By J. Sturgeon | Financial Post | 03. 14. 2009
Once considered Canada's twin economic engines, Ontario and Alberta continued to lose steam in February, taking the lion's share of job losses and led by a notable decline in construction employment.
The Canadian economy shed a worse-than-expected 82,600 jobs last month, with more than half coming from Ontario, where the construction sector replaced manufacturing as the main industry to be sideswiped by a deepening U. S. recession.
Last month's reading pushed the province's unemployment rate to 8.7%, a full percentage point over the current national jobless rate and the highest level since April, 1997.
"There's no question that Ontario is bearing the brunt of the weakness," said Douglas Porter, deputy chief economist at BMO Capital Markets, in an interview.
About 28,000 construction jobs were purged from payrolls as housing starts continued to moderate in Ontario amid slumping real-estate demand.
"February finally saw building activity catch up with labour-market realities," said Meny Grauman, senior economist at CIBC World Markets.
Other sectors felt the bite as well, with finance, insurance and real estate combining to shed 19,000 jobs.
In contrast, manufacturers -- the source of much of the blood-letting in recent months --added 14,000 positions.
The additions were a surprising development given the grim export environment for goods bound for a recession-plagued United States. However, it was "literally a dead-cat bounce," said Mr. Porter, given "the steep drop in U. S. auto sales and the massive decline in auto production and other manufacturing sectors around the turn of the year."
February's purge mirrors Ontario's experience since Canada's labour market first began to buckle last October. The province has now absorbed just over half of the country's total job losses in the period, or 160,000 positions.
"That's one interesting feature of this report -- just how far Ontario's unemployment rate has risen above the national average," Mr. Porter said. "It's unheard of."
In particular, Mr. Porter noted that Ontario's unemployment rate remained higher than Quebec's for the second month in a row.
Ontario's unemployment rate eclipsed Quebec's for the first time on record in January.
"This is an important development," he said. "It really plays up how much Ontario's economy has suffered in the past year, in particular as manufacturing has struggled."
Since October, Ontario's unemployment rate has risen two full percentage points, with increases concentrated in southwestern Ontario, where the Canadian auto industry is centred, said CIBC's Mr. Grauman.
Unemployment in Quebec edged up 0.2 percentage points in February to 7.9% as 18,000 jobs were lost, led by 11,000 health-care positions.
"Ontario getting above Quebec is unusual in its own right and to be that much above speaks volumes," Mr. Porter said.
Yet the most-populous province in the country wasn't alone, as plunging commodity prices finally spilled over into the construction and manufacturing sectors of Alberta, resulting in a steep rise in unemployment in that province.
"We are seeing job losses move out [west]," Mr. Grauman said. Alberta shed 24,000 jobs last month, pushing the unemployment rate to 5.4%.
Oil's plunge has chilled construction in the oil sands as well as Alberta's once-torrid housing market, eliminating 9,000 construction jobs in February. Another 10,000 jobs were lost in the province's manufacturing sector. The remaining 13,000 were culled from the education sector.
Alberta unemployment now sits at its highest level in six years. As commodity prices remain depressed, the province is expected to lose more jobs in the months ahead, Mr. Grauman said.
"The weakness in the labour market started later there but it's definitely going to continue."
jasturgeon@nationalpost.com
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