Bloomberg News
OTTAWA — Canada’s unemployment rate unexpectedly rose from a five-year low last month on a drop in full-time work, taking it above the U.S. jobless measure for the first time since 2008.
Unemployment rose to 7.2 percent from 6.9 percent while employment fell by 45,900 in December, Statistics Canada said Friday in Ottawa. Economists surveyed by Bloomberg News projected a 14,100 job increase and an unchanged unemployment rate according to the median forecasts. U.S. unemployment fell to 6.7 percent from 7 percent.
The weaker job market, tepid exports and sluggish business investment are hampering economic growth. Bank of Canada Governor Stephen Poloz said in an interview last month that a rotation of demand from indebted consumers is taking longer than he expected and predicted the economy won’t reach full output for two years. The Canadian dollar dropped to a four-year low and bond yields plunged.
“It’s going to make the Bank of Canada cautious in our view,” Paul Ferley, assistant chief economist at Royal Bank of Canada, one of three economists who correctly predicted higher unemployment Friday, said by phone from Toronto. “It just argues for them to keep policy accommodative but not to go so far as to introduce further easing.”
After Friday’s report, traders were pricing in about 11 basis points of lower rates by the Bank of Canada’s December 2014 policy meeting, compared with 6.2 basis points yesterday and 3.1 basis points a month ago, according to Bloomberg calculations based on overnight index swaps.
Full-time employment declined by 60,000 workers in December, the most since October 2011, while part-time positions increased by 14,200.
The report caps a year of labor market weakness with 102,000 jobs created in 2013, a 0.6 percent increase that was the slowest since 2009, Statistics Canada said. Employment growth slowed from 1.8 percent in 2012.
The number of unemployed rose by 24,300 during the year, greater than the 19,200 annual increase in full-time work. For every full-time job created last year, four part-time jobs were added, the data show.
Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer by market value, said last month it will cut its global workforce by 18 percent amid weaker-than-expected demand in emerging markets. Canada’s postal service said Dec. 11 it will cut its workforce by as many as 8,000 over five years, or almost 12 percent, to reduce costs.
Natural resource companies fired 8,000 workers in December, Statistics Canada said, and education employment dropped by 18,500.
Private companies cut 26,300 workers and public-sector employment rose by 18,200 in December.
Workers designated by Statistics Canada as employees fell by 8,000, and the self-employed category dropped by 37,900.
The jobless rate in Ontario, the most populous province, jumped to 7.9 percent from 7.2 percent as employment fell by 39,300, Statistics Canada said.
The labor force participation rate remained at 66.4 percent, the lowest in more than a decade, for a fourth month in December.
Average hourly wages of permanent employees rose 2 percent in December from a year earlier, slower than the prior reading of 2.3 percent.
The share of Canadians who say their jobs are secure declined to 45.9 percent on Jan. 3 from 48.9 percent on Dec. 6, according to the Bloomberg Nanos Canadian Confidence Index.
Statistics Canada publishes an unemployment rate that it says is comparable to the U.S. rate; on that basis Canada’s unemployment was 5.8 percent in December. The gap of 0.9 percentage points has narrowed from 3.3 percentage points at the end of 2010.
