Jobless rate soars to 7.2% — analysts comment
The Canadian unemployment rate climbed a much worse-than-expected 0.6% in January as a deteriorating economy shed another 129,000 last month, almost all in full-time positions, Statistics Canada reported Friday. The figure represents the worst single-month decline since the federal agency began tracking employment data in 1976. The jobless rate now sits at 7.2%. Here are some analysts' comments:
BENJAMIN REITZES, economist, BMO Capital Markets
"The figures are far worse than consensus and paint a bleak picture for the first quarter. The details were soft as well, with full-time positions tumbling 113,900. The unemployment rate surged 0.6 ppts to 7.2% — the highest since November 2004. Average hourly wage growth surprisingly accelerated to a 4-year high ... but don’t expect that to last with the big job losses. This bleak report will likely prompt a March rate cut by the Bank of Canada."
DAWN DESJARDINS, assistant chief economist, RBC Capital Markets
"Today's data just adds to the stream of increasingly grim reports on the state of Canada's economy. The Bank of Canada and federal government have made efforts to limit the extent of the downturn by implementing stimulative policies and although these actions will not prevent the economy from contracting in the near term, we expect they will contribute to a rebound by the second half of 2009."
DEREK HOLT, economist, Scotia Capital
"The optimists are taking body blows left, right and centre on what is a rapidly deteriorating picture for the Canadian economy. Manufacturing accounted for over 78% of the jobs losses in January as the sector shed 100,900 workers, the largest monthly decline in the industry on record. The bulk of the losses were in Ontario, Quebec and B.C. although factory employment was also down in Alberta and Manitoba."
CHARMAINE BUSKAS, senior strategist, TD Securities
"Finance Minister [Jim] Flaherty was right when he said that today’s employment numbers would be ‘regrettable'. Indeed, they were. The Canadian labour market report for January was absolutely disastrous, pushing the unemployment rate to 7.2% from 6.6% in December. What makes the report even worse is the fact that most of these jobs were private sector, full-time jobs. The case continues to build for another 50 [basis-point] rate cut in March to leave the overnight rate at 0.5%, as it is clear that the economy has downshifted dramatically."
AVERY SHENFELD, senior economist, CIBC World Markets
"Factories still count. Manufacturing no longer carries the heft it had in bygone days in terms of its share of employment, but its ups and downs still have much to do with the business cycle. You don’t trigger a recession by people getting their hair cut less often. Shut down much of the auto sector, as Canada did in the last couple of months, and kick other manufacturing sectors to a lesser degree, and the resulting layoffs explained most of the overall jobs decline. The only good news here is that at least some of these jobs will return later this year when, however slowly, excess inventories of North American vehicles and other manufactured goods are winnowed down."
YANICK DESNOYERS, assistant chief economist, National Bank Financial
"Jobs anxiety will certainly increase in the coming months as more job cuts are expected. That said, with the infrastructure plan taking effect probably in the second half of the year and a very accommodative monetary policy coming from the Bank of Canada, we still believe that the current recession will be shorter than the two previous one and are forecasting a more subdued rise in unemployment rate, with a target between 8% and 9%. This contrasts with the double digits unemployment rate of the last two recessions."
Labels: Canada, unemployment
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