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The Globe and Mail

Canada's job market makes gains in September

Job seekers speak with personnel at the Service Canada kiosk during the 19th edition of the National Job Fair and Training Expo at the Metro Toronto Convention Centre on Tuesday, September 27, 2011.

The Globe and Mail

Canada's jobs market is still holding up in the face of global turmoil, though there are signs that fading confidence and seesawing markets are making companies cautious.

The economy churned out 60,900 jobs in September, far more than expected, pushing the unemployment rate down to 7.1 per cent, the lowest since December, 2008. But much of the increase in the number of jobs came from a seasonal bounce in the education sector, while private sector employment fell for the second-consecutive month and self-employment rose. Manufacturers and financial firms also shed jobs.

Still, Canada's performance stands in stark contrast to that of the United States, where the jobless rate is at 9.1 per cent despite an increase of more than 100,000 jobs last month.

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Economists believe the jobs market appears solid, though the pace of hiring is expected to slow. Some companies are taking steps in this volatile environment.

Bioniche Life Sciences Inc., for example, had been in expansion and hiring mode until recently. Now, the bio-pharmaceutical company is asking departments to trim budgets by 5 per cent and has implemented a hiring freeze.

"We're just watching every penny, and we have an open relationship with all employees about that," said Graeme McRae, chairman, president and chief executive officer of the Belleville, Ont.-based company, adding that its focus is on boosting sales rather than adding to its head count.

Even without the seasonal quirks in educational hiring, the labour market looks "healthy, and that suggests that the economy is likely to grow over the third quarter" rather than fall into recession, said Shahrzad Mobasher Fard, economist at Toronto-Dominion Bank.

She sees the pace of hiring tempering to a monthly average 5,000 to 10,000 for the rest of this year. That modest pace won't be enough to prevent the jobless rate from ticking higher to about 7.5 per cent by year's end.

The public sector and self-employment accounted for last month's gains, which outweighed the drop in the private sector.

The country's labour market has had a solid run this year. Employers have added 294,000 positions in the first nine months, led by full-time growth, according to Statistics Canada.

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September's increase came in large part from educational services, which rose by 38,000 and tends to see large swings at this time of year.

Other industries added jobs, too. Employment in professional, scientific and technical services rose by 36,000, extending a streak that began in the summer of 2009. Accommodation and food services added positions, as did natural resources and public administration.

Elsewhere, employment fell. The finance, insurance, real-estate and leasing sector shed 35,000 jobs last month. The financial services job losses are coming half from real estate and half from what is traditionally thought of as finance, but since real estate is a smaller industry in Canada, the impact of the losses there is more significant, said CIBC economist Benjamin Tal.

"The decline in jobs in real estate is really the story," he said. "We have to remember though that these two categories were rising very quickly until two months ago, so this is a little bit of a correction. But also there are clear signals that the housing market is levelling off, so I would not be surprised if we see the real estate market contributing to some softness in the financial industry as a whole."

Real estate jobs are sensitive to market fluctuations, he added. "Whenever there is a slowdown we see it immediately in jobs. So I'm not surprised to see it slowing down, and I think that will continue over the next six months or so because I do see the real estate market levelling off."

Some companies are forging ahead with expansion plans because they still see demand for their products. Wolf Steel Ltd., which makes Napoleon barbecues and fireplaces, is branching into the production of high-efficiency furnaces. Its expanded facility in Barrie, Ont., will create 200 direct and indirect jobs in the next five years.

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"We're strong in what we're doing now, and have a lot of plans for growth," said Steve Schroeter, senior vice-president.

The youth unemployment rate remained at 14 per cent, the highest of any demographic group.

With files from Tara Perkins

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