Canadian job market stalls again in February

Unemployment drops to 7.4 per cent, 40,000 jobs lost

(Reuters) — Canada unexpectedly failed to create any new jobs in February, continuing a trend of stalled employment despite healthy economic growth rates and contrasting with renewed strength in the United States.

The net job losses in the month totaled 2,800 compared with the consensus forecast for gains of 14,500, with the biggest declines in retail and wholesale trade.

The unemployment rate nonetheless dropped to 7.4 per cent in the month from 7.6 per cent in January, largely because 38,000 people dropped out of the workforce, the biggest such move since January 2009.

"This does speak to some of the weakness in the labour market," said David Tulk, chief Canada macro strategist at TD Securities.

"Again, all the easy jobs have been made so we're roughly now waiting for the next dose of stimulus, which we feel will come through a stronger U.S. economy but is unlikely to really filter through until maybe the second half of the year," he said.

Canada had recovered all the jobs lost during the recession by early 2011, but the labour market began to stall in the second half of the year and now lags behind U.S. employment, which has taken flight from a prolonged slump.

The data comes a day after the Bank of Canada issued a more upbeat outlook for the economy but opted to hold its benchmark interest rate unchanged at one per cent. The report supports analysts' view that a rate increase may come sooner than previously expected but is not imminent.

Trade services weak

There were 12,000 fewer part-time positions, while full-time jobs grew by 9,100, according to Statistics Canada.

The public sector shed 13,400 jobs in the month while private sector payrolls shrank by a milder 1,700 positions.

Employment was weakest in the services industries. In addition to the drop-off in retail and wholesale jobs, there were big declines in transportation and warehousing, health care and social assistance, and public administration.

These were partially offset by a big jump in financial services jobs and more modest gains in education and construction.

Wage inflation slowed in February, according to the indicator closely watched by the Bank of Canada. The average hourly wage of permanent employees rose 2.1 per cent in February from a year earlier, down from 2.2 per cent in January.

Unemployment in America

In the United States, the unemployment rate held at 8.3 per cent in February. American employers added 227,000 jobs last month, according to the U.S. Labor Department. Government employment saw a decrease of 6,000, declining for a sixth straight month. In contrast, the private sector added 233,000 jobs last month.

The overall U.S. workweek held steady at 34.5 hours — holding at the highest level since August 2008. This is just one-tenth below the pre-recession level, which was at 34.6 hours per week in December 2007. The average workweek reached an all-time low in March 2009.

Canada’s average workweek in February was 34.9 hours for workers 15 years and older. Last month’s numbers are up from a year ago when the average workweek in February 2011 was 34.6.

Average weekly hours in Canada, not seasonally adjusted, reached 36.4 in August 2008, falling to 34.6 in February 2011.

A reduced workweek means smaller paycheques for workers, but continued work for a greater number of workers. In the wake of the recession, with the demand for goods and services increased, employers are restoring work hours rather than bringing on new hires. Now that the average workweek has nearly been restored to pre-recession levels, any new hours added to the workweek will more likely be filled by new hires.

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