Canadian Labor Market in Steep Decline

March 13, 2009

Canada shed another 82.6K jobs last month, 65% more than expected and akin to a drop of 670K in the U.S. Labor market.  U.S. jobs, by comparison, dropped 651K last month.  Over the past four months, Canadian employment fell by 74K per month or a U.S.-normalized 584K per month. 

The unemployment rate jumped to 7.7% in February, 4/10ths less than the U.S. jobless rate, from 7.2% in January and 6.3% as recently as November. In the prior two business cycles, the Canadian unemployment rate peaked at 8.0% in September 2003 and 11.6% in July 1993. A year ago, the rate stood at a cyclically low 5.8%.

Average hourly wages finally dipped below a 4% on-year pace to 3.9%, but that remains well above CPI inflation of 1.1%.

Job losses in February were again concentrated in full-time workers, off 110.9K after January’s drop of 113.9K.  Core-age male workers fell by 66K and by 42.5K per month since October.  Construction workers accounted for slightly more than half last month’s total reduction of jobs.  Regionally, 89% of the decline in jobs last month occurred in the three provinces of Ontario, Quebec, and Alberta.  The distribution of February job declines was fairly even between private employees (35%), the self-employed (32%), and the public sector (28%).

North America has fewer labor market rigidities than those in Asia and Europe, and the rapidly deteriorating North American labor markets show that.

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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