Canadian economy sheds 39,400 jobs in July, unemployment rate rises to 7.2 per cent -

Canadian economy sheds 39,400 jobs in July, unemployment rate rises to 7.2 per cent


OTTAWA – The Canadian labour market took an unexpected turn for the worse last month, shedding a surprisingly high 39,400 net jobs that included a record loss in the public sector that more than offset gains among private employers.

In all, six of 10 Canadian provinces lost workers with Quebec’s 30,400 setback the deepest fall-off.

It was the second consecutive month that Canada’s economy shed jobs — although June’s loss of 400 net jobs was only technically negative.

July’s decline lifted the official unemployment rate to 7.2 per cent in July, one-tenth of a point higher than in June and May and matching the level for April and March. The rate stood at 7.0 per cent in the first two months of 2013.

The big shock was that Statistics Canada reported a record loss of 74,000 public service jobs, more than half of those coming in the health care and social assistance category and a disproportionate number of those situated in Quebec.

Battling large deficits, most governments in Canada have sought to reduce spending. In March 2011, Finance Minister Jim Flaherty vowed to cut about 19,000 public servants from the federal workforce.

But economists cast doubt that so many public servant suddenly found themselves unemployed.

“I’ve no doubt there is some restraint going on, but it’s incredibly hard to believe that it all happened effectively in one month,” said Doug Porter, chief economist with the Bank of Montreal.

CIBC’s chief economist Avery Shenfeld agreed, noting that the 47,000 drop in health care and social assistance — a traditionally stable category — “could simply be statistical noise” or make-up from previous over-counting.

Porter had little trouble believing the general softness in the report, however. It is in line with a struggling economy that has yet to find a second gear.

“I think the overall story is job growth is moderate at best,” he said. “Another way of coming to the same conclusions is at the start of the year the unemployment rate bottomed at seven per cent and we’re now at 7.2 per cent, so it does look like there’s been a little bit of deterioration since the start of the year.”

The Canadian dollar dropped slightly 0.15 of a cent to 96.71 cents US as the data was made public at 8:30 a.m ET, but quickly recovered and was trading modestly higher by mid-morning.

Porter and other analysts cautioned that the data was not as alarming as the bottom line suggested. Hours worked, which are directly tied to economic activity, actually rose 0.3 per cent during the month, and the private sector managed to add 31,400 workers.

As well, the goods producing sector of the economy was on the positive side of the ledge and manufacturing, a critical industry, recorded 13,500 in job gains.

The biggest winner was the business, building and other support services industry, which added about 29,000 workers.

The data was heavily influenced by a loss of 45,600 young workers, reflecting one of the most difficult summers for students in recent history. Statistics Canada, which issues the labour reports, noted that the employment rate for students aged 15 and 16 was the lowest since records on the category began being kept in 1977.

“The Bank of Canada should view it as a temporary shock that will be unwound after the Labour Day holiday,” said David Madani, chief economist with Capital Economics in Toronto. “Nevertheless, the modest gains in prime-aged employment over the past six months supports our view that the economy has been underperforming its potential growth rate of two per cent.”

In a statement released by his office, Flaherty pointed out that monthly job numbers are volatile, but took note that the private sector had added workers in July.

Economists had expected a modest pick-up of about 10,000 jobs during the month, but one of the few forward indicators — the Conference Board’s want-ad index — was more prescient in predicting a setback.

The retreat all but wipes out any hopes that April’s head-scratching surge of 95,000 added jobs might have been signalling an upward trend for the Canadian economy.

Economists said a more accurate picture is that the economy and job creation is growing, but at a snail’s pace and likely not fast enough to keep up with population growth.

The agency pointed out that for the first half of 2013, job gains have averaged 11,000 a month. That’s far weaker than the 27,000 average gain the economy produced during the second half of 2012.

It is also not sufficient to fill vacancies created by the natural growth in the labour force, which analysts estimate is between 15,000 and 20,000 a month. Under this scenario, it should be expected that the unemployment rate will rise unless a large number of discouraged Canadians drop out of the workforce altogether.

The silver lining is that the Bank of Canada is predicting a big surge of economic activity of 3.8 per cent during the current third quarter, in part as a rebound from shocks that occurred in June from the Quebec construction strike and the Alberta’s floods.

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Canadian economy sheds 39,400 jobs in July, unemployment rate rises to 7.2 per cent

  1. It’s about time that the bloat in public service sector takes a hit ,another few million and that would be great news to the over taxed Canadian public.

    • Don’t count on much of a real cut from government. Last years so called cuts were well below retirement and attrition.

      On your ballot you have 3 major parties but all represent the same thing. More taxes for you and bigger government. All argue on how to best waste our money, tax us more and do less for it. Not one party on your ballot is for less taxes and less government. Its why I say democracy is a ruse in Canada.

      But the stupid and often poor suffer too, huge tariffs on food like dairy, cheese, beef and even on cloths, utilities, property taxes inside rent….you can even be a worker in Canada making poverty level wages and paying income taxes. While we like to self important tout a social contract, lots of able get much more money for nothing than disabled who get maybe $13k/year from Ottawa. Sort of disgusting too to pay able twice as much to do nothing and disabled and vets gets screwed.

      But that is the real Canada. As if big governemtn was a deity or something.

    • It’s about time that the bloat in corporate profit took a hit. Another few billion from them would be great news to the over taxed Canadian public.

      Raise taxes on corporations and the wealthy cut them for the rest of us. That would be much better news for the over taxed Canadian public. A huge part of our national deficit and debt is due to the under taxation of corporations and the wealthy. They don’t invest or create jobs with heir wealth any way, they just donate it to the conservatives or invest it overseas. No wonder our economy is so dead in the water.

      • You didn’t notice in the article that it was Quebec that lost those jobs.They did exactly what you prescribe and it worked for the people? “Tax the rich feed the poor until the rich are no more.”

        • If cutting taxes to corporations produces jobs then we should be swimming in jobs here in Canada since we have some of the lowest corporate taxes in the OECD and low government debt. Everything that the supply siders claim will bring us strong growth. However: reality. We are still floundering. Wages are stagnant but corporate profits are high. “We can’t afford” (higher wages, unions, healthcare government programs) is the mantra for the little people but there is still no tax low enough for the corporations and the rich and no million dollar supercar or mansion or corporate HQ big and gold covered enough for the elites.

          The rich will still be rich with higher taxes and the corporations will still profit when their employees wages are higher and their payroll taxes lower. In fact, with more to spend they can buy more of their employers goods. It’s the most basic economics that you people have forgotten. You have been brainwashed.

          • I’m a farmer, a corporation. Brainwashed , hardly ! Marxism doesn’t work ,check your history.
            If you respond ,answer the question.Your premise has been tried. Think California, New York, Quebec, Ontario. These economies are in the toilet. Give me one place your idealism has worked? Where on this planet have the common folks got an even break ever?

          • First, Marxism is an interpretation of capitialism not an economic system. Calling me a marxist because I call for higher taxes on the wealthy and corporations is a prefect example of brainwashing. Instead of independent thinking, you react with a pre-set response your “masters” have programmed into you.

            Second, you can’t have competition for lower taxes as a government policy and expect it to work in an age of globalization. Stuff costs money. Businesses use infrastructure and services and should pay fairly for them. How did lower taxes become the only way to stimulate growth when it can be shown that there are many better ways to do it? What happens when taxes are so low that they no longer be used to stimulate the economy? Who will pay for the roads, courts, services and institutions we all need when corporations get their wish and pay no taxes? When all your economic arguments all boil down to lower taxes will fix everything have you not abandoned economics entirely for the idealism you accuse me of?

            Third, Sweden, Norway, Denmark, all have higher taxes and stronger economies than us as well as a very large union membership. Canada, USA, and most European countries all had higher taxes and stronger economies in the past. You need to stop listening to the useless so-called economists who comment in the media. They should have all been fired after the crash because they all got it so totally wrong. Go read Ha-Joon Chang’s ’32 things they don’t tell you about capitalism’

            I’m no communist, I’m a business person who does not believe in the trendy BS that is supply side neo-liberalism works for anyone but the ultra powerful and wealthy. I happen to be a caring human being who thinks that workers deserve higher pay for their contribution to wealth creation and a strong safety net and a good health care system. There are plenty of times and places where people got a fairer break than now. I know this can all be done and we can have a stronger economy but you won’t learn about those alternatives reading this magazine’s garbage.

  2. The recession has never really gone away. The new normal?

    • Yep. If you factor in inflation the depression never left. After inflation, Canada still is in a depression state. Even our currency is starting to decline in value to non-G8 countries of debt fraud.

      If it is like Argentina, Russia, Asia current crisis of decades ago, yep, takes 15-25 years to recover after you hit bottom and we haven’t hit bottom yet.

      This is for all intensive purposes the new economy, two steps down and one step up and repeat. As time goes by, government prints (electronic counterfeit no value money) for government debt, the lower standard of living will be on us.

      Any real recovery is going to have 1970s like stagflation. Or best case is a stagnant economy slowly depreciating in world share. Our worst case is we get more depression and inflation.

      It is the new normal, false starts with a further step down.

  3. BoC and Ottawa sell so many lies….and it is catching up with reality.

    Worker participate rates are also down. Household net after tax incomes not yet recovered to 2006 levels. New jobs often part time, temp and with lower average pay…..

    Not as good as Ottawa would like you to think. As July in Canada should be a good month as it is summer with summer jobs.

    But no one questions why governemtn can’t solve the economic problems, so well conditioned never to question governemtn waste, debt, bailout and deficits we ignore being critical of the most expensive item in our lives, the governments.

    But hey, while the people have less and the middle class shrinks, we do have bigger government than ever before. While we shrink, government grows.

  4. I thought the new “action” plan was for Canadians to all get rich selling real estate to one another at ever increasing prices whilst taking on ever increasing amounts of personal debt (backed by CMHC aka “the taxpayer”)

    Then, everyone was to simply take out bank loans against their ever-increasing home values and purchase necessities such as luxury cars, exotic trips, and high-end kitchen renovations.

    Bingo – everyone in Canada is rich and prosperous and happy!

    I’m surprised that no other western democracies dreamt up a plan like that!


  5. How many jobs are out sourced Harper , The NDP and Unions have never out sourced jobs , We want a Change

  6. hope the time will be change

    Job in Canada