecast by economists.

The declines were in both goods-producing sectors — such as mining, construction and manufacturing — and service-producing businesses — including retail and wholesale trade, as well as transportation and financial services. Compare that to a 0.6 increase in U.S. productivity between April and May, following a decline of 0.2% in the first quarter.

The Canadian data showed labor costs were up 0.7%, the third straight quarterly increase. In the U.S., those costs rose 0.3%.

The average hours worked in Canada continued to edge higher, rising 0.9% in the second quarter, with construction and financial sector accounting for much of the overall increase.

“The soft underbelly of Canada’s recovery has been our productivity performance,” said Mr. Porter. “Would I like to see the recovery have strong productivity and strong job growth? Definitely. But if I could only have one of the two, I would take strong employment growth.”

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