February 17, 2010
Economic Snapshot | Feb. 17, 2010
Expect a full-time, not part-time, job recovery in the coming year
JOHN CLINKARD
consulting economist, CanaData
At first glance, the larger-than-expected jump in total employment (43,000) suggests that as Canadian employers entered the new year, they were more positive about future sales and production prospects and needed to add staff to boost output.
A closer look at the January employment report, however, indicates the vast majority of new jobs created in that first month were part-time, and consequently, that the production plans of employers might not be as strong as they first appeared.
Indeed, over the past three months, virtually all of the net increase in total employment is due to growth of part-time employment. This implies that while this is not a ‘jobless’ recovery, it may be a ‘part-time’ job recovery.
It is worth looking at the composition of job growth during this recovery and comparing it to previous periods to determine if the current pattern of full-time versus part-time employment is abnormal.
As the chart illustrates, during the past two downturns – in 1991 and 2001 – firms cut full-time staff and substituted part-time staff in order to sustain their output.
As the economy started to expand, firms gradually started to add full-time staff and their appetite for part-time employees slowed.
The pattern of full-time hiring in the current cycle appears to differ from previous cycles in that firms have been quick to cut full-time staff but have not increased part-time to the extent they have in the past.
Following a short spurt in full-time jobs in the third quarter of 2009, firms have boosted their part-time hiring in the past few months. Despite this increase, however, the ratio of part-time employment to total employment is well within its historical range.
Full-time employment should trend steadily higher through the first half of 2010 and into the second half.
This is based on recent strong growth of firms planning to add staff, as reported in the Bank of Canada’s latest Business Outlook Survey. Plus there is evidence of increasing external demand — driven by stronger U.S. growth — coupled with sustained domestic demand.
John Clinkard has over 30 years’ experience as an economist in international, national and regional research and analysis with leading financial institutions and media outlets in Canada.
Data sources: Statistics Canada/Chart: Reed Construction Data, CanaData
