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It was in July that Canada announced the recession was over, but we are definitely still suffering from a hangover. In general terms from a labour market perspective, we are still in a buyers market, with more people looking for work than clients looking for workers! There are of course some exceptions where very specific skill sets are in demand, creating some "mini skills shortages" but we are not yet seeing labour shortages.
After a couple of months of moderate growth, Canada lost 43,000 jobs in October creating an unemployment rate of 8.6%. Last year Canada had its first deficit in more than a decade at $5.8B and this year it is projected to be $55.9B. The "wisdom" was to stimulate the economy however I don't see much impact on the IT sector from where I sit ... except maybe a few more PCs (netbooks?) were sold. The result will be cuts in government spending which WILL have a negative impact on jobs in our sector. Coupled with provincial deficits (even Alberta is looking at a $7B deficit) there will be less work in government for a while.
Here at Eagle we are continuing to see a steady increase in orders from our clients, but certainly nowhere near the activity of the years leading up to the recession.
The GTA (Greater Toronto Area), driven by the financial sector was probably the first market to be hit by the recession and has been the first to recover. We are seeing reasonable and growing activity in this market both in the demand for contract staff, and full time resources.
Alberta was Eagle's busiest market prior to the recession but a big hit to both oil and gas prices, along with all the other nasty economic news hurt that market. It was slower into recession than the GTA, and is slower returning to normal too. Oil prices are back close to $80 and after hitting a 7 year low, Natural Gas prices seem to be recovering too. Perhaps driven by those realities we are seeing an uptick in activity in Alberta, but still nowhere near the demand that we saw a little more than a year ago.
In Ontario Bill 139 came into effect and we will see some impact from this as staffing companies adjust to the new regulations and associated costs of doing business. I expect the increased business risks, increased administrative burden and all of those associated costs will result in a reduction in available temporary jobs in Ontario.
The Federal market in Ottawa is always one of the biggest markets, but it continues to "tick along", with no increase in demand and no new big initiatives causing excitement. The continued focus on procurement issues, the propensity for legal activity by disgruntled suppliers and the handcuffed minority government seem to have a damper on this market.
Elsewhere for Eagle we are not seeing any appreciable increase in activity. There are pockets of business needs in Montreal and in Vancouver, Winnipeg seems relatively quiet and Eastern Canada has never been a particularly busy market for us. Having said that, a recent report indicated that the Maritime provinces have weathered the recession better than most but mostly because their manufacturing base was small so there was little to lose.
On the candidate flow side of things resumes have been flooding in at a relatively consistent rate over the last three months. October was a little slower than the previous two months, but November is picking up the pace again! This can be attributed to several factors, (a) we are posting more jobs as our clients increase their hiring; (b) many employees are a little disgruntled with their current situation perhaps they have had pay cuts and/or increased responsibilities etc so they are looking to move; and (c) there are still plenty of people "out there" looking for work!
The following are some facts/indicators we are watching as of time of writing:
> The price of oil is now close to $80 a barrel which is good news for IT projects at oil companies. > Natural Gas prices have risen significantly to around 16 cents, after hovering down at seven year lows of 9 cents. This should start to have a trickle effect on confidence in that sector.
> The TSX moved up above the 11,500 range and is close to its 52 week high ... a positive sign.
> The Canadian dollar is strong, currently above 95c US. Not always a good thing for Canadian business, but a positive economic indicator.
> Prime remains at 2.25%, making borrowing inexpensive. This is good for when companies feel optimistic enough to invest!
> Unemployment is still an issue ... after a couple of months of modest growth we lost 43,000 jobs in October and have a unemployment rate of 8.6% nationally.
> The Alberta government is forecasting a $7B deficit, and announced government cuts to projects of $430 million
> Many sectors appear to be picking up activity ... banks, oil companies, provincial governments and telcos all appear to be picking up steam.
> There have been few signs that any "stimulus" package will bring relief in the IT services sector. Hardware companies are benefiting from tax breaks but no big new IT services spending yet!
This should be one of the busiest times of the year in our sector. The Summer holidays are done, and the holiday season is not here yet ... so the focus is on "getting things done". There is increased activity, the economic indicators are generally good, and here at Eagle there is more of a "buzz" in the air than we have seen for some time.
Having said that, the recovery is slow and clients are very demanding. It is still a buyers market, but slowly changing and that always causes a little confusion in the market with candidates thinking they have a little more power in the negotiation of rates than they really do.
I expect it will be 2010 before we see a real shift in the market and a return to more skills shortages and some labour shortages. Meanwhile the recovery is happening, more and more clients are looking at new initiatives and the demand for resources is increasing. As a staffing company it would be nice to see those increases happen everywhere, and happen faster ... but I guess I can't be greedy!