Canadian economy sheds 39,400 jobs in July, unemployment rate rises to 7.2 per cent

OTTAWA – Canada’s labour market continued to exhibit signs of weakness last month as the economy shed a surprisingly high 39,400 net jobs nationally, with public sector workers and youth taking on the biggest share of the losses.

Regionally, six provinces sustained a net drop in employment, with the biggest in Quebec where 30,400 jobs were lost. Alberta had the largest gain with an increase of 16,600 jobs.

It was the second consecutive month that Canada’s economy lost jobs and lifted the official unemployment rate to 7.2 per cent, one-tenth of a point higher than in June.

The setback, which followed by a much smaller retreat in May, also all but wipes any hopes that April’s unusual surge of 95,000 added jobs might have been signalling a upward trend for the Canadian economy.

Economists had expected a modest pick-up of 10,000 jobs in July, but the Conference Board’s help-wanted index released last week proved more prescient in pointing to a setback.

Statistics Canada said with the latest result, employment growth has averaged a meagre 11,000 a month during the first half of 2013, far less than the 27,000 average gain realized during the second half of 2012.

Analysts say the economy needs to create between 15,000 and 20,000 new jobs each month just to keep up with population growth.

The tally for the past year is more impressive with 226,000 new jobs created, but the government agency noted that part-time work rose at twice the speed of full-time.

The Bank of Canada, and the vast majority of economists, have anticipated slow economic growth during the second quarter of this year, which ended in June, with the economy expected to kick into a higher gear in the third quarter. July’s jobs report suggests the rebound may be a little longer off, however.

If there was good news in the report it’s that the losses were disproportionately bunched in the public service, which shed a whopping 74,000 workers in July, with big declines in health care, social assistance and in public administration.

Private employers actually added 31,400 jobs during the month.

Young Canadians also bore the biggest burden of the losses, as workers in the 15-24 age group saw their numbers diminish by 45,600. The agency said among returning students aged 20-24 years, the employment rate was 69.7 per cent in July, a similar level to last year. The 16.8 per cent unemployment rate was also similar to what was observed in July 2012.

“The labour market for students aged 15 and 16 remained difficult in July 2013,” the agency added. “Their employment rate was 28.6 per cent, the lowest since 1977, when data became available. The unemployment rate for these students was 30.0 per cent.”

Employment in the information, culture and recreation sector also sustained a big loss of about 21,000, taking the industry 4.2 per cent lower over the past year. While business, building and other support services added about 29,000 jobs.

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