Canadian job creation stalled in October, while the national unemployment rate held at 7.4%. Closer analysis of the data reveals that the western provinces have had lower-than-average rates of unemployment, compared to higher-than-average rates of unemployment in Ontario and the eastern provinces. The western provinces had previously been driving economic growth with its resources (oil, gas, potash, wheat and canola), whereas the eastern provinces have stalled with its focus on traditional manufacturing industries.
However, what is more concerning is the announcement from Statistics Canada that Canada’s GDP contracted for the first time in six months in August, shrinking 0.1% in August compared to July. Although the service sector was unchanged, the contraction was led by declines in mining, oil and gas, and manufacturing. Major resource projects are currently being delayed in the western provinces, and the data agency noted decreased output in 10 out of 18 industrial sectors.
Lower margins and competitive pressures are forcing Canadian companies to layoff employees. Pfizer Canada, Loblaws, the National Bank of Canada, and a Nova Scotia paper mill have all announced layoffs recently.