Canada Unexpectedly Loses Jobs in AprilGreg Quinn
Canadian employment declined for the second time in three months in April, casting doubt on the Bank of Canada’s forecast for a rebound this quarter.
Employment fell by 28,900 in April, Statistics Canada said today in Ottawa. The unemployment rate remained at 6.9 percent as 25,600 people also left the labor force, reducing the participation rate to the lowest since November 2001. Economists surveyed by Bloomberg News projected a 13,500 job increase and a jobless rate unchanged at 6.9 percent, according to median forecasts.
Canadian unemployment will remain stuck at about 7 percent this year, above the 6.1 percent recorded in 2008 before the last recession, economists surveyed by Bloomberg predict. Bank of Canada Governor Stephen Poloz has said output growth is being hobbled by weak business investment and exports and that economic slack will persist for about two years.
“We aren’t getting the employment gains anymore and this is five years into the recovery,” said David Watt, chief economist at the Canadian unit of HSBC Holdings Plc, and the only person in the Bloomberg survey to predict today’s decline. “The Canadian economy doesn’t have a lot of momentum to it.”
Canada’s dollar depreciated as much as 0.8 percent after the report, the most in seven weeks, and was 0.6 percent weaker at C$1.0894 per U.S. dollar at 9:53 a.m. in Toronto. Most federal government bond yields declined, with that of the benchmark security due in five years declining to 1.63 percent from 1.65 percent.
Full-time employment fell by 30,900 in April, and part-time positions rose by 2,000, Statistics Canada said. Workers designated as employees declined by 46,000 while the self-employed category increased by 17,200, the report showed.
“It was pretty ugly,” said Nathan Janzen, an economist at Royal Bank of Canada in Toronto. “There wasn’t a whole lot to like in the details either.”
The Bank of Canada predicted last month that economic growth would quicken to a 2.5 percent annualized pace this quarter from 1.5 percent from January to March. Today’s report means Poloz can retain his “neutral” view about the bank’s 1 percent policy interest rate, Janzen said.
Private companies cut 28,600 workers in April and public-sector employment declined by 17,400.
Unilever said yesterday it will close a Bramalea, Ontario, factory that made dried soup and sauce mixes and employed about 280 people. Production is being moved to Independence, Missouri, to bring production closer to U.S. customers that buy the majority of those products, the company said.
Accommodation and food service jobs led the decline by industry, falling by 32,200.
The Good Friday holiday occurred during the survey week, BMO Capital Markets chief economist Doug Porter said in a note to clients, saying this may have distorted the total results.
One bright spot was a decline in the jobless rate in the western province of Saskatchewan to 3.4 percent in April from 4.5 percent in March, the lowest in records back to 1976. The decline came as employment rose by 3,000 and another 3,700 people left the labor force.
The national labor force participation rate fell to 66.1 percent in April from 66.2 percent in March, a measure that has slid from a peak of 67.8 percent in May 2008 before the last recession.
“Given we are five years into a recovery you wouldn’t expect the participation rate to be at 13 year lows so that is certainly a concern,” Watt said.
Average hourly wages of permanent employees rose 1.6 percent in April from a year earlier, slowing from the 2.4 percent pace the prior month.
“There has been little overall employment growth in Canada since August 2013,” Statistics Canada said in its report.