Canada’s Job Demand Stable Despite Oil and Gas Industry Woes

Guest Post by Strac Ivanov of Vicinity Jobs

In January, the Bank of Canada lowered its interest rate, citing expectations for a slowing growth and a widening output gap in the first half of 2015. In March, in an interview with the Financial Times, the Bank’s governor Stephen Poloz commented that “the first quarter of 2015 will look atrocious”. Around the same time, the OECD cut its growth forecast for Canada, for both 2015 and 2016.

The gloom has been driven by the realization that sharp declines in oil prices in the second half of 2014 are unlikely to be reversed in the near future. This has raised concerns about the growth prospects of Canada’s economy in light of the important role that the oil industry has played in driving growth in recent years. And even though oil prices have stabilized in 2015, the ripple effect of the declines from last year may still be spreading as the economy is adjusting to a “new normal”.

What is bad for Canada’s economy is also bad for the job market, so we asked: “how have these trends impacted job creation in Canada?”

We looked at job advertising trends since the start of 2014, focusing primarily on communities in Ontario and BC. We included some data from the first quarter of 2015 for Alberta and Nova Scotia as well.

I was somewhat surprised by what we found: As the graph below illustrates, while economic headwinds have, indeed, kept a cap on job demand growth, the situation outside of Alberta looks better than the news headlines might suggest. In fact, Canada’s job market is holding up quite well. Hiring demand did decline somewhat in the 4th quarter of 2014, but those declines were reversed in the first quarter of this year.

Quarterly Hiring Demand Trend Index Chart from Vicinity Jobs

In a “normal” year (without major external shocks) the number of jobs advertised will typically grow by about 10%. We did record such increases in BC, while the number of jobs advertised in Ontario remained largely unchanged from a year ago. Our data for Nova Scotia suggests that hiring demand there has remained stable as well. The number of job postings advertised in Alberta was declining in the first 3 months of 2015, but so far the trend has been constrained to that province.

To put these numbers into perspective, during the financial crisis in late 2008 job demand declined year-over-year by more than 30%.

We also looked at the industries that were advertising job openings and found that the job market landscape has not changed dramatically since Q1 of 2014. In Ontario, the share of the Manufacturing and Professional Services industries remained largely unchanged, while a slight decline in Retail industry job openings was offset by increases in the number of jobs advertised in the public sector and the information and cultural industries sector. In BC, the increases in the number of jobs advertised were not confined to a single industry.

This is good news. It alleviates some of the immediate concerns around the potentially negative impact of declining oil prices on Canada’s job market. This may be part of the reason why the Bank of Canada has not deemed it necessary to lower its interest rate since January.

Yet significant weakness remains, even outside the oil and gas industry. Events like the bankruptcy of Target Canada, the sudden closure of Future Shop’s stores, and Toyota’s recent announcement that it is moving production of its Corolla model to Mexico suggest that Canada’s employment growth prospects are limited. With the oil and gas industry in turmoil, Canada’s economy needs stimulation.

Strac Ivanov is the Founder and President of Vicinity Jobs. MDB Insight works with Vicinity Jobs to provide the Jobs Demand Report

Vicinity Jobs started in 2006, when it launched one of North America’s first free Internet search engines for jobs. Today, the company operates 22 regionally specialized job search engines serving Canadian communities from Halifax to Victoria. Vicinity Jobs also operates its own regional hiring demand monitoring and analytics technology platform serving economic development clients, and provides a locally focused online job advertising service for employers. The company`s services have been used by millions of Canadian job seekers and thousands of employers.