Canada’s streak of job growth continued in October, though it slowed from a torrid pace.
The country added 31,000 jobs last month, following a gain of 157,000 positions in September, Statistics Canada said Friday. The unemployment rate declined to 6.7 per cent from 6.9 per cent. It was the fifth consecutive month of job growth since the summer reopening.
As of October, around 19.16 million Canadians were employed – or nearly 32,000 more than in February, 2020, when the pandemic upended the economy.
Despite the threat of the Delta variant of COVID-19, hiring has continued to chug along in early fall. The October gain was entirely driven by the private sector, which saw an increase of 70,000 jobs. And the standout industry was retail, adding 72,000 positions for the month.
After wild bouts of layoffs and hiring in much of the past two years, Friday’s labour report resembled a “normal” one, said Bank of Montreal chief economist Doug Porter in a report to investors, pointing out that monthly job creation in 2019 averaged just under 30,000.
“Over all, a bit of a ho-hum report, which will make little impact on the timing of any rate moves by the Bank of Canada – but given the wildness of the prior 18 months, no one is complaining about ho-hum,” Mr. Porter said.
The question is whether that normality persists. Federal financial supports for employers and individuals – such as the Canada Emergency Wage Subsidy and Canada Recovery Benefit – expired on Oct. 23, which could have a ripple effect on hiring and labour participation.
At the same time, job openings are continuing to grow, and employers remain vocal about their struggles to fill vacancies. There has also been further easing of health restrictions, such as the removal of capacity limits on indoor dining in Ontario in late October.
“With COVID cases on the decline, and some provinces continuing to ease restrictions … employment should continue to advance, driven by industries with strong labour demand,” said Toronto-Dominion Bank senior economist Sri Thanabalasingam in a note to clients.
The labour market hit some milestones last month. Full-time employment for men in the core working ages of 25 to 54 returned to its prepandemic level. For women in that cohort, full-time work has increased by nearly 100,000 positions since the pandemic started.
While the labour participation rate fell 0.2 percentage points to 65.3 per cent in October, it has fully recovered and was at record or near-record highs for most age groups, Statscan noted.
Still, there are segments of the labour market that are struggling greatly. In particular, self-employment continued a lengthy slide, falling another 38,000 positions in October. Statscan noted that self-employment now stands at the lowest level seen since March of 2007.
Despite having a large number of vacancies, the hospitality industry lost workers for a second consecutive month, dropping by some 27,000 people in October. Restaurants and hotels have been some of the most vocal businesses about their hiring challenges. Hospitality jobs are down 17 per cent (207,000) since COVID-19 started.
While employment has returned to prepandemic levels, Canada is still short of a full recovery. The employment rate of 61 per cent is down 0.8 percentage points over the pandemic, reflecting growth of the adult population. To close the employment-rate gap, another 265,000 jobs are needed for a full recovery, based on today’s population.
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China cuts reserve requirement ratio as economy slows – BNN
China cut the amount of cash most banks must hold in reserve, acting to counter the economic slowdown in a move that puts the central bank on a different policy path than many of its peers.
The People’s Bank of China will reduce the reserve requirement ratio by 0.5 percentage point for most banks on Dec. 15, releasing 1.2 trillion yuan (US$188 billion) of liquidity, according to a statement published Monday.
The reduction was signaled by Premier Li Keqiang last week when he said that authorities would cut the RRR at an appropriate time to help smaller companies, and is the second reduction this year. The decision comes after recent data showed the economy and industry stabilizing, although Beijing’s tightening curbs on the property market have led to a slump in construction and worsened a liquidity crisis at developer China Evergrande Group and other real-estate firms.
The cut is a “regular monetary policy action,” the PBOC said, pre-empting expectations that the decision was the start of of an easing cycle. “Prudent monetary policy direction has not changed,” it said, adding that the bank “will continue with a normal monetary policy, maintaining the stability, consistency and sustainability of policy, and won’t flood the economy with stimulus.”
However, with the U.S. Federal Reserve and other global central banks looking to tighten policy, the move to add stimulus by the PBOC makes the divergence between China and much of the rest of the world even clearer.
What Bloomberg’s Economists Say
“We think the reduction would help offset the headwinds facing the economy, particularly in the first quarter of 2022. We maintain our view that an additional 50-100 basis points of RRR cut would come next year.”
– David Qu, economist
Separately, the Communist Party’s Politburo said China will continue to implement a proactive fiscal policy in 2022, and prudent monetary policy will be flexible and appropriate, and maintain reasonably ample liquidity, the official Xinhua News Agency. The Monday meeting of the Politburo will be followed by the Central Economic Work Conference sometime this month, which will flesh out economic policy plans for the next year.
The cut will be applied to all banks except those that are already on the lowest level of 5 per cent, which are mostly small rural banks, according to the statement. The weighted average ratio for financial institutions will be 8.4 per cent after the cut, down from 8.9 per cent previously, the PBOC said in a separate statement.
Some of the money released by the RRR cut will be used by banks to repay maturing loans from the PBOC’s medium-term lending facility, and some of it will be used to replenish financial institutions’ long-term capital, the central bank said. There are almost 1 trillion yuan worth of the 1-year loans maturing on Dec. 15, the day the cut takes effect.
Even with the deepening housing market slump, authorities had been restrained in adding new support policies, holding monetary policy steady and maintaining a measured pace of fiscal spending. However, the PBOC signaled an easing bias in the latest monetary policy report last month, while the State Council urged local governments to speed up spending.
“The aim of the RRR cut is to strengthen cross-cyclical adjustment, enhance the capital structure of financial institutions, raise financial services capabilities to better support the real economy,” the PBOC said. The cut will effectively increase long-term capital for banks to serve the real economy, and the PBOC will guide banks to step up their support for small businesses, it said.
A cut in the reserve ratio doesn’t directly lower borrowing costs, but quickly frees up cheap funds for banks to lend. The reduction will lower the capital cost for financial institutions by about 15 billion yuan each year, which will lower the overall financing cost of the economy, the PBOC said.
China think-tank warns of economic slowdown – Aljazeera.com
Advisers to Beijing will recommend a 2022 growth target that’s lower than the target that had been set for 2021.
Ongoing stress in China’s property sector is likely to slow down the country’s economic growth next year, a government think-tank has warned.
The world’s second-largest economy is expected to have expanded by about 8 percent this year, according to the annual blue book on the economy from the Chinese Academy of Social Sciences (CASS), a top government think-tank. It warned that the property downturn was likely to persist and weigh on the expenditures of local governments next year.
China’s economy is expected to grow about 5.3 percent in 2022, bringing the average annual growth rate forecast for 2020-2022 to 5.2 percent, CASS said on Monday.
Advisers to the government will recommend that authorities set a 2022 economic growth target lower than the target set for 2021 – or “above 6 percent” – Reuters reported, amid growing headwinds from a property downturn, weakening exports and strict COVID-19 curbs that have impeded consumption.
It urged the central government to proactively engineer a soft landing for the property sector, to avoid failed land auctions in big cities and to fend off risks of quickly falling property prices in smaller cities, the report said.
China’s move to wean property developers away from rampant borrowing has translated into loan losses for banks and pain in credit markets, as cash-strapped builders fall into distress, increasing risks across the economy.
Property behemoth China Evergrande is facing one of the country’s largest defaults, prompting the authorities to step in and oversee risk management at the company.
Canadian employers, facing labor shortage, accommodate the unvaccinated
Canada’s tight labor market is forcing many companies to offer regular COVID-19 testing over vaccine mandates, while others are reversing previously announced inoculation requirements even as Omicron variant cases rise.
Canadian Prime Minister Justin Trudeau’s government adopted one of the strictest inoculation policies in the world for civil servants and has already put more than 1,000 workers on unpaid leave, with thousands more at risk.
Airlines, police forces, school boards and even Canada’s Big Five banks https://www.reuters.com/world/americas/canadas-major-banks-require-employees-entering-premises-be-vaccinated-2021-08-20 have also pledged strict mandatory vaccine policies. But following through has proven less straightforward, especially as employers grapple with staffing shortages and workers demand exemptions.
Job vacancies in Canada have doubled so far this year, official data shows, and vaccine mandates can make filling those jobs harder, potentially putting upward pressure on wages. That could fuel inflation https://www.reuters.com/world/americas/canadas-annual-inflation-rate-hits-47-oct-highest-since-feb-2003-2021-11-17, already running at a near two-decade high.
“It’s already difficult to find staff, let alone putting in a vaccine mandate. You’d cut out potentially another 20%” of potential workers, said Dan Kelly, chief executive of the Canadian Federation of Independent Business.
There are pitfalls to employing the unvaccinated. Companies run a higher risk of COVID-19 outbreaks and many vaccinated employees are uncomfortable working with those who have not had the jab, said industry groups and marketing experts.
At Luda Foods, a Montreal-based soup and sauce maker, president Robert Eiser said he has 14 open jobs, no vaccine mandate and no plans to restrict new hires to the vaccinated.
“I don’t know that I want to reduce the (labor) pool, which is already quite low,” said Eiser. “We need to attract people to meet the demand. If we don’t, our competitors will.”
Data released on Friday underpinned Canada’s tight labor market, with a hefty 153,700 jobs https://www.reuters.com/markets/us/canada-posts-hefty-job-gains-outlook-clouded-by-omicron-variant-2021-12-03 added in November. It also showed a growing mismatch between available workers and unfilled jobs. And job postings are far above pre-pandemic levels. (Graphic: Canada job postings surge above pre-pandemic level Canada job postings surge above pre-pandemic level, https://graphics.reuters.com/HEALTH-CORONAVIRUS/CANADA2/klvyknzklvg/chart.png)
The province of Quebec backtracked on a vaccine mandates for healthcare workers last month, saying they could not afford to lose thousands of unvaccinated staff. Ontario, which was also eyeing a mandate, said it would not go ahead.
Toronto-Dominion Bank and Bank of Montreal have both softened their vaccine policy to allow regular testing for workers who missed their Oct. 31 inoculation deadline.
In Canada, 86% of adults are fully inoculated, though that drops under 80% among 18-40 year olds. At least 15 cases of the new Omicron https://www.reuters.com/markets/rates-bonds/canada-has-reported-total-11-cases-omicron-variant-health-official-2021-12-03 variant in Canada have been reported in the past week.
John Cappelli, vice president of onsite managed services in Canada for global recruitment firm Adecco, said half of his clients are mandating vaccines with the other half allowing regular testing for the unvaccinated.
But he expects the Omicron variant will prompt more workplaces to get strict on vaccination, even as they grapple with the tightest job market he’s seen in his 25-year career.
“We are now starting to see our first workplace (COVID-19) cases in five months,” he said.
The number of Canadian job postings on search website Indeed mentioning vaccine requirements has quadrupled since August. (Graphic: Canada job postings and vaccine mandates, https://graphics.reuters.com/HEALTH-CORONAVIRUS/CANADA3/byvrjqrlmve/chart.png)
In the hard-hit manufacturing sector, where 77% of firms say their top concern is attracting and retaining workers, vaccine mandates are more rare.
Dennis Darby, CEO of Canadian Manufacturers and Exporters, said most of Canada’s factories have operated safely throughout the pandemic. While CME encourages vaccination, “some companies are still using rapid testing if somebody doesn’t want to get vaccinated,” he added.
But companies risk a hit to their reputation if they are overt in efforts to tap into the unvaccinated as a labor pool, said Wojtek Dabrowski, managing partner at Provident Communications.
“If you go out and say, ‘We are intentionally seeking to hire unvaccinated people,’ many customers are equating that with you being anti-science and anti-safety,” said Dabrowski.
(Reporting by Julie Gordon and Steve Scherer in Ottawa, additional reporting by Rod Nickel in Winnipeg and Nichola Saminather in Toronto; Editing by Alistair Bell)
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