Jobless rate drops, but concern remains

(Jean-Sébastien Marier/Graph News)

Unemployment dropped from 8.7 to 8.4 per cent as 30,600 more Canadians ended September with jobs, according to the Labour Force Survey, released by Statistics Canada on Friday morning. Good news, but economists are quick to explain why the numbers are not as encouraging as they first appear.

The boost of 30,600 jobs came as a pleasant surprise, since the consensus of Canadian banks had predicted the number would be closer to 5,000.

HSBC pointed to 46,200 new jobs in construction and manufacturing as a clue that Canada’s economy may be recovering.

However, HSBC had expected more Canadians to begin searching for jobs in September, which would have increased unemployment to 8.9% even with more people working.

Instead, the number of Canadians either working or job-hunting dropped by 24,500, which is one reason the unemployment rate decreased.

Sylvain Schetagne, an economist for the Canadian Labour Congress, which advocates on behalf of over three million unionized Canadians, suggested a celebratory night out should wait.

“Half of the decrease in the unemployment rate is actually explained by Canadians leaving the labour market,” he said.

“It sounds like good news, but underneath the surface it’s not as good news as we would expect.”

In September, many Canadians joined the public sector (36,400) and became self-employed (11,300), while the number of Canadians in the private sector dropped by 17,100.

Women aged 25 and above gained 41,300 jobs, while similarly-aged men lost 14,900.

The gender disparity is not alarming, according to Danielle Zietsma, a Statistics Canada economist, who mentioned Friday that women’s general resilience to recessions has been demonstrated in earlier downturns and that the public sector tends to employ more women than men.

However, Schetagne warns that the job market shift in women’s favour is not particularly encouraging for the Canadian economy, partly because men are generally paid higher wages.

“Last month, there were no jobs created in the private sector and no jobs created for men above 25 years old, which is not a good sign because these are the kind of jobs that pay taxes to fund the public sector and help others to get jobs, in the retail sector, for instance.”

HSBC economist Stewart Hall indicated that the results, while positive, should not be taken to suggest a full economic recovery is beginning.

“This is not your typical, V-shaped recovery,” he said. “It is more likely to look saw-toothed in nature. Indeed, we may have to steel ourselves for an uncomfortable, jobless recovery or the prospect of further job losses going forward.”

Statistics Canada points out that Canada’s job gain does not indicate a trend, even though September’s 30,600-job boost follows August’s 27,100.

According to Statistics Canada’s Zietsma, “it’s not a trend until you’ve got three months, and even then you need to be cautiously optimistic.”

Despite general worries, Hall expects the job growth to boost consumer confidence, which could lead to higher spending and a more stable economy.

The loonie jumped from 95.04 cents to 95.62 Friday morning after the Statistics Canada numbers were released.

Also, Hall says Friday’s news may encourage Canadians who left the job market to begin searching anew. While not necessarily a bad thing, an influx of job seekers could drive the unemployment rate upwards.

As Prime Minister Stephen Harper said in a televised broadcast Friday, “we are not out of the woods yet.”