A cocktail of collapsing oil prices, slow global growth and an aging population is producing one of the most sluggish labor markets in Canada’s history.
Employment rose on average less than 1 percent for a second consecutive year in 2015, Statistics Canada data released Friday show. That’s only happened four times since 1945. Average job growth of 1.1 percent over the last decade is rivaled only by the slump in the 1990s in the country’s postwar era.
The malaise poses another challenge for an economy running out of drivers and increasingly reliant on a weakening currency to fuel growth. Investors are betting Bank of Canada Governor Stephen Poloz will cut rates again this year on speculation gains in non-energy exports aren’t enough to sustain a recovery.
“The weakness may not be done in oil and gas,” Leslie Preston, an economist at Toronto-Dominion Bank, said in a telephone interview. “We don’t expect employment growth to be as strong as it was 10 years ago, so you need to set a new bar for employment growth.”
Job creation of 158,100 last year wasn’t enough to prevent the unemployment rate from rising to 7.1 percent from 6.7 percent. The prospect of further layoffs in Canada’s energy-producing regions from Alberta to Newfoundland means there may be little improvement in 2016. Economists polled by polled by Bloomberg project 2016 unemployment will average 6.9 percent.
Hiring and investment may be hobbled for the next few years by losses in energy-producing regions, Poloz said in a speech Thursday. The Bank of Canada, which cut interest rates twice last year to forestall more widespread damage from the commodity shock, will update its quarterly growth forecasts on Jan. 20 as oil, the country’s largest export, trades at a 12-year low.
Employment in natural resources industries dropped 6.8 percent or 26,600 last year, Statistics Canada figures showed. There was reason for optimism in the 6.1 percent gain in manufacturing that was the first since 2012.
The shifts between energy and manufacturing are also showing up in the Canadian provinces linked to those industries. Alberta’s jobless rate rose to 7 percent in December from 4.7 percent a year earlier. In the factory hub of Ontario it fell to 6.7 percent from 7 percent.
It’s not just Alberta. If employment in the province had expanded last year at the same pace it did in 2013 and 2014, Canadian job growth would still fall short of 1 percent. The aging of the the labor force is having an impact. Employment rose by about 220,000 for those 55 and older in 2015, a gain of
6.3 percent. Those in the 15-to-24 age bracket saw employment fall by 1.9 percent.
“That isn’t really a ringing endorsement of job opportunities,” Preston said.
The year did end on a decent note. Employment grew faster than economists forecast in December with a gain of 22,800 following a November decline of 35,700.
Part-time work rose by 29,200 in December, while full-time positions declined by 6,400. Workers designated by Statistics Canada as employees fell by 17,500. The self-employed category increased by 40,300.
Health care and social assistance employment climbed by 16,500 on the month, followed by education with 15,400 new positions, Statistics Canada said.
Job gains led by the part-time and self-employed categories suggest some weakness even in the December gain, Derek Holt, Scotiabank’s vice-president of economics in Toronto, wrote in a research note.
“Canadian job markets were very resilient in the face of the plunge in commodity prices; the question mark is whether such gains are sustainable into 2016 and the composition of recent numbers raises serious question marks,” Holt said.