2015 is off to a weak start in Canada: both manufacturing and retail sales fell 1.7% in January while exports fell 2.8%–so far a much weaker loonie is not having the boosting effect that bulls had forecast.
The Bank of Canada had projected annualized growth of 1.5% in the first quarter, but with one week to go, that target is looking overly optimistic again. Q1 growth is setting up to be flat to negative. And job losses for Canada’s highly indebted consumers, are only just started. Plunging revenues are spreading from the energy patch to the other interconnected sectors.
Canadian employers are reluctant to hire, and it’s not just because of low oil prices.
Year-over-year employment growth in Canada has been below 1 per cent for 15 months in a row, the longest stretch below that mark for annual job gains, outside of recessions, in almost 40 years of record-keeping.
This slow growth reflects caution among employers who are reluctant to add staff in an uncertain economic climate, now compounded by currency and commodity price volatility. Without clarity that business conditions will improve, many employers are aiming to keep costs down by avoiding adding to permanent payrolls.
Companies “want to take advantage of better business activity by improving productivity,” said Rowan O’Grady, president of recruiting firm Hays Canada. “But there’s still a lack of confidence … to be in a position where they’re doing a lot of hiring.”
Rather than risk adding to head counts, he said, many are instead asking one person to take on two roles, hiring only on a temporary or contract basis and holding off on big decisions to expand.
Employers shed 1,000 positions last month, according to Statistics Canada, and the jobless rate rose two notches to a five-month high of 6.8 per cent as more people looked for work. Annual employment growth has hovered at about 0.6 per cent in the 15 months since December, 2013.
The last period of least 15 months of growth below 1 per cent was during the 2008-2009 recession…
See: Anemic job growth streak earns place in the record book
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