100,000 jobs to be lost as Canada hits recession: report
Last Updated: Tuesday, November 11, 2008 | 10:23 PM ET
The Canadian Press
Canadians are in store for a harsh winter of economic news, with substantial job losses mounting in the next few months as recessionary times take hold, the Global Insight forecasting firm says.
Global Insight managing director Dale Orr said the country will lose 100,000 jobs in the first three months of 2009, and he believes Canada has already entered its first recession in 17 years.
While several of Canada's chartered banks have previously predicted the economy will experience some slippage, it is the first time Global Insight — known for its detailed and cautious reports — has projected an outright recession.
A recession is typically defined by economists as two consecutive quarters of economic contraction, usually measured by gross domestic product.
By that measure, the Canadian market narrowly missed falling into recession in the first half of 2008; after a contraction in the first three months of the year, the second quarter showed modest growth.
Third-quarter GDP numbers for the full July-to-September period haven't been released yet.
The current October-to-December period will see the economy shrink 1.4 per cent on an annualized basis, Orr forecast, with a further 1.2 per cent retreat occurring in the first quarter of 2009.
For the next year as whole, Orr said, the economy will average zero growth.
"That's quite a stretch of miserable growth," he said.
Unlike the slowdown earlier this year, which was mainly concentrated in the business community and the stock markets, this "will feel more like a recession" because of the significant job losses, he said.
Orr said job losses will likely occur in the beleaguered auto sector and forestry — two hard-hit areas — but also in the construction trade as housing starts decline, and in tourism and the financial services sector in response to the crisis in stock markets.
"Main Street hasn't felt this [slowdown] yet because we've had pretty good labour markets, but the next year going forward, the labour markets are going to show it," Orr said.
The forecast for a 100,000-job plunge in employment contrasts with the 104,000 jobs created in Canada in the first three months of 2008.
Orr said Canada's jobless rate will rise from the current 6.2 per cent to 7.2 per cent at the end of next year.
Resource boom over: BMO
Separately, the Bank of Montreal declared that Canada's resource-sector boom — which sustained much of the country's growth the past few years — has ended, after commodity prices plummeted another 16.7 per cent in October.
Prices for almost all commodities Canada exports are now lower than they were a year ago after peaking in the summer, the bank said, and aren't likely to recover for at least another year.
Oil will average about $70 US a barrel in 2009, from this year's $102 average, BMO forecast.
While lower prices for energy and metals are generally regarded as good news for consumers and manufacturers, the sudden commodities collapse alongside the global financial slump is whipsawing Canada, BMO senior economist Earl Sweet said.
"Sharply rising commodity prices were very good for resource-rich provinces and not so good for central Canada's manufacturing sector," Sweet said.
"Now it's going to be a difficult time for the commodities sector in general, and [because of the global slowdown], we're not going to see much of an improvement in central Canada, either."
Amid the general economic gloom, CIBC chief economist Jeff Rubin did manage to find a silver lining, saying he believed the worst of the stock market meltdown may be over.
Rubin was cautiously optimistic the global economy can escape further systemic financial shocks for the balance of the year, noting that credit and liquidity concerns were easing.
