Private-sector employment decline is no blip

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Canada's private sector is in no mood to hire.

Private companies shed 105,400 jobs in March and April, the largest two-month decline since early 2009, when the economy was in the throes of the recession.

That retrenchment isn't a one-month blip, with private-sector employment losses in three of the past four months. It reflects faltering confidence running through several threads in the economy, from a pullback in the mining sector to restrained consumers.

There are some "rather worrying signs" as private companies have cut jobs while the ranks of self-employed swelled this year, said Benoit Durocher, Montreal-based senior economist at Desjardins Securities Inc.. "Need it be said? The replacement of private-sector jobs with independent work is usually not a sign of a healthy labour market."

Business confidence is ebbing, according to the Conference Board of Canada's measure. Confidence fell – and investment intentions declined – in the first quarter of the year amid employment concerns, weaker demand and troubles in Europe. The overarching trend since the start of 2011 has been downward, it said.

That muted picture is showing up in corporate reports, as well, such as this week's earnings statement from Tim Hortons Inc. Consumer confidence and discretionary spending "have been negatively impacted by rising unemployment, high consumer debt and the cooling housing market," the coffee chain said.

Over the past year, virtually all of Canada's job gains have come in the public sector and among the self-employed, while private-sector employment has been flat.

Last month, public-sector gains helped the economy add 12,500 jobs while the jobless rate stayed at 7.2 per cent, Statistics Canada said Friday. By province, Manitoba's job losses of 11,100 were the largest on record, a reflection in part of reductions in the mining sector.

Public-sector hiring seems at odds with government austerity, and many economists expect it will soon slow. In the past year, many of the public sector gains have been in Ontario and Alberta.

Last month's public-sector increase of 34,200 jobs came in occupations such as secondary-school teachers, child-care workers and nurses, according to Statistics Canada.

There are still bright spots in the labour market. The economy did manage net job gains last month, wages are firming and employment in some sectors, such as professional and scientific services, are well above last year's levels.

The biggest demand for workers this spring has been in IT and the trades, and in Alberta and Saskatchewan, said Kelly Dixon, president of the online job board Workopolis. Software developers and mobile-app developers are in high demand, along with engineers and electricians. Demand for clerical workers, and in the pulp industry, has ebbed.

"It's modest growth versus anything very aggressive," she said.

Jobs numbers have bounced around in recent months. But the six-month average of 12,400 is softer than the average of the past two years. So far this year, the Canadian economy has shed 13,200 jobs.

Fewer people are actively searching for work. The country's participation rate fell to a 14-month low of 66.5 per cent last month. Many of the exits came among youth and core-aged workers, noted economist Emanuella Enenajor at CIBC World Markets Inc.

While weak economic growth "may be triggering some exits from the work force, other factors are at play, including an increasing presence of older individuals who are retiring," she said in a research note, adding that the share of Canadians 65 and up is now 18 per cent of the population, compared with 15 per cent a decade ago.