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Economy in Brief

Some Employment Gains in Canada, But Lower Unemployment Reflects Reduced Participation
by Carol Stone May 6, 2005

The Canadian economy also experienced job growth in April, with a total employment gain of 29,300, following a slim 4,400 rise in March. The great part of the April move was in service industries, as the number of workers in the goods sector held just about steady. From a year ago, employment increased 1.4%, indicating some slowing after a 2% average annualized rate of increase over the past three years.

In the goods sectors, April's flat result was the net of a nearly offsetting rise in construction jobs and fall in manufacturing. These same two have maintained this kind of pattern over the last year as well. In service industries, firm uptrends are evident in trade, finance, professional services and education. Transportation, health care and accommodations and food service are losing jobs, although the declines in the latter two are quite modest.

The unemployment rate in Canada has continued its declining trend begun in late 2003. The 6.8% in April is the lowest since the same level in December 2000. While this might suggest recent strength in the Canadian labor market, optimism must be tempered by the fact that employment growth has been slower. In fact, the inroads on the reported unemployment rate come from lower labor force participation. While employers are adding new jobs at a slower pace, people are pulling back somewhat from wanting jobs in the first place. This is reflected in the reduction in the participation rate by 0.4% from its 2004 average of 78.2% of the working-age population to 77.8% in April. Had participation remained at that level, calculations indicate that the labor force would have been nearly 80,000 larger in April and the resulting unemployment rate would not have declined.

Mo/Mo Change, 000sDecember/December
Canada Yr/Yr % Apr 2005
Apr 2005 Mar 2005 2004 2003 2002
Employment* 29.3 4.4 1.4% 1.5% 1.9% 4.0%
Goods - Producing* 0.4 10.8 0.7% 2.0% -0.5% 6.3%
Service - Producing* 28.9 -6.3 1.5% 1.2% 2.6% 3.1%
Labor Force** -5.6 -8.2 0.7% 1.1% 1.6% 3.2%
Unemployment Rate** 6.8% 7.0% Apr 2004 Annual Average
7.3% 7.2% 7.7% 7.7%
Participation Rate** 77.8% 78.0% 78.3% 78.2% 78.1% 77.4%
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