Source: The Canadian Press

Canada’s employment picture is getting darker, according to a new report that predicts jobs will be scarce in the next year or so, and wage gains modest.

Job gains will fall to under 200,000 next year, just over half of the 350,000-plus jobs that is expected as the final tally for this year, predicts the TD Bank report released Tuesday.

And average wages will rise at under 2% for the next few years — just keeping up with the anticipated inflation rate.

“It’s going to be a period of tough employment growth,” said Derek Burleton, deputy chief economist with the bank.

“Already we are seeing wage gains that are tepid.”

Recent data from Statistics Canada shows the slowdown in employment has already begun, coinciding with a similar braking in economic growth.

Employment growth averaged about 13,000 in July and August, after averaging 51,000 a month in the first six months of the year.

Burleton says he expects monthly gains in the 5,000- to 10,000-a-month range for the rest of the year.

The consensus among economists is that Friday’s jobs report will show a modest 10,000 pickup in September, which basically keeps pace with new entrants entering the labour force.

Burleton said the report is not all bad news, given that Canada has seen a remarkable rebound in employment since the recession began two years ago. The recovery is thought to have begun about nine months later in mid-2009.

In the four quarters beginning July 2009, the economy has already managed to recoup all and slightly more of the 417,000 jobs that vanished in the 2008-2009 downturn. While many are part-time and public service jobs, that is still an impressive record by historical standards, since it normally takes six to nine quarters to recover lost jobs.

By contrast, the U.S. has about eight million fewer workers today than when the recession began.

Bank of Montreal economist Douglas Porter agrees that unless something dramatic happens, such as far stronger recovery in the United States, Canadians need to temper their expectations.

And he says it may be unreasonable to expect Canada’s unemployment rate to fall below 6%, where it was for several months in 2008, within the foreseeable future.

“Perhaps that unemployment rate before the recession began was unsustainable,” he says. “That came amid a commodity boom and quite strong housing and consumer spending in the U.S., so perhaps that was a world that may be unattainable again.”

The TD report predicts that only about one-quarter of the job growth next year, such as it is, will come from the goods-producing sector but that is expected to rise to one-third of the growth in jobs in 2012.

Primary industries, such as resource producers, are expected to account for 15.4% of the overall jobs growth in 2011 and manufacturing will contribute 11.1%, while fewer construction jobs will be added next year than in 2010.

Among the service sectors, the biggest areas of jobs growth in 2011 are expected to be trade (17.6%), professional (13.6%), and the finance, insurance and real estate industries (10.7%).

Many of the jobs created since the recession have come in the public sector and construction, but with the slowdown in the housing market and governments focused on reducing their deficits, those sectors are no longer capable of sustaining the recovery, Burleton said.

TD sees job opportunities expanding in 2012, however. That year, employment growth is forecast to return to current levels with some 335,000 jobs being created.

That would be sufficient to bring down the unemployment rate to 7.5%, closer to what economists now consider the normal range for the Canadian economy.