Stinky Jobs Report for February | Dr. Sherry Cooper
This article was written by DLC Chief Economist Dr. Sherry Cooper.
There was no good news in the data released this morning for Canadian employment in February. While economists were expecting a 5,000 jobs gain, employment edged downward (-2,300) as gains in part-time work were offset by losses in full-time–the opposite of what we would like to see. In addition, the unemployment rate notched up another tenth of a percentage point to 7.3%, its highest level in three years.
The only demographic group to enjoy an uptick in employment was men aged 55 and older. For everyone else, job growth was stagnant. On a regional basis, employment declines were posted in Saskatchewan, New Brunswick and Prince Edward Island. British Columbia, the strongest province in the country, recorded an increase and there was little change in the remaining provinces. Employment growth in BC has outpaced the national performance since mid-2015 (see chart below).
The jobless rate in Alberta continued to climb as layoffs in the energy sector have dragged on. The unemployment rate in that beleaguered province is now 7.9%, compared to 6.6% in BC and 6.8% in Ontario where housing markets continue to boom. In vivid contrast, housing markets in Alberta, Saskatchewan and Newfoundland have slowed with the cutback in the oil industry.
The construction industry has been one of the bright spots in the economy. There were 34,000 more people working in that sector in February, although year-over-year, the number of construction jobs was virtually unchanged. Manufacturing jobs were little changed last month, but employment in manufacturing increased by 2.4% over the past year, mostly in Ontario, Quebec and BC. The weaker Canadian dollar has made Canadian manufactured products more competitive, improving exports, primarily to the U.S.
In other news released this morning by Stats Canada, household net worth continued to rise in the fourth quarter of last year as the value of financial assets outpaced the rise in household debt. The ratio of household debt to disposable income rose to 165.4% in the fourth quarter–up from 164.5% in Q3. The Bank of Canada has long been concerned about the rise in debt levels (chart below), the largest gains having occurred in BC, Alberta and Ontario as mortgage debt has risen sharply.
With interest rates likely to remain low for an extended period, more than 90% of households are in decent financial shape. The Bank of Canada estimates that roughly 8% of households have debt-to-income levels at or above 350 percent. These are generally younger households concentrated in Alberta, BC and Ontario. Highly indebted Albertans could be in trouble as unemployment has spiked in the wake of the oil shock. To date, however, mortgage delinquency rates remain very low in Alberta.
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