Despite official data proclaiming Canada is creating more jobs every month, a new analysis from Capital Economics suggests the economy is losing good high-paying jobs — a first since the recession that began in 2008.
Economist David Madani said in a research note Tuesday that recent headlines proclaiming new jobs being created belie a deterioration in the job market. "The trend among the prime working age cohort, those aged between 25 and 54, has slowed dramatically," he said.
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Over the past six months, the job market for people in that age group has been effectively flat, with a net of zero new jobs created, on average, every month.
"Prime-age workers are often the highest paid," Madani notes, so that's a trend that's bound to have an impact beyond those people themselves.
"We're a little concerned about what this means about the broader economy," he said in an interview Wednesday.
Indeed, another data point on the job market shows dark clouds on the horizon. Statistics Canada's survey on employment payroll and hours for October showed that in the year ended that month, the number of high-paying jobs shrank for the first time since the 2008-2009 recession.
The timeline is roughly in line with the slump in oil prices, and Madani's analysis suggests that trend is likely to continue as long as oil prices stay low.
Oil isn't the only drag, though.
"There's also a slowdown in hiring professional, technical and scientific jobs," Madani said. "And while we're watching an expected fallout in energy, we're not seeing some positive offset from other sectors like manufacturing."
Essentially, Canada's economy may be creating more jobs every month, but they're predominantly low-paying or part-time ones — not the type that tend to spur an improvement in the broader economy. Sectors that should be doing well in the current era of cheap energy aren't making enough new jobs to offset those lost in oil's slowdown.
"With non-energy exporters still struggling and energy producers slashing investment and hiring, we expect net job creation to be modest in the coming year, with the unemployment rate rising to 7.5 per cent by the end of 2016," said Madani.
"Overall, if the economy struggles to cope with the worsening fallout from the oil shock as we expect, then the amount of labour market slack will grow."