Despite all the talk about job losses in the oilpatch, Alberta was the shining star on the Canadian labour front in January.
But dark clouds may be looming on the horizon warn a number of economists.
Employment in the province rose by 14,000 in January, bringing gains over the past 12 months to 67,000 or three per cent, the fastest growth rate among the provinces, Statistics Canada reported Friday.
“Year-over-year employment gains in Alberta were in health care and social assistance as well as in transportation and warehousing, while there was a decrease in retail and wholesale trade,” said the federal agency. “Employment in natural resources was little changed on a year-over-year basis, but it was down 13,000 (7.2 per cent) from the most recent peak in September 2014.”
The unemployment rate in the province fell to 4.5 per cent in January from 4.7 per cent in December.
In the Calgary area, unemployment dipped to 4.7 per cent in January, from 4.8 per cent in December, as the region added 5,900 jobs. Year-over-year employment was up 2.9 per cent, or 22,900 positions.
Todd Hirsch, chief economist with ATB Financial, said January was the strongest monthly gain since September and the fifth consecutive month of growth.
“But a deeper dive into the data reveals that the energy market is, indeed, seeing a slowdown. Between December and January, there were 1,000 fewer jobs in oil and gas, and 3,700 fewer jobs in a category labelled professional, scientific and technical jobs,” said Hirsch. “These would be occupations such as geologists, engineers and other technical services which are frequently contracted by petroleum producers. There were also job losses in educational services and construction.
“But gains in other areas more than offset these losses. Health care professionals, manufacturing, transportation and warehousing, and public administration all added positions. Despite the job losses in oil and gas, (the) labour market report is positive news for Alberta’s economy. Moving further into 2015, it is likely that there will still be some overall job loss, and the unemployment rate is almost certain to rise towards the middle of the year. But for now, we will take the good news.”
Robert Kavcic, senior economist with BMO Capital Markets, said despite the strong job growth in the province “all eyes are on Alberta for potential job losses.”
“Resource-sector jobs fell 8,800 in the month, which was expected, but curiously most of the declines came in Ontario, where there is no oil exposure. Alberta’s resource sector lost 1,000 jobs, while Saskatchewan’s shed 1,100,” he said.
“Resource employment in Alberta is indeed down 2.9 per cent year-over-year but the sector directly accounts for a modest 7.4 per cent of the province’s workforce. It will take a bit longer for the knock-on effects of lower oil prices to show up in other industries.”
David Madani, economist with Capital Economics, said the slump in crude oil prices has already begun to hit the labour market.
“This is only the beginning,” he said. “As energy producers cut back on investment this year, there will be ripple effects throughout the entire economy, eventually hitting the construction sector and other services sector that depend heavily on the oil gas sector for business.”
According to the Alberta government, the province’s unemployment rate tied it with Saskatchewan for the lowest in the country. The unemployment rate decreased from the previous month because the labour force increased by 10,100 people and employment increased by 13,700, it said.
Employment increased by 7,900 among men aged 25 and over and increased by 7,400 among their female counterparts from December 2014.
It said annual employment growth in Alberta accounted for 52.4 per cent of Canada’s growth. Full-time employment increased by 51,600 and part-time employment increased by 15,300 over the same period.
The following occupations had the most annual employment increases: Trades, transport and equipment operators related occupations, 66,100; Social science, education, government and religion, 24,500; and Occupations unique to processing, manufacturing, and utilities, 11,700.
Across Canada, Statistics Canada said employment was up 35,000, or 0.2 per cent, in January, the result of more part-time work. The unemployment rate declined 0.1 percentage points to 6.6 per cent.
Leslie Preston, economist with TD Economics, said it’s nice to see the Canadian economy generate jobs after two months of losses but the report Friday was “underwhelming.”
“Job growth dominated by part-timers is less positive for income gains, and January’s job report sets the tone for a loss of momentum in the labour market this year,” said Preston.