Job and Export Drops Show Canada Hurt by Global WeaknessGreg Quinn
Canada’s biggest employment loss since the recession four years ago and an unexpected trade deficit underscore how the world’s 11th largest economy is being hobbled by weak global demand.
The drop of 54,500 positions reported today by Statistics Canada offset a 50,700 gain in February, and lifted the unemployment rate to 7.2 percent from 7 percent. The merchandise trade deficit for February was the 11th in a row, marking the longest streak in records dating to 1988.
Bank of Canada Governor Mark Carney has said a rebound in exports and business investment will lead growth through next year as consumers struggle with record debt loads. The country’s currency fell the most on an intraday basis in nine months on today’s figures, coupled with a weaker-than-expected U.S. job report that suggested continued weakness in the country that buys three-quarters of Canada’s exports.
“In the Canadian numbers there was no silver lining whatsoever,” said Avery Shenfeld, chief economist at CIBC World Markets in Toronto. “We aren’t yet getting enough lift to exports, as today’s data shows, to compensate for a much less exciting domestic housing market.”
The Canadian dollar fell after the employment and trade reports, dropping as much as 1.1 percent, the most since June. It traded down 0.4 percent to C$1.0163 at 4:38 p.m. in Toronto. One dollar buys 98.39 U.S. cents. Bonds rose, with the yield on the 10-year government benchmark falling 5 basis points to 1.74 percent.
The Standard & Poor’s/TSX Composite Index fell 31.20 points, or 0.3 percent, to 12,331.85 at 4 p.m. in Toronto. The benchmark gauge lost 3.3 percent this week, erasing its gain for the year amid concern over global economic growth that has pressured oil and metal prices.
The report brings the labor market more in line with other parts of the economy, where output growth slowed to a 0.6 percent annualized pace in the fourth quarter and inflation has lagged the central bank’s 2 percent target since May.
“As bad as the headline was, there wasn’t much below the surface to make it better,” Robert Kavcic, senior economist at Bank of Montreal, said by telephone from Toronto. “We were pretty suspicious with what we had seen in the last four months,” he said, referring to improvements in the job market.
Full-time employment fell by 54,000 in March while part-time work declined by 400 positions, according to the report from Ottawa-based Statistics Canada.
Private companies cut 85,400 workers and public-sector employment fell by 7,700. Workers designated as employees by Statistics Canada fell by 93,100 while self-employment increased by 38,700.
Accommodation and food service fell by 24,900 jobs in March, followed by cuts of 24,300 in public administration and 24,200 in manufacturing.
A.O. Smith Corp. said April 3 it will close a residential water heater plant in Fergus, Ontario, with 350 workers. The Milwaukee-based company said in a statement the industry was “burdened with overcapacity for a number of years,” adding “we have been facing a challenging economic environment as a Canadian manufacturer.”
The U.S. employment report for March was also weaker than forecast, with Labor Department figures showing payrolls rose by 88,000, less than half the amount forecast by economists in a Bloomberg survey.
Canada’s February trade deficit of C$1.02 billion ($1.00 billion) followed a January figure that was revised to C$746 million from C$237 million, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg had forecast a C$100 million surplus, as well as an employment gain.
Exports fell 0.6 percent to C$38.5 billion in February, as shipments of metal and non-metallic minerals dropped 7 percent to C$4.69 billion. The surplus with the U.S. narrowed to C$3.40 billion from C$3.90 billion a month earlier.
Finance Minister Jim Flaherty said he is “disappointed” with the job loss, calling it “a snapshot in time” in an e-mailed statement.