August 7, 2008

Pace of Canadian job creation likely to slow, economists warn

OTTAWA

With persisting U.S. economic weakness continuing to spill over the border, Canada’s once-stellar job creation record could be the next shoe to drop in the lurch to find the bottom of the ongoing economic malaise, analysts say.

The remainder of the year will see job creation stall in Canada and wages paid to workers moderate, say economists.

“It won’t be as easy for people looking for a job the rest of the year as it was a year ago,” says Bank of Nova Scotia senior economist Adrienne Warren.

The trend has been visible since the beginning of the year, when the economy and particularly job creation, appeared relatively sound.

The year began with the economy churning out a whopping 46,000 jobs in January. But it’s been steadily downhill ever since, culminating in June’s surprising 5,000 net job loss.

In fact, 39,200 net full- time jobs were shed in June, with Ontario bleeding 45,500 full-time workers.

Meanwhile, wage gains have moderated from a high of 4.9 per cent year-over-year in January to 4.4 per cent.

As bad as it appears, Canada’s pain is nowhere near the carnage seen in the United States, which has bled 463,000 jobs since the beginning of the year.

Still, economists say Canada is joining the United States — only less so — on the sidelines of job creation in the upcoming months.

Scotiabank has forecast that when Statistics Canada reports on July’s employment record on Friday, Canada will have shed another 5,000 jobs overall — and likely a higher number of full-time jobs.

That’s more pessimistic than the consensus, but even BMO’s Michael Gregory, whose bank is calling for a 10,000 job gain, agrees it could easily go the other way.

“The Canadian job market is weakening, that’s unequivocal,” he said. “And a lot of the layoff announcements you’ve seen, particularly in the manufacturing sector, have yet to come home to roost, and as they do you will start to see those job losses build.”

Canadian Press

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