MONTREAL ― The evidence is mounting that Canada’s economy entered a slowdown in the final months of the year, and the job market’s two-year hot streak may be ending.
The latest edition of the ADP Canada payroll report ― an alternative measure of the job market to the ones provided by Statistics Canada ― estimates Canada lost 22,600 jobs in October.
That’s much weaker than StatCan’s labour force survey, which reported that Canada lost 1,800 jobs that month.
Watch: How Canada’s housing market is impacting jobs. Story continues below.
The survey found only one sector of Canada’s economy added jobs in October ― leisure and hospitality, with an increase of 4,900 positions. The largest losses came in education and health care (down 7,800) and trade/transportation and utilities (7,000 jobs lost).
“Leisure and hospitality experienced a gain likely due to the seasonal nature of the industry,” said Ahu Yildirmaz, vice-president and co-head of the ADP Research Institute.
ADP’s payroll survey is a closely-watched measure of the job market in the U.S., where it has been running for decades. But in Canada it’s a relatively new measure and gets less attention. It surveys 40,000 companies on their hiring levels.
ADP and StatCan’s two measures had tracked each other fairly closely this year, with ADP estimating that Canada created 262,000 jobs since the start of the year, while Statistics Canada reports 290,000.
The number of people making new and repeat Employment Insurance claims is climbing upwards, with StatCan reporting a 2.1-per-cent spike from August to September.
Ontario saw the steepest increase in EI claims, up 5.9 per cent in a month, while Saskatchewan saw a 5.1-per-cent spike and claims in Manitoba rose by 4.7 per cent.
The new EI data “suggests the labour market may be losing steam,” National Bank of Canada senior economist Krishen Rangasamy wrote in a client note. He noted EI claims hit their highest levels since late 2016, when Western Canada was experiencing a recession led by plunging oil prices.
Surprisingly bad news
The October job losses added to a growing amount of data suggesting Canada’s economy is taking a breather as it heads into 2020.
According to an “economic surprise index” run by Citigroup, for the first time this year, Canadian data is coming in below analysts’ expectations, meaning the experts may not have realized how quickly the economy is slowing down.
In a speech to the International Finance Club of Montreal on Tuesday, Bank of Canada senior deputy governor Carolyn Wilkins said the economy “is in a good place” to weather any coming shocks, including those posed by the growing global trade war.
“Even though businesses are facing uncertainty about trade, and regions that depend on oil and gas are still suffering, Canada’s economy is in a relatively good place overall,” Wilkins said.
She said changes to mortgage rules have helped slow the rate at which Canadians are taking on more debt.
“But these are still our biggest vulnerabilities, and we’ll be watching them closely,” Wilkins said.