Statistics Canada reported Friday that employment edged down almost 19,000 in August, the fourth decline in the last five months.

In 2003, so far, employment has increased by only 0.3%. That’s a sharp contrast to the 2.6% growth during the first eight months of 2002.

In August, the unemployment rate increased 0.2 percentage points to 8.0%. The last time the rate was at 8.0% was in December 2001.

The weak jobs report has economists backtracking on their call, earlier this week, that the Bank of Canada has reached the end of its rate-cutting.

BMO Nesbitt Burns said that the details of the report provide no comfort. All of the job losses were full-time positions, with the private sector hurting worst. Full-time employment fell 22,000.

StatsCan reported that manufacturing was off only slightly, but that management and administrative jobs plunged by 23,800, and health care & social services also fell heavily. The only sources of strength were in construction and government.

Nesbitt pointed out that the jobless rate now matches the cyclical high reached at the end of 2001. The decline was also the fourth drop in the past five months and leaves payrolls up only fractionally for 2003, it notes.

CIBC World Markets said that, “Workers are feeling the pain of an economy smacked by successive temporary shocks – like SARS, mad-cow, and forest fires – and the more lasting adjustment by exporters to a stronger Canadian dollar.” However, economists note that the blackout didn’t appear to have much impact.

TD Bank said that although the blackout didn’t affect employment, hours worked in the province dropped 5.6% in August, the largest monthly decline on record. “Even if part of the lost time is recouped in September, this suggests that the hit to Canadian GDP in the third quarter will be substantial,” TD said.


CIBC said that it expects financial markets are going to be questioning their earlier confidence that the Bank of Canada won’t be cutting interest rates again. “The weak jobs figures present downside risks to our already-tame 2.2% growth forecast for Q3. But it’s fully in line with our view that the Bank of Canada has one or two more quarter point rate cuts to come. We will have to move our forecast quarter point rate cut for December into October if the next employment report fails to show a rebound.”