A Resource Bust and Yet...

The OECD has cut its growth forecast for Canada citing the drop in oil and commodity prices.  With all the talk about the slowdown in the Canadian economy picking up steam and slow growth as a result of the drop in oil prices that began last spring, one might expect some job losses to start emerging in places like Calgary or Regina.  Interestingly enough, most Canadian CMAs have continued to grow their employment over the course of the last twelve months.

Of course, some CMAs have seen employment losses but they are not the places you might expect.  According labor market numbers from Statistics Canada, over the last twelve months, the following Canadian CMAs have seen a drop in their total employment (See Figure 1): Victoria (-4.3%), Saint John (-4%), Quebec (-3.9%), Thunder Bay (-2.9%), Kingston (-2.7%), Toronto (-0.9%), Hamilton (-0.5%) and Abbotsford (-0.2%).  None of these strike me as oil patch places.  Calgary, Edmonton, Saskatoon and Regina still saw growth in employment over the last twelve months but it could be that the full effects of the resource bust have yet to hit.  Interestingly enough, of these four cities, only Saskatoon saw a slight decline in seasonally adjusted monthly employment between January and February of this year. 

As well, the employment drops in some cities have not translated into higher unemployment rates (Figure 2). 

Hamilton, Thunder Bay, Quebec City and Victoria have some of the lowest unemployment rates in the country – they are all below six percent.  There may be some other unique labour market issues going on in these CMAs probably involving labor force changes or other demographic issues. Overall, the resource sector employment bust is not here yet.

Comments

[Majromax]

What happened in Guelph? +12% YOY employment change is huge.

[Nick Rowe]

As someone who tends to look just at macro data, it is surprising to see so much variance across cities, especially with no obvious pattern.

Maybe some of it is sampling variance? The Labour Force Survey (which is where these numbers come from?) doesn't have that big a sample size.

[Livio Di Matteo]

Majromax & Nick:
I think some of it it has to be sampling variance especially for smaller centres. Guelph goes from employment of 78600 to 87900 in 12 months. Unless someone knows something about what has been going on in Guelph that I am not aware of.

[baconbacon]

i would be careful when it comes to mining/extraction. Permenent, local jobs tend to come after years of exploration and mine development (i assume oil works similarly). The early to mid stages of development tend to import experts/construction workers from broader areas- and these are the projects that get shuttered/paused more frequently than those that are already up and running.

[rsj]

I thought Canada's economy was now firmly driven by housing rather than resources. E.g. Residential investment is 30% of Gross fixed capital formation and rent + consumption of goods and services related to dwellings is 20% of personal consumption expenditures. About 30% of Canada's economy is accounted for by real estate versus the 7% or so accounted for by oil and gas.

Also, Statistics Canada sucks.

[Yinner]

My understanding of the oil & gas industry, especially in Canada's largely conventional/oilsands deposits, is that capital projects have really long lead times. So I'd assume that you won't see employment #'s change rapidly in the presence of the recent commodity(energy) price collapse. The drop in employment is surely coming though. I work for a midstream energy company and we're giving "concessions" to some of our clients to help them with their cash flow. It's pretty ugly for the E&P crowd.

[Matt]

Thanks for this post, Livio.
I live in the Maritimes where dozens of my friends and neighbours have been waiting for call backs from their
respective employers – all of whom are either directly or indirectly related to oil – since Christmas. Surprisingly few
of them have opted to register for EI, instead either enjoying the break using personal savings, or working
under the table (or shovelling snow - ha!). So I suppose my gut instinct right now is telling me that unemployment numbers have yet
to properly codify the real picture (ie. the real damage) of the decline in oil prices since autumn. Am I
off-base on this? I have to wonder if some industries lag – perhaps based on (what I’ll call) traditions – in
reporting their unemployment status. Anecdotally, right or wrong, most seasonal workers here in the Maritimes are very punctual
in their reporting status, whereas it appears that oil workers aren’t as much. Does this impact the statistics?
Cheers. Matt