Poll expects just 5,000 jobs to be added
OTTAWA (Reuters) — Canada's job market is expected to slow markedly in December to reflect the sluggish economy and employers' fears about the U.S. fiscal crisis following outsized gains of over 50,000 jobs in two of the previous three months.
The median forecast in a Reuters poll is for the economy to add just 5,000 jobs in the month, with forecasts ranging from a loss of 20,000 positions to a gain of 21,000.
The forecast compares with employment growth of 59,300 in November, 1,800 in October and 52,100 in September.
The unemployment rate is seen ticking higher in the final month of the year to 7.3 per cent from 7.2 per cent.
Derek Holt, vice-president of economics at Scotiabank, said he's been surprised by the strength of job growth which he estimates to be the equivalent in the United States of about 1.5 million non-farm payroll jobs over the last three months.
"Here we are with the conundrum where we have zero growth in the Canadian economy, long predating the appearance of the greatest fiscal-cliff risks and yet we're heaping on jobs like there's no tomorrow," Holt said.
Unlike the U.S., Canada has long recovered all the jobs lost during the 2008-09 recession but the pace of hiring in 2012 was unsteady.
Benjamin Reitzes, economist at BMO Capital Markets, said if the 5,000-job forecast was accurate, it would put 2012 job growth at just 1.1 per cent, "the weakest non-recession year since 1996."
Canadian employers have faced uncertainty in one form or another during the recovery and in December were fretting about the U.S. fiscal cliff, a set of tax hikes and spending cuts that were set to automatically take effect and possibly throw the U.S. into recession if the White House and Congress did not reach an alternative agreement.
Lawmakers in Washington averted an economic calamity by approving a deal on Tuesday that raises taxes only on the wealthiest Americans. But they postponed other politically challenging issues, setting the stage for more fights ahead.
With the Canadian economy now expected to grow by far less in the fourth quarter than the Bank of Canada's projection of 2.5 per cent, annualized, the blockbuster jobs growth of recent months looks suspect. The six-month trend shows more sustainable gains of about 21,000 per month.
"While employers have been generally constructive on hiring intentions for some time, our sense is that much of the hiring that was planned has already occurred," said TD Securities in a research report on Thursday.
The moderation means the Bank of Canada will be in no hurry to raise its benchmark interest rate, which it has held at one per cent since September 2010.
Market players surveyed by Reuters in late November predicted the bank would resume hiking rates in the fourth quarter of 2013.
