Job creation in Canada likely to remain moderate in next few quarters

Headline labor market indicators of Canada indicate towards a mixed performance so far in 2016. Reflecting a difficult economic environment, job creation in Canada has run at an ordinary average pace of 8000 net positions every month.

Still, the jobless rate continued to drop below 7 percent as certain Canadians left the labor market. In spite of subdued labor market participation, the jobs quality seems to have been improved, marked by a drop in the involuntary jobless rate, noted TD Economics in a research report.

In 2016, employment growth has been hugely focused on service industries, headed by the food and accommodation services that have gained from solid growth in visitors to Canada. However, the manufacturing sector has been challenging the trend. Net job losses in the manufacturing sector seem to be because of both weaker than anticipated growth in foreign demand and subdued demand from resource-oriented regions of Canada.

Job creation in Canada is expected to remain moderate at around 7,000 to 10,000 per month in the coming four to six quarters, despite prospects for a moderate recovery in economic activity, stated TD Economics. Manufacturing sector is likely to register positive job growth. Sound growth in employment is also projected for trade and healthcare. On the contrary, commodity-focused industries and agriculture are anticipated to underperform. But the drop in commodity related employment is expected to come to an end, added TD Economics.

Even if advances in job are likely to be widely distributed throughout several industries, they would not be distributed evenly throughout provinces. Most of the gains in employment are likely to be seen in Ontario, B.C. and Quebec. On the contrary, weaker growth in hiring is likely to be seen in Atlantic Provinces, whereas Alberta is expected to continue to post job losses through the rest of 2016 and into 2017.

“The unemployment rate is expected to rise slightly over the coming quarters, averaging 7.0 percent in 2017. Employment growth will likely be unable to keep pace with gains in the labour force as participation rates normalize,” noted TD Economics.