Friday, February 09, 2007

Red-hot job market raises eyebrows


Globe and Mail Update

Canadian companies continue to hire workers at a surprisingly rapid pace, driven by strong labour demand in the country's westernmost provinces, Statistics Canada said Friday.

The latest jobs report, however, further illustrates the stark contrast between employment growth and Canadian economic growth, which has been stuck in the doldrums in recent months.

The Canadian economy added 88,900 jobs in January and for the second month in a row the labour market far exceeded forecasts. Economists had expected just 13,000 new jobs last month, after the economy added a revised 52,500 positions in December alone. The number of employed Canadians now sits at a record high, Statscan said.

“Jobs are on fire while GDP growth is on ice,” said Douglas Porter, deputy chief economist at the Bank of Montreal. Still, “the really good news for the Bank of Canada is that the economy is essentially at full employment and yet wage growth is if anything moderating.”

He doesn't expect the central bank to cut interest rates and sees the next move as a hike, some time next year.

The currency markets seemed to share that view Friday as the Canadian dollar sailed past 85 cents (U.S.) on the strength of jobs numbers and the reduced odds that interest rates will be cut.

Canadian companies have been hiring over the past year amid buoyant Western economies, a robust housing market and strong consumer spending. More evidence of that came Friday, with The Home Depot Canada saying it plans to add more than 7,000 part-time, seasonal and full-time people for its busy spring period.

But, despite the number of jobs added, January's jobless rate rose a notch to 6.2 per cent as more people looked for work, today's report showed.

Looking at the provinces, employment rose by about 32,000 in British Columbia and by 24,000 in Alberta, sending their employment rates to record highs in January, Statscan said. Manitoba and Saskatchewan also posted record employment rates.

January's growth was equally split between full-time and part-time positions.

Most job gains over the past year have been full-time, though in recent months that's shifting to part-time work.

Among industries, gains came mostly from four industries: information, culture and recreation; professional, scientific and technical services; accommodation and food services as well as natural resources.

The manufacturing sector, which has shed hundreds of thousands of jobs in recent years, was unchanged in January as weakness in Ontario was offset by gains in Alberta and Manitoba.

In January, the share of the working-age population who were employed across Canada hit a record 63.4 per cent.

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