The Canadian economy adds a whopping 59K jobs in November

TD Economics

Data Release: The Canadian economy adds a whopping 59K jobs in November

The Canadian economy added 59,000 jobs in November, following a lackluster performance in October. The unemployment rate fell to 7.2%, a drop of 0.2 percentage points, to the lowest level seen since June.

Most of the gains seen in November were full-time positions (+55,000), as has been the case over the past 6 months. After falling in October, private sector (+48,200) bounced back strongly last month, while public sector and self-employed each added a modest 5,000 jobs.

The increases in November were fairly widespread, though the services-producing sector (+65,700) was the bright spot. Accommodation and food services (+28,300) recorded the largest increase, marking only the third month of job creation in the sector this year. The trade sector (+25,300) also recorded outsized gains in November, the fifth increase in 7 months. Professional, scientific and technical services (+22,800) also rose for a fourth consecutive month, making up for some of the losses seen during the first half of the year. Declines in manufacturing (-20,000) and construction (-8,400) led to an overall decline in the goods-producing sector (-6,200).

Regionally, employment growth was strongest in central Canada, with Ontario (+32,000) and Quebec (+18,000) posting the largest increases. Alberta (+10,000), and Manitoba (5,500) also increased hiring, while all other provinces saw little change.

Hours worked bounced back 0.2% following a decline of 0.3% in October - the trend has been fairly flat over the past 6 months.

Key Implications

The strong gains in employment seen in November are not likely sustainable given the current sub-par economic growth environment. Last month's tally brings the 6-month moving average to 21,700 jobs - which is on the high side for an economy growing at around 1%. As such, it appears as though productivity will be weak in Q4, extending the downward trend seen over the last two quarters.

Looking ahead, the job market will be facing several headwinds. The public sector is dealing with spending constraints which is likely to limit hiring prospects, while the private sector will continue to be faced with a slower growing economy. Add to that that persistent uncertainty surrounding global economic growth and the ability of policymakers in the U.S. to address their fiscal challenges, and businesses will not likely be rushing to ramp up their workforce.

Once the external environment does improve - likely by mid-2013 - related sectors such, as manufacturing, will likely respond with increased employment.

Overall, we expect employment to be fairly steady next year, increasing by an average of about 15,000 jobs per month, with the unemployment rate holding fairly steady.

Dina Ignjatovic, Economist