08/01/2012 03:00 EDT | Updated 08/01/2012 03:00 EDT

Canada Job Market Set To Dive, Conference Board Report Predicts

a closeup of a car fuel level...
a closeup of a car fuel level...

OTTAWA -- The Conference Board says its research suggests Canada's labour market has run out of gas, and could even register a loss of jobs for the month of July.

The Ottawa-based think-tank's help-wanted index fell 4.5 points to 120.5 in June, a reading suggesting only modest job gains in the near term.

It predicts July's employment report from Statistics Canada, which will be released next Friday, will show a loss of 5,500 jobs, marking the first setback since February.

After two strong months of job creation in March and April, the last two months have seen only moderate growth, both under 8,000 jobs.

Economists are expecting more of the same for the rest of the year, given that the economy is advancing at a weak sub-two-per-cent rate.

The July index shows that with the exception of Prince Edward Island, all provinces posted a decline from June, with Saskatchewan recording the biggest drop.

"This is not surprising, as the uncertainties created by the debt crisis in Europe and a potential slowdown in China and the U.S. are leading Canadian employers to adopt a cautious pace of hiring,'' the Conference Board said.

The think-tank noted that its help-wanted index had been picking up signs of labour market weakness as far back as March, the last time there was a drop.

Then April and May returned to positive territory, but not sufficiently to reverse March's decline.

A business confidence survey conducted by the Canadian Federation of Independent Business in July, also released Wednesday, suggests firms are less optimistic about the economy, with the confidence measure dropping to the lowest point in three years.

Surprisingly, however, 20 per cent of firms still expressed intentions to hire on more workers, while 13 per cent thought they would need to lay off staff over the next few months.

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