The labor market in Canada most probably returned to normal figures in January after job gains in the last months of 2012, while the experts were not forecasting an increase in employment, but rather a higher unemployment rate. Reuters surveyed a group of companies on whether they’ll post new jobs on the market – the results pointed out to positive figures, however very low, a gain of only 5,000 jobs in January. There was a gain of 31,200 jobs in the previous month.
According to Statistics Canada, this is a flat job market. Most experts predict an increase in unemployment rate to 7.2 percent from the current rate of 7.1 percent. This ends a previous four-month period of unexpectedly high job growth, a surprising trend for the economists as the economy didn’t show any signs of improving.
“The Canadian economy may be reaching a point where these lofty job numbers might downshift into something more moderate, and even the possibility of outright decline is a risk,” reads a comment by Jonathan Basile from the international financial services group Credit Suisse in New York.
The Canadian economy made progresses since the 2008 economic downturn however the expansion of the economy was lower than expected. As a result, Bank of Canada, the Canadian central bank postponed raising the overnight interest rate. Economic analysts consider that the job gain figures will continue to slow down in the first few months of 2013.
This opinion is shared by Arlene Kish, an economist at IHS Global Insight: “We expect some kind of payback in January. A decline is likely in part-time work as temporary holiday hiring came to an end.”
In case this projection is correct, there will be a 30,800 job growth in the last three months ended January 31, below the 33,100 gains in the 4th quarter. Ivey Purchasing Managers Index (IPMI), which measures month to month changes in purchases, also showed an employment downturn in December. On the other hand, Bank of Canada’s study states that a smaller number of companies announced labor shortages for the 4th quarter than in the previous quarter.
The real estate market is another reason for the low employment numbers as there are fewer construction jobs due to a lower demand in new housing.
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