I think that the Canadian Staffing Index produced by ACSESS is a great indicator of what is actually happening in Canada's employment sector. Since the start of a recovery that can be traced back to March 2009 we have seen a trend upwards in job creation and economic activity. However that recovery is not a straight line upwards, and nor is it a steep growth. Rather we have seen stops and starts, increases and decreases along the way ... all indicative of a long slow, cautious recovery.
In May, Canada added another 25,000 jobs following the record 108,000 new jobs reported the previous month. However volatility in the markets saw fluctuations up and down that for instance resulted in the TSX dropping month over month. The banks have been reporting good results which should be good for the Canadian economy however the Ontario Government will be implementing HST effective July 1st which will cost the banks an extra 8% for all services it receives ... including staffing! So we may see up to a 8% reduction is spending on services to offset these increased costs. HST will also affect the housing market as it applies to new homes, plus its introduction has influenced the timing of capital investment decisions, with companies waiting until after July 1st in order to take advantage of tax credits.
At the beginning of June Mark Carney announced an increase in Canada's Interest Rate to .5% resulting in prime moving up to 2.5%. Not an unexpected increase but the first G8 country to do so. This will increase the cost of borrowing, increase the costs of mortgages and together with Ontario's HST on new homes will cause some negative pressure on the economy.
Anecdotal evidence amongst my staffing peers would suggest that the GTA (Greater Toronto Area) is definitely still the most active market across Canada. More and more we are seeing the most skilled resources getting multiple job offers, clients missing new hires due to a slow hiring process and a more bullish attitude by job seekers. The financial sector and in particular the banks are very busy, the telcos are also very busy. The Ontario provincial government is fairly steady, with a reported pent up demand working through the process and the System integrators appear to be winning more business and therefore in need of resources. There is a healthy demand for both full-time and contract resources within all of those areas. The impending introduction of the HST will have an impact on the financial sector as they will not be eligible for rebates, so we may see a sharp reaction in July as the increased cost of all services comes to fruition.
Western Canada's markets are recovering, but like most places it's a very cautious "two steps forward, one step back" kind of process. Calgary is the hottest Western market but May was a little slow however early signs for June are promising. Edmonton is probably the second most active market but as a government town has been impacted by the various government deficits, so demand is spotty. Vancouver appears to suffering a little from a "post Olympics hangover" so spending in BC has not returned to pre-recession levels yet either. Overall the recovery is well under way, the "in demand" resources are getting very scarce and we are seeing the demand curve start to switch to a job seekers market, from the employers market we have had for the last 18 months or so.
In Eagle's Eastern Canada region Montreal has continued to be a fairly strong market and here too we are seeing a shortage of the most in demand candidates. Like the GTA it is the financial sector, telcos and system integrators that have the biggest demand and here they will not be affected by the HST issue that will hit Ontario. Perhaps we will see work move from Toronto to Montreal ... at least until the planned Quebec tax increases in the New Year? In the National Capital Region I would have expected Federal Government demand to increase significantly through May but that has not happened. Procurement concerns and the deficit appear to be stalling any increase in demand. IT firms are pointing to the Auditor General's report and the Clerk of the Privy Council's report, both of which call for technology investment, but the wheels of government are proving to move slowly.
The following are some facts/indicators we are watching as of time of writing:
> The price of oil is still around $77 a barrel, basically unchanged from last month ... our experience with the activity in Calgary would suggest the oil sector is picking up!
> Natural Gas prices have been trending up which is more good news for the oil and gas sector in Western Canada.
> The markets have been pretty volatile of late and while the Canadian economy has done better than most the recovery is cautious. The TSX is down a little from last month at 11,937 today but that's still a pretty healthy level.
> The Canadian dollar continues to be very strong, currently about 97.35c US. Not always a good thing for Canadian business, but a positive economic indicator.
> Prime was raised to 2.5% in June so borrowing is now that little bit more expensive!
> Canada added another 25,000 jobs in May, following the huge gain in April. Canada has now added back 310,000 jobs since July 2009.
> Alberta's provincial government continues to grapple with its unusual situation of a $7B deficit, and the requisite cuts that go with that.
> We are continuing to see a pickup in activity in most sectors ... banks, energy companies, and telcos in particular. There is also some pickup in Municipal and Provincial Government activity.
> The Canadian government, while not expected to drastically reduce its spending this year has not really "wowed" the market with its spending. There has not been a lot of new IT business and the National Capital companies are suffering a little for that.
> Canada's Staffing Index dropped slightly this month, indicative of the very cautious and slow recovery. The staffing index is still more than 25% off the pre-recession peak of October 2008.
Another tough month on this road to recovery. The May Canadian Staffing Index dropped slightly, the prime interest rate was increased slightly and Ontario and BC will introduce HST on July 1st. None of this will make the recovery any easier.
On the positive side we are seeing more demand for people, in the hot markets we are seeing shortages of the most in-demand people and a shift from a buyers (employers) market to a sellers (employee) market.
It will continue to be an interesting journey with as many twists, turns and unexpected results as the World Cup underway in South Africa. Perhaps next month I can present some positive economic news to accompany the right result from South Africa!!!