Employers are posting fewer summer jobs, another signal the economy is slowing
Employers are seeking fewer temporary workers and interns this summer, according to one of the country’s leading jobs sites, a signal that Canada’s tight labour market could be normalizing after two years of strong growth.
Recruit Holdings Co. Ltd.’s Indeed, a web-based hiring platform that connects employers with job seekers, said postings for summer jobs were down 17 per cent from 2022, while advertisements for internships dropped 19 per cent, according to a report published May 18.
The report used the week of May 12 as its benchmark for year-over-year comparisons. Total Canadian job postings were down 21 per cent over that period, the report said.
Companies’ hiring appetite was strong in 2022, despite inflation peaking above eight per cent in June, the fastest since the early 1980s. But a year on, the impact of higher costs and interest rates appear to be weighing on the labour market, said Brendon Bernard, an economist at Indeed.
“The huge boom in hiring appetite and job openings… has been fading over the past year,” Bernard said, adding that even though demand for typical summer jobs, such as camp counsellor, has cooled, it still remains elevated compared with pre-pandemic levels.
Summer job postings are 55 per cent higher than in 2019, while internships were up 18 per cent compared with that year, the report said.
“It’s not the exceptional job-seekers’ market that was prevailing last year,” Bernard said.
Canada’s labour market has remained stubbornly tight despite high inflation and policymakers lifting the benchmark interest rate 4.25 percentage points in the span of a year.
Postings for internships tend to follow a different hiring cycle than summer jobs, with hiring happening typically in fall and winter. Those postings had a strong start in 2023 but have fallen, especially in “white collar” fields such as technology, marketing and finance, Bernard said.
Analysis: Strong economy puts Bank of Canada's 4-month rate hike pause in doubt – Reuters
OTTAWA, June 5 (Reuters) – The Bank of Canada (BoC) became the first major global central bank to pause its rate-hike campaign in January, but the economy’s surprisingly strong performance since then will test Governor Tiff Macklem’s resolve to stay on the sidelines this week.
A return to rate-hike mode would raise questions about how high the bank can take borrowing costs without sending the economy into a tail spin. Between March 2022 and January, the BoC hiked eight times to a 15-year high of 4.50% – the fastest tightening cycle in the bank’s history.
Still the rapid rise in the price of money has failed to cool an overheating economy, with the first quarter GDP rising 3.1% – versus the 2.3% forecast by the BoC – and April seen expanding 0.2%. Nor has it loosened the tight labour market or tamed wage growth.
Inflation, which peaked at 8.1% last year, accelerated for the first time in 10 months in April to 4.4%, more than double the Bank of Canada’s 2% target. The recent recovery in Canada’s housing market is also putting pressure on prices, analysts say.
“Following the rapid turnaround in the housing market and upside surprise to CPI inflation in April, that resilience boosts the case for another interest rate hike, which we now judge to be more likely than not,” said Stephen Brown, deputy chief North America economist at Capital Economics.
Strong household spending and exports drove growth in the first quarter.
The Bank of Canada will announce its interest rate decision at 10 a.m. ET (1400 GMT) on Wednesday.
Money markets see a nearly 40% for a 25-basis-point hike on Wednesday, a more than 80% chance for one by July, and they fully price one in by September. .
Yet, about two-thirds of economists polled by Reuters last week expect the BoC to keep rates on hold for the rest of this year. Four said they see a hike on Wednesday and three-quarters said there is a risk of at least one increase in June or July.
U.S. JOBS DATA
The May unemployment rate in United States rose from a 53-year low to 3.7% in May, the biggest jump since April 2020. The easing of labor market conditions south of the border could allow the Federal Reserve to pause its own tightening campaign this month.
Since the United States accounts for about three-quarters of Canada’s exports, indications of slowing growth there could play into Macklem’s decision. But some analysts say Macklem could shrug off market expectations and protectively push rates higher.
“The Bank of Canada’s penchant for surprising traders means that nothing can be ruled out,” said Royce Mendes, head of macro strategy at Desjardins Group.
Mendes said there could be more than one rate hike in the cards, and Canadians should “brace themselves for a further tightening in financial conditions this summer”.
The governing council discussed the possibility of raising rates at its last policy meeting in April, according to the minutes, and Macklem has repeatedly warned rates could go higher if inflation does not slow as expected to 3% this summer.
To definitively rule out further hikes, Macklem said the labour market must soften as growth slows, easing wage pressure and price-setting behavior by businesses, especially in the services sector.
So far, the data show this scenario is not playing out.
“The latest round of data adds weight to our view that the Bank will need to conduct an insurance rate hike at either of its next two meetings,” said Jay Zhao-Murray, FX analyst at Monex Canada.
Our Standards: The Thomson Reuters Trust Principles.
Canada’s largest solar farm, GDP growth and an immigrant jobs boom: Must-read business and investing stories
Getting caught up on a week that got away? Here’s your weekly digest of the Globe’s most essential business and investing stories, with insights and analysis from the pros, stock tips, portfolio strategies and more.
Canada’s first-quarter GDP rose higher than expected
Canada outperformed expectations on its first-quarter gross domestic product (GDP) reading earlier this week, prompting some speculation the Bank of Canada could raise interest rates again – perhaps as early as next week. The Canadian economy grew at an annualized rate of 3.1 per cent in the first quarter, buoyed by strong exports and robust consumer spending. Mark Rendell reports, however, that this economic resilience is a problem for Canada’s central bank, which is deliberately trying to slow down the economy to bring inflation back under control. David Parkinson also writes that the quarter’s brisk growth rate is “too much of a good thing” because it implies more inflationary pressure in the quarter, not less.
A recession might be just what Canada needs
What if a recession – or a prolonged economic slump – is exactly what Canada needs? According to Tim Kiladze and Matt Lundy, the R-word might be the only way to reset the country’s overheated economy. Historically, the economy has gone into recession roughly once a decade. And not every recession is as painful as the 2008-09 global financial crisis. A group of prominent economists recently put out a paper looking at advanced economies since the end of the Second World War, and concluded that a recession now would help to quash runaway inflation, sky-high price increases and cool down the housing market.
Canadian consumer spending is at an all-time high
Can we shop our way out of a recession? Consumers in Canada are giving it their best shot. This week’s strong first-quarter GDP growth was powered by two sectors – exports and consumer spending. Consumer spending, specifically, rose 5.7 per cent on an annualized basis. That growth was twice as fast as economists expected, and it pushed consumer spending to its highest share of GDP since records began in 1961. Resilient consumers have been credited for helping stave off recession in the United States, but Canadian shoppers are outspending their U.S. counterparts. Jason Kirby takes a closer look in this week’s Decoder.
Greek company Mytilineos to launch Canada’s largest solar farm in Alberta
Mytilineos, one of the top industrial and power companies in Greece, is launching a $1.7-billion solar-energy project in Alberta that it says will be the largest of its kind in Canada. The project will be built on separate plots in Southern Alberta, one of the sunniest areas in Canada and home to many of the country’s biggest solar farms. Once finished, it will have enough capacity to power 200,000 homes. Eric Reguly reports that fossil fuels account for almost 90 per cent of power generation in Alberta, and the province is under pressure to bring that share down as Ottawa strives to meet the net-zero emissions goal by 2050.
The good and bad of Canada’s immigrant jobs boom
Canada’s labour boom is creating plenty of opportunities for recent immigrants, according to Matt Lundy. The employment rate for recent immigrants – those who landed in Canada within the past five years – has topped 70 per cent, the strongest level on record. What’s contributing to the unequivocally positive trend? The biggest factor in the employment surge is that Canada has moved toward a two-step immigration process, meaning a larger share of people who become permanent residents have already worked in Canada as temporary residents.
Gen Z thinks you need to make $100,000 to live comfortably
How much do you think you need to live comfortably in Canada? According to a recent poll by Abacus Data, Gen Z believes they need to earn an average of $100,953 to live a comfortable life. For reference, boomers said $63,753, Gen X said $84,700, and millennials said $87,386. According to Rob Carrick, it seems clear in these numbers that the older and more established you are, the less you figure you need to live a comfortable life. He writes that young people know what they’re up against trying to afford adulthood. Do the rest of us?
Sign up for MoneySmart Bootcamp: If you want to improve your financial fitness, The Globe’s MoneySmart Bootcamp newsletter course is for you. This new five-part course written by personal finance reporter Erica Alini will improve your personal finance skills, including budgeting, borrowing and investing. Subscribe to the MoneySmart Bootcamp and you’ll receive an e-mail a week to work a different financial muscle. Lessons will land in your inbox Wednesday afternoons.
Now that you’re all caught up, prepare for the week ahead with the Globe’s investing calendar.
Can market veteran Simsek pull Turkey’s economy back from brink?
Mehmet Simsek, a former Turkish finance chief popular among foreign investors, has taken the helm of the economy again, signalling a return to more orthodox economic policies.
The United Kingdom-educated Simsek, a former strategist at London-based Merrill Lynch, was appointed treasury and finance minister on Saturday as Turkish President Recep Tayyip Erdogan announced his new cabinet after winning the May 28 presidential run-off that extended his rule for five more years and into a third decade.
Turkey is in the midst of a cost-of-living crisis stemming from soaring inflation, which peaked at 85.5 percent in October compared with a year ago before easing to 43.7 percent in April with a favourable base effect.
Analysts largely blame the crisis on Erdogan’s unorthodox economic strategy of low interest rates and credit expansion with increasing state control on financial markets that the government says it pursued to push investments, production, exports and growth.
The Turkish lira has lost some 150 percent of its value in the last two years as the country’s $900bn economy came under immense pressure amid depleted foreign reserves, a swiftly increasing current account deficit, and a snowballing state-backed scheme of lira deposits protected against the currency’s depreciation.
The lira lost about 23 percent of its value since the beginning of this year and stood at a record low of nearly 21 against the United States dollar on Sunday.
‘Transparency, consistency, predictability’
Simsek, 56, who was finance minister between 2009 and 2015 and then deputy prime minister until July 2018, is a market-friendly figure known to foreign investors as an advocate of conventional economic policies, transparency and an independent central bank.
He said during a handover ceremony on Sunday that the country “has no other choice than to return to a rational ground” and that a “rules-based, predictable Turkish economy will be the key to achieving the desired prosperity”.
“Transparency, consistency, predictability and compliance with international norms will be our basic principles in achieving this goal,” he said, adding that among the main targets was “establishing fiscal discipline and ensuring price stability for sustainable high growth”.
Seref Oguz, a senior economist and columnist, said the negotiations between Simsek and Erdogan for the position took a long time because the former wanted to secure his conditions before accepting.
“Simsek put forward three conditions to get on board with the position,” Oguz told Al Jazeera.
The first condition, according to Oguz, was the authority to make his own decisions. The second was to be able to design the country’s economy teams, and the third was for him to be given adequate time to fix the economy’s problems.
Local and international media started reporting about talks over Simsek’s possible reappointment before the first round of the presidential elections on May 14.
After none of the candidates failed to secure more than 50 percent of votes for an outright victory, media close to the government intensified its reporting on a likely nod for Simsek provided Erdogan remained in power.
Addressing his supporters after his election victory on May 28, Erdogan said that he would have “internationally reputed finance management”, in an apparent reference to his former minister.
Hence, foreign investors already knew that Simsek’s appointment was highly probable before Saturday’s announcement.
Erdogan named Cevdet Yilmaz – another cabinet member who backs orthodox economic policies – as Turkey’s vice president.
Simsek said on Sunday that the government’s main purpose is to increase social welfare in Turkey.
Ceyhun Elgin, a professor of economics at Istanbul’s Bogazici University, said Simsek is expected to pursue a monetary policy aiming for low inflation rather than credit expansion and growth.
“This means there will be higher policy interest rates to fight inflation,” he told Al Jazeera.
Elgin added that the new minister would not abolish the lira deposits scheme protected against foreign currencies amid depleted foreign currency reserves, but that he might do so “after Turkey’s foreign reserves reach a certain level with the influence of increasing interest rates”.
The indirect state controls on the lira’s exchange rate against foreign reserve currencies are expected to be gradually lifted, Elgin said, leading to controlled depreciation of Turkey’s currency.
Erdogan is known for his belief that high interest rates are the cause of high inflation, not the cure for it.
“Interest and inflation are directly proportional. Interest is the cause, inflation is the effect. There may be people who do not believe this, but this is what I believe,” the president said earlier this year.
Simsek said that it was vital for Turkey “to reduce inflation to single digits again in the medium term … and to speed up the structural transformation which will reduce the current account deficit”.
Turkey’s central bank, the independence of which is seen to have eroded over time, has cut its policy rate to 8.5 percent from 19 percent since late 2021 because of Erdogan’s economic views.
The lira deposit scheme protected against the currency’s depreciation was launched in 2021 in an attempt to keep the lira valuable. It now holds the equivalent of about $125bn.
Erdogan has also followed a policy of credit expansion, at times utilising public banks to provide loans with extremely low borrowing costs, which skyrocketed purchases of properties and cars among other consumption in the last few years.
Oguz said Simsek’s name and appointment are important for Turkey to attract foreign investment, but that investors will want to see the autonomy and authority of the new finance chief.
“Therefore, the first 100 days of Simsek are crucial, in which we will see what authorities he will be able to use, and how he will oversee or change the economy-related positions, including the chief of the central bank,” Oguz said.
He added: “The investors will, in particular, watch the actions that will be taken on the interest rates and lira’s exchange rate, which was kept valuable up until now, but is slowly being released to depreciate against the dollar.”
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