OTTAWA — Canada's labour market held up under pressure in April, but economists warn it is showing some cracks.
Employment rose a healthy 19,200 positions from a month earlier, Statistics Canada said, surpassing economists' expectations of 10,000 new jobs, and topping March's employment increase of 14,600 positions.
But because more people entered the work force during the month, the unemployment rate ticked up to 6.1 per cent, up from the 6.0 per cent seen in March, and the 5.8 per cent low mark seen in January.
Self-employment was particularly robust, climbing 18,300 positions. Public sector employment expanded by 9,100 jobs, while private-sector positions dropped by 8,300, Statscan said.
In April, the accommodation and food services industry led all sectors in job creation. Here, executive chef Warren Geraghty makes squash and rosemary ravioli at West restaurant in Vancouver. (Laura Leyshon for The Globe and Mail)
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That's where economists see the cracks of slower growth starting to penetrate the seemingly invincible job creation machine in Canada.
The Canadian economy likely won't be able to sustain this type of job creation, warned economists at Bank of Nova Scotia.
“Going forward, the public sector will find it tougher to pile on such largesse as revenue pressures mount in a softening economy,” they said in a note to clients. “At the same time, supply chain relationships with the U.S. economy carried private employment weakness north of the border.”
The predominance of self-employment in April's job creation numbers is worrisome, added Erin Weir, economist with the United Steelworkers union.
“One must ask whether Canadians are becoming self-employed voluntarily or because they cannot find positions paid by an employer,” he said.
In April, the accommodation and food services industry led job creation with 22,200 new positions, and construction jobs rose as well, up 16,200 jobs, despite signs of slowing in the housing sector. Over the past year, construction has been the biggest job creator in Canada, adding 113,000 workers.
Financial services jobs rebounded in April after showing little growth over the past few months. Some economists had fretted that the stagnation of job growth in the sector was a sign that the global credit crunch was taking a toll.
Manufacturing, however, declined again in April, down almost 15,000, led by losses in Ontario and British Columbia, Statscan said. About 112,000 factory positions have disappeared in the past year, as the sector deals with a strong currency, rising energy costs, stiff global competition, and now, recessionary conditions in the United States.
The new jobs were spread across the country, with modest increases in most regions. Manitoba saw strong growth in April, but Quebec employment dropped by about 20,000 positions. It's the first significant decline in about two years for that province, Statscan said, and pushes the provincial unemployment rate up to 7.6 per cent, compared to March's 7.3 per cent.
Ontario defied the odds stacked against it, and saw employment rise by 12,000 positions, with work mainly going to young people. Ontario's employment has risen by 2.2 per cent over the past year, slightly above the national average of 2.1 per cent. Even though manufacturing employment in the province has declined, construction and services jobs have offset those losses, Statscan said.
Still, Ontario's unemployment rate remains stubbornly above the national rate, at 6.3 per cent in April.
As for pay, average hourly wages rose 4.3 per cent in April, compared to a year earlier – a pace significantly above inflation, but not as high as earlier this year. The wage growth has been concentrated in provinces focused on natural resources: Newfoundland and Labrador, Saskatchewan and Alberta.
By demographic, women over 25 dominated employment growth in April, Statscan said. About 17,000 new positions went to that group, keeping the unemployment rate at 4.7 per cent – well below the 5.2 per cent rate for adult men. However, employment for adult women has been growing more slowly than for adult men over the past year. Employment levels for the entire working age population are hovering near a record high, Statscan said, and the economy has created 348,000 additional jobs over the past 12 months.
The pace of job creation in Canada has confounded analysts, who can't quite figure out how the U.S. economy can be slowing, manufacturing and exports in Canada are suffering, Canadian output has slowed considerably, and yet employers keep hiring as if nothing has happened.
In the United States, employment in construction and financial services has declined, but that has not been the case in Canada, Statscan said. Both countries have seen their manufacturing work force decline.
“While the latest climb in Canadian employment sports the odd blemish – a higher jobless rate, weakness in private sector jobs – the main point is that job growth continues to churn ahead even in the face of a U.S. recessionette,” said Doug Porter, deputy chief economist at BMO Nesbitt Burns.
He noted that the pace of job creation has slowed down in Canada, but is still much stronger than in the United States.
“The Canadian results are consistent with slower growth, but are still a long, long way from anything close to a serious downturn,” he said in a note to clients.
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