Canada’s slow climb out of a recession appears to be doing little to foster growth in the domestic job market so far.
Statistics Canada said Thursday the number of non-farm jobs in the country fell by 0.8 per cent in August from July, when it registered an increase. The results were pulled down by a drop in educational services jobs, though a lower hirings were seen in many different sectors.
The agency reported that more than 70 per cent of industries surveyed posted losses, the largest number since last January. Other recent reports also question whether Canada’s economy is poised for recovery this quarter.
RBC chief economist Craig Wright said that the data doesn’t necessarily stray from the expectations of a typical post-recession pickup.
“If you look historically, virtually every recovery is a jobless recovery in some sense,” he said.
“What you tend to see is that the growth in the economy often takes hold before we see an improving trend in the overall labour market.”
Wright said part of the reason is that businesses approach economic recoveries with extreme caution and tightened spending habits, which typically includes delaying the hire of new employees.
However, a study from the Canadian Centre for Policy Alternatives suggests there’s still more pessimism in the economic recovery. The group says that Canada is actually still in a recession, while any expectations of a quick rebound in the private sector are unfounded.
“Public investment has been essential to stabilizing Canada’s economy — it is the only engine of economic growth right now,” said Jim Stanford in a release on the study.
Stanford is chief economist with the Canadian Auto Workers union, which has seen the auto sector battered by the recession, with the loss of thousands of jobs and near-collapse of General Motors and Chrysler. The two companies were saved with billions of dollars in loans from the U.S., Canadian and Ontario governments.
Government aid has played a major role in pulling the economy away from the depths of its low. The Harper government’s multibillion-dollar stimulus plan has delivered jobs to hard-hit areas of the country, but many of them are temporary.
There are signs that some businesses are starting to feel better about the growth of their own operations in the coming quarters, according to the Ontario Trucking Association.
A survey from the industry advocate shows that 71 per cent of trucking companies in the province who responded believe the Canadian economy has hit bottom. The poll, which was taken during the first three weeks of the fourth quarter, marked an increase from 52 per cent in the third quarter.
The survey also showed that 53 per cent of trucking firms believed the U.S. still hasn’t reached it bottom.
Data from south of the border provides a foggy outlook for where the U.S. economy is headed.
During the third quarter, the American economy delivered its best growth in two years, climbing 3.5 per cent, but the momentum was drawn primarily from government subsidies. Consumers spent money on cars and homes with the help of an $8,000 tax credit for first-time home buyers, and a rebate of up to $4,500 to buy new cars.
It remains to be seen whether the U.S. economy will continue to draw growth once the government pulls back on its current financial support system.
Rising unemployment numbers and the tough loan market for both consumers and businesses is adding extra pessimism to the pace of the recovery. The question also remains on whether the U.S. could mount an overall economic recovery without a coincidental improvement in employment.
CIBC economist Avery Shenfeld said the prospect for the U.S. sustaining a jobless recovery is limited.
“We’ll need more jobs to power our consumption growth,” he said.
“If we’re going to have the private sector take over demand at some point we’ll need to have job creation to back that up.”