Canada's jobless rate climbs to 7.2 %

Toronto unemployment edges up slightly; Ontario loses 17,000 jobs since May

OTTAWA (CP) — After resting for five months at an even seven per cent, the jobless rate climbed to 7.2 per cent in August, reflecting the economic downturn. Toronto's unemployment rate edged up .2 per cent to 6.4 per cent.

The national jobless rate hadn't budged since March, despite the deteriorating economy, and experts had predicted it would begin to drift upward — to the detriment of consumer confidence.

The economy shed almost 8,000 jobs in August, Statistics Canada reported today.

Most of the recent jobs losses came in British Columbia and Ontario, the agency reported. In Ontario, a small increase of 24,000 full-time jobs last month was offset by a drop in part-time work. Since May, about 17,000 jobs in total have been cut in Ontario.

At the same time, an increase in the number of job seekers pushed Ontario's jobless rate to 6.6 per cent last month from 6.3 per cent in July.

Economic experts also warn that the job market will worsen much more before it begins to improve, given the troubles spilling over from the United States.

About 7,000 jobs have been added to the economy since January, estimated Warren Lovely, an economist with CIBC World Markets.

In contrast, the economy grew by 325,000 net jobs last year.

"The labour market is spinning its wheels," said Lovely. "And that's clearly a troubling development from the consumer confidence perspective."

That marked the third consecutive month of losses — a dangerous trend not seen since 1992, at the tail end of a devastating recession.

Such a string of job losses historically has suggested an economy ``teetering on the edge of a recession," warned Lovely.

The news was even worse south of the border where the U.S. unemployment rate soared to 4.9 per cent in August from 4.5 per cent, the level it had held since April.

That was the highest level in nearly four years as American businesses slashed 113,000 jobs as the slumping economy continued to hammer the labour market.

In Canada, 35,000 jobs have been lost since May.

It's likely the jobless rate will climb to about 7.5 per cent before year-end, warned Doug Porter, senior economist with brokerage Nesbitt Burns in Toronto.

"There's no doubt that the broader picture here is that the labour market continues to deteriorate and unless we get a sudden and swift turnaround in the U.S. economy, I think things will weaken a bit further for the rest of the year."

Anything that hurts consumer confidence is bad for the overall economy.

Spendthrift consumers have been vital in keeping growth alive, offsetting dramatic drops in the manufacturing and technology sectors.

The news had little impact on the dollar, which opened at 64.18 cents (U.S.) today, down 0.04 of a cent.

There was a kernel of good news in Friday's employment report.

All the jobs lost last month were part-time positions, while 41,000 full-time jobs were added.

Analysts say full-time work is generally preferable to part-time because it usually means greater pay, more benefits and permanent contributions to the economy. So negative a report clears the way for the Bank of Canada to continue lowering interest rates in the hopes of injecting some life into the lacklustre economy, analysts say.

Lovely predicts the central bank — which has trimmed rates six times already this year — will lop another half a percentage point off its trend-setting rate at the end of October and cut once again before year-end.

The central bank's trend-setting rate is now four per cent after beginning the year at 5.75 per cent.

Analysts have been consistently downgrading their predictions for economic growth in 2001, many now dipping to two per cent expansion or less.

"You think the first half of the year was bad? It's going to get worse and that's why we see the bank taking a more activist role in the coming months," said Lovely. He predicts second-half growth will be less than one per cent.

Last month, the technical, professional and scientific services sector shed 18,000 positions, due to the slowdown in the high-tech sector.

Work in trades also fell by 21,000 last month — mostly in Ontario and Quebec.

Helping to offset those losses were about 19,000 jobs added in health care and social assistance.

That's a reversal for those fields, which had seen about 23,000 jobs cut during the previous four months.

About 1.17 million people were looking for work in August.

About 20,000 jobs were cut last month in British Columbia, bringing total losses there since May to about 39,000. That bumped the province's jobless rate up to 7.9 per cent from 7.2 per cent in July.

Saskatchewan saw a small increase of 4,000 jobs last month for a total gain in employment of 7,000 and a jobless rate of 5.2 per cent.

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-- Martin Thompson (mthom1927@aol.com), September 08, 2001