The SARS virus knocked a hole in Canada's job market last month, but even without it, clear signs emerged that the sluggishness of the U.S. economy is finding an echo in the Canadian economy.
Almost 19,000 jobs disappeared in April, pushing the unemployment rate to 7.5 per cent from 7.3 per cent in March, Statistics Canada reported yesterday, but most of the changes appeared to have been the result of the outbreak of severe acute respiratory syndrome in the Toronto area.
Employment dropped 27,000 in Ontario alone -- meaning that 8,000 new jobs appeared in the rest of the country -- and most of the Ontario decline was packed into industries most affected by SARS.
The health sector dropped 14,000 jobs in April, while another 12,000 positions disappeared in the hotel and restaurant business. Statscan said Toronto accounted for about half of Ontario's lost health care jobs, "but the entire provincial decline in the accommodation and food sector was concentrated among Toronto's restaurant workers."
SARS alone, however, was not the whole story. Derek Holt, assistant chief economist at Royal Bank of Canada, noted that the April job losses "were fairly widespread with 11 of 16 industrial sectors witnessing declines in employment across a whole range of businesses. It is impossible to blame all of this weakness on SARS and the disruptive effects of workers forced to stay at home."
Manufacturing employment fell for the sixth time in the past eight months, shedding another 7,500 jobs in April to bring overall losses since September to 61,000.
"The soft U.S. economy is already taking its toll on Canada's manufacturing sector," said economist Stéfane Marion of National Bank Financial. "This development, combined with the sharp appreciation of the loonie since the start of the year, will pose a significant challenge to Canadian exporters. The outlook for the U.S. economy will be the dominant factor in the performance of Canada's job market."
Employment fell in New Brunswick, Newfoundland and British Columbia as well as Ontario.
Economist Marc Lévesque of Toronto-Dominion Bank said the new figures leave "no doubt that Canada's job market is now on a much more moderate growth path than last year's breathtaking pace."
However, he noted that there were some bright spots in April: An additional 11,000 full-time jobs were created while almost 30,000 part-time jobs disappeared. So far this year, the economy has generated 95,000 full-time jobs, while part-time employment has fallen by 47,000 positions.
Robert Spector, head Canadian economist at Merrill Lynch Canada Inc., took a gloomier view.
"If these full-time jobs were so good, why exactly is wage growth (as measured by average hourly earnings for permanent workers) running at a five-year low of 1.3 per cent year over year and is actually negative in real terms [after]adjusting for core inflation of 2.9 per cent?"
There was other evidence of the SARS impact on the Toronto economy during April.
Moneris Solutions Corp., which processes debit and credit card transactions, reported a sharp drop in the dollar volume of transactions from March in a number of sectors in the Toronto area.
Declines ranged from 4.4 per cent for retailers, to 10 per cent for restaurants and tourist attractions and 16.1 per cent for hotels. Grocery stores, however, saw a 9.9-per-cent increase.
Economist Dale Orr of Global Insight (Canada) Ltd. said the new jobs data support the view that SARS is not "a significant economic issue for Canada outside Toronto."
Although it might cost Canada "several hundred million dollars," mainly in the tourism, business travel and convention business, Toronto will absorb about 90 per cent of the hit.
The cost to Canada of the rising Canadian dollar will be of about the same magnitude, he added, but its effects will be felt across the country, roughly in proportion to each region's share of national output.
Toronto is usually reckoned to account for about 20 per cent of Canadian gross domestic product.