Americans are worried about a slow December jobs report, but the Canadian data is even more disheartening.
Thanks to bad weather, a slow dollar and sweeping job cuts from large companies such as BlackBerry Ltd., (NASDAQ:BBRY), the Canadian unemployment rate is higher than the United States' rate for the first time since the financial crisis started.
“If you think the U.S. jobs report was cold, Canada’s was a deep freeze,” wrote David A Rosenberg, chief economist at Gluskin Sheff, a Canadian wealth management firm.
The American economy added a disappointing 74,000 jobs in December. But Canada lost 45, 900 – the country's worst rate in nine months.
The Canadian jobless rate jumped to 7.2 percent, surpassing the American rate of 6.7 for the first time since September 2008.
In response to the news, the Canadian dollar fell to just $1.0922 per U.S. dollar this morning, the lowest rate since 2009.
Rosenberg said the employment-to-population ratio is "sure to catch the Bank of Canada's eye." It fell to just 61.6 percent from 61.8 percent, hitting its lowest since February 2012. It is even lower than America’s 62.8 percent, which matches October as the lowest in the country since 1978.
Ontario, the most populous province, saw the highest rate of employment decline. The province’s jobless rate also jumped to 7.9 percent from 7.2 percent. Alberta – home of the profitable oil sands – also lost a large amount.
The public sector gained 18,200 jobs while private-sector firms cut 26,300 positions. But some analysts think this could be temporary.
“December’s shocking decline in employment and hours worked probably had more to do with severe winter storms rather than the broader state of the economy,” wrote David Madani, economist at Capital Economics in Toronto, in a note Friday morning.
This shows in certain sectors such as construction – which lost 14,000 jobs last month.
“We suspect that this large negative shock will be reversed early this year,” he added.
But factors besides the chilling temperatures also influenced the numbers.
Retailer Sears Canada Inc. (TSE:SCC), tech giant BlackBerry Ltd. (TSE: BB) and Potash Corp. (TSE:POT), the country’s largest fertilizer producer, all announced year-end job cuts in December. Plus, major manufacturers around the country announced plans to close plants in the near future.