Labour Force Survey Analysis –  December 2016

Labour markets end 2016 on a high note

Canadian Labour Market

December
After a poor November, the Canadian labour market ended 2016 on a high note, posting one of its best months in recent memory. In total, 53,700 net new jobs were added last month - a number surpassed only a handful of times in the last five years. This increase was not enough to move the unemployment rate down. The national jobless rate actually climbed one basis point to reach 6.9 per cent to end the year.

Employment in Canada

This marks the second consecutive month that the unemployment rate has moved in a seemingly counterintuitive direction. November was a weak month for job creation in Canada but the unemployment rate nevertheless fell to 6.8 per cent from 7.0 per cent in October because a large number of Canadians gave up looking for work, driving labour force participation lower. In December, many of those job seekers returned, driving up the number of Canadians identified as unemployed. This is a case where movements in the unemployment rate paint a misleading picture of overall labour market performance.

Adding to the good news, December's employment gains were driven entirely by growth in the number of full-time jobs. In total, there were 81,300 full-time positions created across the country last month, partially offset by a loss of 27,600 part-time jobs. However, this represents an aberration compared to the general trend in 2016. For the year as a whole, the number of full-time positions in Canada grew by only 0.4 per cent, while there was a 2.2 per cent increase in the number of part-time jobs.

full-time job growth

While most provinces saw better jobs numbers in December, employment growth was once again heavily concentrated in Quebec. That province has been a labour market juggernaut (relatively speaking) in recent months. It has added 92,300 positions since July, including 20,400 new jobs in December. BC also posted strong jobs numbers, adding 17,000 positions in December, helping to erase the memory of a poor month in November. Ontario (9,100 net new jobs) and Alberta (6,900 net new jobs) also ended the year on a high note.

Total employment growth - Dec

Saskatchewan and Newfoundland and Labrador were the only provinces to see employment fall in December. In Saskatchewan, the drop was relatively inconsequential, but on the East Coast, December continued a worrying trend that has seen employment on the Rock decline in six of the past seven months.

At the industry level, most job gains December were in the services sector. Notably, there were 28,100 jobs created in professional, scientific and technical services industries, as well as 13,900 positions in health care and social services. There was also a jump in wholesale and retail trade jobs during the Christmas season and, on the goods side, an uptick in construction activity.

export growth by product type

2016 Year-End
The release of December's job numbers also means that year-end labour market data are also available. A strong ending notwithstanding, 2016 was, overall, another poor year for job creation in Canada. Overall employment rose by just 0.8 per cent, marking the third consecutive year of sub-one-per cent growth. Making matters worse, as noted above, most of the new jobs that were created last year were in part-time positions. You would have to go all the way back to 1990-1993 to find a worse period for job growth in Canada.

In spite of poor employment numbers, the unemployment rate rose only modestly in 2016 - increasing from 6.9 per cent in 2015 to 7.0 per cent last year. While the jobless rate currently sits far below its historical highs (and its level in the early 1990s), other indicators signal trouble ahead.

The unemployment rate has held steady in recent years not because the economy is growing, but because more and more Canadians are hitting retirement age and exiting the labour market. The employment rate is, in many ways, a better indicator of labour market health. It is simply a measure of the share of working-age Canadians that have a job. At 61.1 per cent in 2016, the employment rate in Canada is at its lowest level in more than 15 years.

Provincially, Ontario and BC were the best places to live in 2016 if you were looking for work. Employment in BC rose by 3.0 per cent, while it was 1.1 per cent higher in Ontario. While Quebec also added more jobs in 2016, all seven remaining provinces saw employment fall last year. Leading the way was Alberta where there were more than 35,730 fewer jobs compared to 2015 (a 1.6 per cent decline).

Manufacturing Sector Labour Market


December
After falling in October and November, the manufacturing sector was able to regain some of those job losses to end the year on a positive note. Overall, manufacturers added 3,600 net new jobs last month. While this number is only a fraction of the 19,400 jobs lost in the previous two months, it does represent a positive sign for job seekers in the New Year.

mfg employment

Although the number of new jobs created in December was modest, there was a dramatic decline in the manufacturing unemployment rate, which fell to 4.4 per cent from 5.1 per cent in November. This decrease is the direct result of an ongoing decline in the number of Canadians who identify themselves as being part of the manufacturing labour force.

At the sub-national level, results in December were mixed. Half the provinces saw manufacturing employment increase while the rest saw it decline. On the positive side, job growth was led by Ontario and BC which added 2,800 and 2,100 net new manufacturing jobs, respectively. In the case of Ontario, those gains offset comparable job losses in November. In BC, manufacturing employment has been trending upward in recent months, but remains below its recent peak about two years ago. On the negative side, Alberta, Nova Scotia and Manitoba saw the largest decreases in manufacturing jobs in December.

Mfg employment - Dec

2016 Year-End
Manufacturing employment was not strong in 2016. Overall manufacturing employment fell by 0.9 per cent compared to 2015, dipping below 1.7 million employees for the first time in well over 40 years.

Mfg employment growth 2016

This decrease, which is part of a long-term trend in manufacturing, is the result of several contributing factors. These include lost manufacturing capacity in Canada, automation and changes in the nature of manufacturing production, an ageing population and relatively few entrants into the manufacturing workforce.
Dwarfing all of these last year, however, was the decline in energy sector investment, which had a devastating impact on manufacturing in Canada's oil- and gas-producing provinces. Overall, Canada lost about 15,100 manufacturing jobs last year, but in Alberta, where manufacturing is closely tied to oil and gas production, jobs losses totalled more than 24,000.

The silver lining here is that such heavy losses in Alberta suggest that manufacturers that are less directly tied to the energy sector did relatively well in 2016. On top of that, a modest recovery in energy prices gives reason to believe that the worst may finally be over for those manufacturers that serve the energy sector.

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