Canada jobless rate dips to 7 per cent as volatile labour market picks up

Canada’s unemployment rate dropped to 7 per cent from 7.2 per cent last month as more full-time positions were added across the country and easing concerns that the economic picture is worsening.

Statistics Canada said Friday that employment grew by 29,000, beating expectations that the equivalent of 20,000 new positions would be added.

“Canada woke up from its early winter slumber and got back to work in January,” CIBC economist Avery Shenfeld said in a note on Friday.

He said the January figures include an increase of about 50,000 full-time jobs, “helping ease the pain of a loss of 44,00o jobs in December.” The number of part-time jobs also fell.

Still, the jump in overall jobs, after a loss of 46,000 positions in December, underscores the volatility of employment data in Canada.

Earlier this week, the Globe and Mail cited a Department of Finance analysis showing the volatility of monthly job numbers is “well above” the historical average.

“With the dip in December, employment still doesn’t look to be on a great trend, but the rebound will alleviate concerns that things were getting much worse,” Shenfeld said.

Even with the January jobs increase, BMO Capital Markets economist Doug Porter says the trend in Canadian employment remains on the “ distinctly sluggish side,” with the 12-month trend running at a modest increase of 12,000.

He notes the 7-per-cent unemployment rates is unchanged from three months earlier and a year ago.

“In other words, the underlying trend in job growth is just firm enough to keep up with labour force population growth—no better, no worse,” Porter says.

United Steelworkers economist Erin Weir doesn’t see much to celebrate in the numbers either, pointing out that 28,000 of the new jobs created were people reporting they are self-employed.

“While self-employment includes some high-income professionals and entrepreneurs, the jump in self-employment in the context of a poor job market suggests that many Canadians are trying to eke out income through contract work because employers are not offering paid positions,” Weir says.

"The other troubling trend is that 21,000 Canadians dropped out of the labour force altogether in January. While their departure reduced the official unemployment count, it reflects a lack of job opportunities rather than an improvement.”

January employment increased in transportation and warehousing, but fell in business, building and other support services as well as public administration, StatsCan data shows. The number of self-employed workers rose in January.

“However, compared with 12 months earlier, all the employment gains were among private sector employees, as there was little change in self-employment and public sector employment,” according to today’s release.

StatsCan said employment increased in Prince Edward Island, fell in New Brunswick and was stable in most other provinces.

It said more men aged 25 and over working last month, while employment was mostly unchanged among women and youths.

Canada’s beat came after a miss in the U.S., where 133,000 jobs were created, lower than the 180,000 expected.

That caused a surge in Canadian dollar in early trading on Friday to just under 91 cents.

The unemployment rate in the U.S. is 6.6 per cent, below Canada’s for the second-straight month. It’s the first time in five years that the unemployment rate in America is lower than in Canada.

Economists say the lower jobless rate in the U.S. is due in large part to a number of people giving up the job search or heading into retirement.