The number of jobs in Canada fell by 88,000 in January to give the labour market its steepest one-month drop in nine years.
The overall result was dragged down by a loss of 137,000 part-time positions in what was the category’s largest one-month collapse on record.
Statistics Canada’s latest jobs survey says the overall decline helped push the national unemployment rate up to 5.9 per cent in January, from a revised 5.8 per cent the previous month.
But on the other hand, the agency says the economy generated 49,000 full-time positions last month.
“Overall, a mysterious mix of good and bad, with the latter’s impact blunted by how strong job gains were in the leadup to these figures,” CIBC chief economist Avery Shenfeld wrote in a research note to clients.
“January saw an [88,000] drop in employment, reversing about half of the spectacular gains we registered late last year. But the details are also looking wonky, with all of the job losses in part-time work.”
The January reading marked the end of a 13-month streak of job gains. However, about half of those positive numbers were within the survey’s margin of error.
The release left economists puzzled, especially because the data indicates that labour force participation, the share of Canadians working or looking for work, dropped. A strong labour market, like the one Canada has seen in recent months, generally invites more people to rejoin the labour force and apply for jobs.
Nationally, the survey revealed that the number of paid employee positions also experienced a significant loss last month by shedding 112,000 positions. By comparison, the number of people who identified as self-employed workers – often seen as a less desirable category that includes unpaid work in a family business – increased last month by 23,900.
Wage growth also received a boost in January, a month that saw Ontario lift its minimum wage. Compared with the year before, average hourly wages for permanent employees expanded by 3.3 per cent. By region, the agency said Ontario and Quebec saw the biggest decreases last month, while New Brunswick and Manitoba also had net losses.
Ontario saw a 51,000 drop in the number of employed persons, all of which occurred among part-time workers. But while that would at first glance suggest a hit from the province’s new $14-an-hour minimum wage, a closer look at the numbers indicates it was due to a drop in the labour force participation, Shenfeld said.
BMO chief economist Douglas Porter also cautioned against “drawing a straight line from the [wage] hike to one month’s job move,” noting in a research note that harsh weather in January appeared to have hit employment in the province’s construction sector (down 14,900 jobs) and transportation industry (down 5,900 jobs).
Overall, the latest labour market data “bring the job market back down to Earth, and reinforces the view that the Bank of Canada will proceed ultra-cautiously through the rest of this year,” Porter wrote. “At the very least, we can dismiss any chance the Bank hikes [interest rates] in March, and April is now looking more like a long shot as well.”
– With files from Erica Alini, Global News