Canada’s economy created a net 200 jobs in July, far fewer than analysts had expected, in a further sign of how employment growth has stalled, Statistics Canada data indicated on Friday.
Analysts had forecast a gain of 20,000 jobs after the loss of 9,400 positions in June.
The unemployment rate dipped to 7.0% from 7.1% as fewer people looked for work.
CAMILLA SUTTON, CHIEF CURRENCY STRATEGIST AT SCOTIABANK:
“There was a shocking drop in full-time jobs, down almost 60,000. We did see a drop in the unemployment rate, however, that drop only came on the back of the participation rate, so it’s not encouraging at all.
“Overall, it goes in line with what we’ve seen seasonally in the July report, which is that it tends to miss expectations over and over again.
“All in all, it highlights a very disappointing pace of job gains in Canada.”
NICK EXARHOS, ECONOMIST AT CIBC ECONOMICS:
“Even if growth looks to be accelerating, the labour market is still stuck in neutral.
“What you see is what you get in Canadian labour market—a whole lot of nothing. Though the economy looks to be in good health, and there are signs that the Bank of Canada’s desired rotation to exports and business investment may be in the early stages of being realized, none of that strength is being translated into jobs. Absent progress there, don’t expected the Bank to be too keen on shifting from its neutral policy stance.”
ROBERT KAVCIC, SENIOR ECONOMIST AND VICE-PRESIDENT AT BMO:
“The jobless rate was down a tick but we are now seeing the lowest participation rate in 13 years, so that’s another indication that things are a little bit worse below the surface.
“I think this keeps the Bank of Canada on the sidelines for now, even though growth is looking quite a bit stronger in the second-quarter. There is really no job growth anywhere outside of Alberta right now. I don’t think this has any impact on changing the bank’s tone or its outlook for policy, if anything it probably keeps them right where they are.”
ARLENE KISH, SENIOR ECONOMIST AT IHS GLOBAL INSIGHT:
“Did Canada’s job market take off on vacation in July? We hope so. Otherwise, this could be a signal that Canada’s economy is not doing as well as expected. The change in fulltime positions and part-time positions is a hard pill to swallow. In fact, on a year-to-date basis, full-time employment is up only 0.4% y/y while part-time jobs are up 2.2% y/y. This is not an indication of a thriving economy.
“Job creation is not as strong as we had expected. Employment growth this year will probably give the worst performance since the recession, coming in below 1%. With stronger growing Canada and US economies expected next year, job growth should improve.”
PAUL FERLEY, ASSISTANT CHIEF ECONOMIST AT ROYAL BANK OF CANADA:
“Disappointing report, not only showing no gain in July, (but) follows weakness in June. We have a return to volatility in terms of the series so far this year.
“Certainly (the Bank of Canada) raised concerns about the weakness in labor markets and today’s report kind of reinforced those concerns, tempered a bit by the unemployment rate moving down, but a fair bit of weight is put on employment growth. It leaves them in a position where they remain on the sidelines holding rates where they are and continuing to monitor the data.”
PAUL ASHWORTH, CHIEF NORTH AMERICA ECONOMIST AT CAPITAL ECONOMICS:
“At first glance, the drop back in the unemployment rate to 7.0% last month, from 7.1%, looks encouraging. But closer inspection shows that decline was only because a further 35,400 discouraged job seekers gave up and left the labour force. As a result, the participation rate slumped from 66.1% in June to a 13-year low of 65.9% in July.
“We can’t help thinking that if the Bank of Canada had a dual inflation/employment mandate like the Fed, then it would now be seriously considering whether a cut in interest rates is needed.”
KRISHEN RANGASAMY, SENIOR ECONOMIST AT NATIONAL BANK FINANCIAL:
“The July report, while disappointing on the surface, was better in the details. The private sector created jobs, and paid employment recouped most of the prior month’s losses. The drop in full time employment is disappointing, although we’ll take that with a grain of salt given the apparent increase in hours worked in the same survey.
“Given how choppy the series has been this year, it’s best to look at the longer-term trend for a more reliable picture of the Canadian labour market. On a 12-month moving average basis, Canada is creating on average roughly 10K/month, mostly in the private sector, although all on a part-time basis.”
CHARLES ST-ARNAUD, ECONOMIST AT NOMURA GLOBAL ECONOMICS:
“Overall, the report is negative. It shows that job creation has stalled. Moreover, the continued decline in the participation rate over the past year suggests that the unemployed are losing confidence in the labour market. The stalled labour market suggests that consumer spending could weaken in coming quarters.”
RANDALL BARTLETT, SENIOR ECONOMIST AT TD ECONOMICS:
“No matter how you slice it, the labour market remained in the doldrums in July.
“All in all, today’s employment release was very discouraging, as the economy continued to shed full-time jobs and unemployed Canadians in the thousands decided to stop looking for work. Even in the sector that saw the largest gain, educational services, this looks to be partly related to seasonal-adjustment factors as opposed to actual jobs being created.
“This follows a string of lackluster employment reports for Canada, sending a clear signal that the labour market is stalling, in spite of the Canadian economy expanding in each of the first five months of 2014. Meanwhile, job gains south of the border continue to roar ahead.
“That said, we do expect employment to pick up over the second half of the year, based on an improving export sector. However, job gains will likely remain modest as the export sector tends to be more capital intensive than other sectors of the economy.”
ERIN WEIR, ECONOMIST AT UNITED STEELWORKERS:
“To misquote Gordon Lightfoot, Canada’s job market took a black eye in July.
“Statistics Canada reported today a loss of 60,000 full-time jobs in July, which more than wiped out all previous gains in full-time employment over the past year. Fewer Canadians have full-time work today than in July 2013. July’s withdrawal from the job market pulled the participation rate down to 65.9% – the first time since 2001 it has fallen below 66%.
“These dismal employment numbers should refocus public policy on creating jobs. Investment in needed public services and infrastructure should take precedence over austerity.”