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(Deborah Baic)
(Deborah Baic)

Job creation tepid in lacklustre economy Add to ...

Canadian employers have boosted payrolls in seven of eight months this year, but cracks are starting to show in the country's job creation.

The economy churned out 35,800 jobs last month, but the gains stemmed from a seasonal rebound in the hiring of teachers. Without the bump in education, the economy would have shed about 32,000 positions as the key private sector cut jobs for the second month in a row.

The jobless rate, meanwhile, ticked up to 8.1 per cent from 8 per cent as more job-seekers entered the work force.

The lacklustre employment picture in August followed employment losses in July, showing hiring has slowed sharply after an average monthly increase of 51,000 jobs in the first six months of the year. And fading government stimulus, a cooling housing market, tapped-out consumers and public sector cost-cutting suggest future hiring will remain muted, with the jobless rate likely to stick around the 8-per-cent mark, economists said.

"It's going to be a tough slog from a job creation perspective over the next three to six months," said Derek Burleton, deputy chief economist at Toronto-Dominion Bank. "It all fits into our view that despite the nice rebound in output and employment in the early stages of the recovery, it's going to be a very slow improvement in economic conditions."

Job growth isn't the only slowing part of the economy. The housing market is easing, while a report earlier this week showed weaker U.S. demand is denting Canadian exports. Economic growth is likely to stay around 2 per cent, Mr. Burleton said.

Canada's labour market may be softening, but it's a stark contrast to its U.S. neighbour, where the jobless rate is stuck near the 10-per-cent mark and it will take years to replace the millions of jobs that evaporated during the recession. In Canada, all of the losses have been recouped within four quarters.

Still, Canada's jobless rate is about two percentage points higher than it was two years ago, and more than 1.5 million people are out of work, Friday's Statistics Canada report showed. Conditions remains tough for many Canadians trying to find work. Manufacturing employment is now hovering near its lowest level in 34 years.

"I would characterize it as lumpy," said Jeff Aplin, chief operating officer of David Aplin Recruiting in Calgary. "In some areas, like the energy sector, we have a return to healthy hiring. But other areas are still lagging … employers are patient, picky and slow and don't want to rush into hiring."

Recent grads are having a particularly hard time as employers opt for more-experienced workers, he noted, and the numbers bear that out. The jobless rate among students this summer was 16.8 per cent, and the average number of hours worked was among the lowest on record.

Surveys on hiring intentions underscore how many companies are in a holding pattern. About 70 per cent of Canadian companies see no change in their head count in the coming months, according to separate surveys this week by employment services firm Manpower Canada and the Canadian Federation of Independent Business.

There are bright spots. Hiring is robust in Quebec and Saskatchewan while wages continue to post solid gains. Many companies are forging ahead with expansion plans. Warner Bros. Interactive Entertainment, for example, is hiring game developers in Montreal, while mortgage lender Home Capital Group has hired dozens of people for various roles and plans to add more by year's end.

A sustainable job recovery will require the private sector to "pull up their boot straps and jump on the hiring bandwagon to decrease the unemployment rate," IHS Global Insight economists Brian Bethune and Arlene Kish said in a report.

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