Housing slump and job losses mark slow start to 2013 in Canada

Biggest Losses

The biggest job losses by industry were a 30,900 drop in education and 21,600 in manufacturing. The losses were partly offset by gains of 17,100 new jobs in construction and 17,200 in professional, scientific and technical services.

Private companies cut 18,800 workers and public-sector employment dropped by 27,000 in January. The federal government has been reducing its workforce as part of efforts to eliminate its budget deficit. The data ends a five-month string of job gains which saw employment increase by 184,000.

“I was more surprised by the resilience of the labor market and anticipated as we turned to this year the employment numbers were going to catch up with the rest of the economy,” said David Watt, chief economist at HSBC Bank Canada.

Canada’s statistics agency also reported the country’s deficit narrowed to C$901 million ($900 million) in December from C$1.67 billion in November. The decline was due to a 2.8% drop in imports, which outpaced a 0.9% fall in exports.

Housing Starts

Separately, Canada Mortgage & Housing Corp. reported the annual pace of home starts fell to 160,577 in January, the slowest since July 2009.

Multiple-unit starts in urban areas fell 29% to 78,816 in January from 110,927 in December. Single-detached home starts fell 11%. Urban housing starts in Ontario plunged 44%, and were down 30% in Quebec.

“Combined with the steep drop in housing starts as well as the still-wide trade deficit, the jobs report rounds out a day of infamy for Canadian economic stats,” Porter, chief economist at BMO Capital Markets in Toronto, said in a note to investors.

“With housing softening notably, and consumers and governments not in much mood or ability to spend, the economy will need a major helping hand from a stronger U.S. performance in the year ahead to help generate renewed job gains,” Porter said.

Bloomberg News

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