06/11/2013 12:06 EDT

Employment Outlook Canada: Pace Of Hiring To Slow, Manpower Says


Job seekers should shed any illusions they have that the near-record number of jobs added in May means that the country’s labour market is suddenly booming, according to a new employment forecast.

The pace of new jobs added over the summer months will slow both compared to the previous quarter and last year, says the Manpower Employment Outlook released Tuesday.

Manpower’s survey of more than 1,900 Canadian employers found that 21 per cent plan to increase their payrolls in the third quarter, down from 23 per cent in the same period of 2012, when the job market was slow. Six per cent of employers plan to cut positions.

The survey found a net difference of nine per cent between employers planning to hire and those planning to fire, using Manpower’s seasonally-adjusted metric, down from 12 percentage points from the survey in the same quarter last year. (The numbers are seasonally adjusted, and so don't correspond to the percentages above.)

“I think that’s suggesting that the private sector specifically is cautious about what’s going on in the economy,” said Byrne Luft, vice-president of operations for Manpower Canada.

“The real estate market, there’s speculation that that’s slowing down, consumer debt per capita is high. You have all these little indicators that are making employers nervous about making investment,” he said.

Story continues below slideshow

The 10 Worst Jobs In Canada

The new projection comes after Friday’s release of the latest Labour Force Survey data showed the economy added a whopping 95,000 jobs in May -- the biggest monthly gain in more than a decade -- and blowing by economists’ modest expectations for about 10,000 new jobs.

But industry insiders said May was likely just a blip and not evidence that the private sector is starting to hire again in any meaningful way, a signal that many observers have been waiting for as a sign that business confidence in the economy is rebounding. The numbers were so staggering that many economists warned about Statistics Canada’s wide margin of error.

“I think it surprised everybody and I think that most economists are trying to wait for some data next month to see how that [helps] in getting a better understanding,” Luft said.

“Our forecast has been moderate from the beginning of the year and it continues to stay that way ... the trending from a job creation perspective has been quite poor. May was nice but overall our employment numbers haven’t been great, so it could have been a quick adjustment in May.”

But other employment experts believe May’s numbers could be more than just a blip. The underlying data showed all the new jobs were added in the private sector and a vast majority were full time, with many going to the struggling youth demographic.

Those are encouraging signs that the Canadian labour market is catching up to the higher level of economic growth now seen in the U.S., this country’s largest trading partner, said Jan Hein Bax, president of Randstad Canada.

“Canadian companies had been hesitant to hire in relation to U.S. growth. They didn’t think that it was going to grow on a constructive level or basis, and now they see that it’s happening, so there’s that effect [of] people hav[ing] more confidence in the economic stability of the labour market of North America.”

He believes the private sector is beginning to pick up some of the slack as government spending slows down, a move that “comes at a good moment” for the economy after many officials warned that the private sector could not continue to sit on hoards of cash and needed to start spending to stimulate the economy.

Bax believes Canada’s labour market will continue to see healthy growth in the third quarter, though not as robust as the numbers posted in May. Randstad, along with most economists, prefers to look at a full quarter of data rather than a single month, in which the figures can be extremely volatile.

“We see that companies are hiring full-time staff over part-time labour. You don’t see these kinds of developments in markets where people are very nervous, you see this when people have more confidence. ... So I think there are good arguments that back the assumption up that we will see continuing growth into Q3.”

May’s gains were driven by a big surge in employment in construction, a sector where Manpower Canada expects to see a 15-point spread between employers hiring and employers firing in the third quarter, up from about five points last year, due to continued investments in the Economic Action Plan and other economic stimulus measures.

The transportation and public utilities sectors reported their strongest hiring outlook since 2007, with a 23 per cent increase in hiring, partly thanks to a dip in the Canadian dollar which tends to spur hiring in cross-border segments.

However, the financial sector stands out as a negative, with a hiring-firing spread of of seven per cent, about 10 percentage points below the level reported in the previous quarter and seven percentage points below that in the third quarter of 2012. Luft believes the decline is likely due to a downturn in the in the real estate sector as housing sales slow down.

Regionally, job seekers in Western and Atlantic Canada are set to benefit most from hiring activities this summer.