Canada Paltry 200 Jobs in July Spurs Labor Market Exodus

Canada created 200 new jobs last month and the feeble state of the nation’s labor market provoked more job hunters to abandon the search.

Another 35,400 people dropped out of the labor market in July, cutting the participation rate to 65.9 percent, the lowest since October 2001, Statistics Canada said today from Ottawa. The shrinking workforce was the main factor in the unemployment rate’s decline to 7 percent from 7.1 percent. Economists predicted a 20,000 jobs increase and a 7.1 percent unemployment rate, according to median forecasts in a Bloomberg economist survey.

Employment has been stuck at about 17.8 million this year, ending a burst of hiring that led Canada out of a recession in 2009 faster than other Group of Seven countries. The Bank of Canada last month cited weaker workforce participation as a sign of idle capacity in the world’s 11th largest economy.

“The shine is off the job market in Canada,” Derek Holt, Scotiabank’s vice-president of economics, said by phone from Toronto. “There are good reasons for declining unemployment rates and not-so-good reasons -- this is one of the latter.”

Canada’s dollar weakened 0.3 percent to C$1.0963 per U.S. dollar at 10:38 a.m. in Toronto. Government bonds due in five years yielded 1.46 percent, a decline of 5 basis points from yesterday.

‘Fairly Volatile’

The composition of employment shifted in July with 60,000 new part-time jobs tempering the loss of 59,700 full-time positions. It was the biggest loss of full-time work since October 2011. Private companies added 26,300 workers as public-sector employment rose by 3,200.

“Each monthly number is turning out to be fairly volatile,” Canadian Finance Minister Joe Oliver told reporters in Toronto after the jobs report. “The overarching point however is that we’ve created over 1 million net new jobs, 20 percent more than the other members of the G-7.”

The July participation rate fell from 66.1 percent the month before.

“Canada’s labor market continued to misfire in July,” Paul Ashworth, chief North America economist at Capital Economics in Toronto, wrote in a research note. “Discouraged job seekers gave up and left the labor force.”

Hourly Wages

Workers designated by Statistics Canada as employees rose by 29,400 and the self-employed category decreased by 29,200.

Average hourly wages of permanent employees increased by 2.1 percent in July from a year earlier, exceeding the 1.9 percent pace the prior month.

By industry, construction showed the biggest loss with a reduction of 42,200 in July. Educational services employment rose by 32,100.

Economists see the employment picture improving only moderately, with those surveyed by Bloomberg predicting unemployment will average 6.8 percent in last three months of this year.

The western province of Saskatchewan’s unemployment rate fell to the lowest since comparable records began in 1976, to 3.3 percent in July from 3.9 percent in June. That decline was also led by a drop in labor-force participation, Statistics Canada said.

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