Canada shed part-time jobs in January

The dip helped push the national unemployment rate up to 5.9%, from a revised 5.8% the previous month.

The decrease was driven by the loss of 137,000 part-time positions, including more than 59,000 in Ontario. It was the biggest one-month collapse in part-time work since the agency started gathering the data in 1976.

For Ontario, some experts raised the possibility of a link between the provincial drop and the introduction last month of a controversial minimum-wage hike.

To partially offset the declines, Statistics Canada said the economy added 49,000 full-time positions last month. The survey also detected stronger wage growth in January of 3.3%, which also led some to point out possible connections to Ontario.

However, several experts made sure to note that before trying to draw conclusions from the January report, one should consider the well-known month-to-month volatility in the jobs figures.

“The Canadian economy experienced a very large setback in January … but it also needs to be kept in perspective — we had outstandingly strong job growth over the course of last year,” Craig Alexander, chief economist for the Conference Board of Canada, said in an interview.

“Quite frankly, we were overdue for a bad number.”

Despite Canada’s healthy economic performance last year, Alexander said the surprising pace of job creation had been stronger than the other data. He said the losses reported Friday brought the monthly jobs average more in line with the other economic numbers.

“I don’t think that the January number is the start of a whole series of declines — I think it’s more of a reflection of the fact that we were tracking abnormally strong numbers behind us,” Alexander said.

When it comes to the Bank of Canada’s possible reaction to the January report, Alexander noted the “bad number” could delay the timing of governor Stephen Poloz’s next rate hike. Poloz has repeatedly said future rate decisions will be highly data dependent.

Others didn’t expect the January report, on its own, to have a significant impact on the outcome of the Bank of Canada’s next rate announcement.

CIBC chief economist Avery Shenfeld said he thought it probably leaves Poloz right where he was before the survey results came out.

“This is a mixed bag for the Bank of Canada because we did see a significant rise in wage inflation … which might counter the disappointment on the headline jobs count,” Shenfeld said.

Even with the decline, Canada has had a strong run of job creation that’s generated 414,100 full-time jobs over a 12-month period. The growth represents an increase of 2.8%.

Over that same period, the number of part-time positions fell by 125,400 for a contraction of 3.5%.

A closer look at the January data showed the number of paid employee positions also experienced a significant loss last month by shedding 112,000 positions.

By comparison, the number of people who identified as self-employed workers — often seen as a less desirable category that includes unpaid work in a family business — increased last month by 23,900.

The wage improvements in January arrived the same month that saw Ontario take the controversial step of raising its minimum wage. The report also said Ontario shed 50,900 jobs last month — with all of the net losses in part-time work.

Most analysts cautiously highlighted the potential connection. They’ll scrutinize incoming data over the next few months to get a better sense of the kind of impact Ontario’s minimum-wage increase could have on the provincial job market.

“The concentration of the job loss in Ontario and the focus upon lost part-time jobs in that province will no doubt feed debate on whether large minimum wage hikes took a toll on employment,” Scotiabank’s Derek Holt wrote in a note to clients.

“But proving causality may remain contentious.”