Canada Lost 70,600 Jobs, Most Since ‘82, on Factories

By Greg Quinn

Dec. 5 (Bloomberg) -- Canadian employment fell by the most since 1982 in November, led by manufacturing, a sign the world’s eighth-largest economy is falling victim to a global recession.

Employers shed a net 70,600 workers, almost three times as many as economists anticipated, after a gain of 9,500 in October. The unemployment rate rose to a two-year high of 6.3 percent from 6.2 percent the month before.

The figures come a day after Prime Minister Stephen Harper suspended Parliament to prevent being toppled by opposition parties who say he hasn’t done enough to help an economy that may have already slipped into recession. Bank of Canada Governor Mark Carney will probably cut interest rates by half a point to 1.75 percent on Dec. 9, the lowest in more than 50 years, according to economists surveyed by Bloomberg.

“It makes a stronger case for the Bank of Canada to move 50 basis points” next week, said Millan Mulraine, an economics strategist at TD Securities Inc. in Toronto. “A case could be made they might do a bit more. Our official call is for 50, but central bankers have shown a willingness to do more.”

Factory owners slashed payrolls by 38,300 workers in November, the most since January 2006, and another 26,000 jobs were lost in transportation and warehousing. Employment in public administration fell by 26,700, after hiring in that sector jumped by 39,800 in October as Canada geared up for national elections on Oct. 14.

Currency Fell

The Canadian dollar weakened 1.5 percent to C$1.2950 per U.S. dollar at 9:28 a.m. in Toronto from C$1.2757 late yesterday.

The economy is suffering from weak demand in the U.S. and slumping prices for commodities such as oil and wheat, which generate about half the country’s export revenue. Automakers and forestry companies have been among the hardest hit.

Ontario, Canada’s manufacturing hub, fared the worst among provinces in November with a 66,000 net job loss. Ontario’s unemployment rate jumped to 7.1 percent from 6.5 percent in October, matching neighboring Quebec for the first time in more than three decades, Statistics Canada said.

Magna International Inc., North America’s largest auto- parts supplier, said Nov. 26 it will close two plants employing 850 workers in Ontario because of “difficult economic conditions” that have sapped vehicle production and demand.

Ontario Woes

Ontario’s job losses continued today, with Canadian Press reporting that General Motors Corp. plans to temporarily eliminate a 700-worker shift at an Oshawa plant in February. General Motors, Chrysler LLC and Ford Motor Co. are seeking government loans to stay afloat and their plants in Ontario are among Canada’s biggest private employers.

Carney and Deputy Governor Pierre Duguay said in speeches last month that policy makers will likely need to cut the bank’s benchmark interest rate because risks to the economy “appear to have shifted to the downside.”

Gross domestic product in Canada will contract 1 percent in the current quarter and 0.4 percent in the first quarter of 2009, meeting the technical definition of a recession, according to government forecasts. Consumer spending is slowing and exports will probably decline next year on commodity prices and as U.S. and global demand wane.

The Organization for Economic Cooperation and Development on Nov. 13 said there will be recessions in the U.S., Japan and the 15-nation euro zone economy next year.

U.S. Jobs

U.S. employers cut 533,000 jobs in November, the fastest pace in 34 years, the Labor Department said today in Washington. The jobless rate rose to 6.7 percent, leaving it above Canada’s for a second month. That hasn’t happened for two straight months since 1981.

Harper yesterday “prorogued” or shut down the country’s legislature for more than seven weeks in a bid to stave off a challenge from opposition parties seeking to bring down his government. Harper, re-elected in October, said Governor General Michaelle Jean, who acts as the country’s head of state, agreed to his request to close Parliament until Jan. 26.

The government’s first order of business will be a budget scheduled for Jan. 27, Harper said, calling on the opposition to work with his administration on a “stimulus” package for the ailing economy.

The political crisis was sparked Nov. 27 when Finance Minister Jim Flaherty presented a fiscal update that included cuts to funding for political parties, limited civil servants’ right to strike and failed to offer a stimulus package to spur economic growth. Three opposition parties said they would oppose the plan and banded together.

To contact the reporter on this story: Greg Quinn in Ottawa at gquinn1@bloomberg.net.