Eh is not OK: Canada’s Jobs Begin to Unravel

By Christine HughesCanada. Chief Investment Strategist, OtterWood Capital:

Canada’s employment stats for February were not what most expected – there was a huge jump in full-time jobs. Most commentators tried to put a positive spin on this, but I have to disagree. Canada’s labour market is struggling and the outlook for the near future isn’t looking any better.

The chart below is what the Bank of Canada tracks as a measure of the broader health of the labour market. As you can see aggregate hours (the sum of all hours worked by full-time and part-time employees) have been flat over the past year.
What limited strength exists in the labour market comes from two unsustainable sources: construction and the public sector.
What’s worrisome is the impact of oil prices in Alberta. As per Macquarie, half of the gains in construction employment across Canada occurred in Alberta, a province where construction activity is likely to retreat. As you can see in 1986 in the months following the decline in oil, Alberta’s construction industry employment fell by 17%. A similar decline in coming months would mean nearly 50K in construction job losses in Alberta.
Employment in Alberta fell by 14,000 jobs in February, and the jobless rate jumped by the most since the 2009 recession.

The energy sector is already seeing laid-off workers turn to food banks. Ms. Reynar, executive director of Leduc & District Food Bank located about an hour south of Alberta’s capital, told the Globe and Mail that they were already seeing a jump in the number of people using the food bank.

“Probably 80 percent to 90 percent of the people we’re seeing have been laid off. Many of those seeking help have piled on debt while waiting for employment insurance to kick in,” she said, pointing to more financial pressure for households already struggling to make ends meet.“People have panicked,” she told the Globe and Mail, predicting another jump in usage as layoffs intensify. “We’re just at the beginning of it.” By Christine Hughes, OtterWood Capital Management.

Just when oil collapses, housing stumbles, and layoffs begin, Canadian households go on another borrowing binge. Read…  Household Debt Soars in Canada, “Stability” at Risk

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  7 comments for “Eh is not OK: Canada’s Jobs Begin to Unravel

  1. mick
    Mar 16, 2015 at 5:31 pm

    Also, statscan is reporting a very high % of new “business owners,” which are classified as full time. In reality, they’re just laid off workers who are embarrassed to say so, thus they call themselves “self employed.”

    As usual, reality is much worse than govt data reports.

  2. Paramount Roman
    Mar 16, 2015 at 10:28 pm

    All these public sector jobs are virtual taxation without representation positions. As the vast majority are bureaucratic, pencil pushing, red tape, parasitic sucking jobs acting as direct theft to those who actually provide true income for society. The governments have even gone into more debt and borrowing just to pay these wages and thus extract more from those actually providing true capital. And some economists actually call for more of these tax recycling jobs.

    • Night-train
      Mar 17, 2015 at 3:40 am

      “The vast majority of these jobs” seems to be an exaggeration. The balance of public sector to private sector jobs is certainly imperfect, but both seem to be necessary for a civilized society. I recently spent an unhappy three months trying to satisfy a “proof of insurance demand” from a mortgage holder for a small loan on a piece of property. After the note was taken out, the 911 system had changed the address of the property making the address on the original documentation incompatible with that of the property insurance. Three months of useless telephone calls, passing me off from one to the next with not one able to tell me what would be satisfactory documentation. A nice young lady in my town’s GIS Department and a nice lady in the Tax Collector’s Office took about 30 minutes to arrive at a workable solution to my problem. Mark up one for the public sector workers in this instance. It is also nice to have police, fire departments, teachers, public sanitation and other services paid for by the tax payers, which includes the taxes paid by the public sector workers as well. We are not islands unto ourselves.

      • JonLaughing
        Mar 17, 2015 at 10:05 am

        LOL What? Is there actually one other person in the world that thinks there might be some value from the government? Thank goodness I was sitting down when I read the comment. I wouldn’t want to have keeled over and ended up in a private hospital! I always ask those who dislike governments and think that they are total parasites on the produtive sector to think about moving to Somalia, Chad, Burkino or similar, since there are no taxes to pay! Somehow they never take up my suggestion.

  3. Julian the Apostate
    Mar 17, 2015 at 5:18 pm

    Night-train, you yourself pointed out how much deadwood you had to kick your way through to find the two nice ladies. Alas your view of public servants are behind the times. The cops in general are bashed by the media and in the US by the Justice Dept. The military ditto. The schools have become indoctrination centers and social services hooks as many people on the opiate of dependency as possible. After the Rodney King riots in LA I saw people lining up on the first of the month in front of a slab that used to be a welfare office. No man is an island has always hacked me off. EVERY MAN IS AN ISLAND. In a moral government we can build bridges to each other. But the function of collectivism is to isolate the individual and strip him of his normal support mechanisms, teach him fear; he dreads the 3AM knock at the door.

    • Night-train
      Mar 18, 2015 at 4:18 am

      Julian the Apostate,
      Perhaps my narrative wasn’t clear. The deadwood I encountered in my quest was with the mortgage and insurance companies. The two ladies working in my local government understood my problem quickly and solved it. Without them I would still be stuck in Limbo with a bunch of people who were adamant that I needed to provide them with specific information, but had no clue as to what it was or where it might be obtained. Sorry if I was unclear. I don’t recall making an argument for collectivism, nor do I advocate for that position. As to my view of public workers being behind the times, perhaps, but I don’t go in much for trends. I try to form my views based on experience. And since I am a small town guy, while you are obviously from a major city, it may be that our experiences with the public sector are very different. Sorry to hack you off, but still not an island.

  4. Joseph Savon
    Mar 17, 2015 at 8:40 pm

    1) Surely 1st chart shows not demand but rate-of-change of demand; formally d/dt{ln{demand}}
    2) Endless growth in Construction may be unsustainable, but surely non-housing construction results in commercial workplaces housing new jobs?
    3) Red line in third chart shows no indication of following behaviour of blue. indeed, it seems to show an instantaneous small dip & rapid recovery, unlike the lagging peak following the ’86 price max

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